Conference Presentation, Interview, Panel
The State of State and Local with Chicago Mayor Lori Lightfoot
Milken InstituteLori Lightfoot, Emily Brock, Austan Goolsbee, Michael Piwowar, Tobias Read, Elizabeth Reich, Simone Brody, Mike Pivovar
- A fiscal health and recovery program is currently active with financial leaders from 30 cities to address revenue losses and challenges similar to those faced by Chicago over the last nearly two years.
- Economic recovery timelines project maximum U.S. inoculation levels by the middle of the year at the earliest, with continued economic restrictions expected for approximately six months, while the current vaccine distribution rate in Chicago alone would require about 18 months to fully vaccinate the population without increased first-dose allocations.
- Stimulus legislation is anticipated to be delayed by the coordination of the December 27th implementation with impeachment and confirmations, creating risks that unresolved decisions will negatively impact residents and businesses, though the $1.9 trillion American Rescue Plan contains $350 billion in flexible federal funding intended to support state and local governments.
- Cities face a projected budget deficit challenge in 2022 and a decline in commercial property values, particularly in hospitality, retail, and restaurant sectors, with Dallas expecting a loss of the budgeted $29 million in increased property tax revenue and potentially more if stimulus support is not secured.
- The 2021 municipal bond market is expected to see $451.2 billion in issuance, building on over $18 billion in savings generated from over 12,000 advanced refunding bond issuances between 2007 and 2017, though the exemption for these bonds faces potential political threats.
- A recession driven by the virus is expected to be steeper than a normal recession, causing disproportionate harm to travel, tourism, and service sectors while the top 25% of income earners experience wealth increases of more than a trillion dollars.
- Fiscal crises are anticipated to manifest primarily on the expenditure side regarding public welfare, education, and healthcare, with education facing cuts as a discretionary budget item that could accumulate deficits haunting the system for years.
- A bipartisan group of mayors is planned to maintain regular conversations with the new administration to integrate on-the-ground realities into policy-making, with collective action expected to make voices powerful enough to influence federal stimulus and infrastructure decisions.
- Without direct federal assistance, states and localities may face the necessity of cutting police, firefighters, and teachers, which could spiral the business cycle worse and lead to further revenue losses over years to come.
- Commercial real estate problems are expected to drop eventually as eviction moratoriums expire, though the immediate next 12 months present a "tough spot" with bumpy economic conditions driven by political focus on aid.
- Urbanization trends over a 175-year period are expected to continue in rich countries, suggesting the virus will not permanently change the relationship with cities, although the "open office culture" may face decline in favor of private offices.
- Investments in equity programs like Invest Southwest are expected to yield catalytic changes in neighborhoods, while continued investments in resident needs during difficult times are projected to build public confidence and hope.
- Small communities are expected to have recovered even less than major cities like Dallas from the previous recession, requiring direct flexible federal assistance to avoid tax increases and layoffs that would deepen the economic recession.
- The next 12 months are described as tough and bumpy, potentially forcing a rethinking of education models, such as jettisoning summer breaks or flipping the classroom, while flood protection and water infrastructure funding remain critical for extending economic development.
- Future events are expected to be held in person in the not-too-distant future, and municipal engagement is projected to improve from here as long as the continued drumbeat of outreach persists.