The National League of Cities (NLC) estimates that cities across the country could lose $134 billion (21.6 percent) in revenues this year due to the downturn. According to the paper, Washington’s cities could lose 32.7 percent of revenues—the sixth highest revenue loss in the country.

These estimates are based on unemployment projections, not tax collections data. They assume that “the portion of revenues for cities, towns and villages generated by sales and income taxes will have the largest relative fiscal impact on budget shortfalls, whereas property tax revenue will have the least.”

The paper finds that for Washington’s cities, each percentage point increase in the state unemployment rate implies a revenue reduction of 3.23 percent (the 12^th highest). Additionally, the report takes into account economic conditions in each state by considering unemployment above the pre-pandemic rate. This additional unemployment rate for Washington is estimated to be 9.62 percentage points (8^th highest).

After accounting for fiscal structure and economic conditions, the paper estimates that Washington’s cities could lose $3.8 billion in 2020, $3.3 billion in 2021, and $3.1 billion in 2022.

At first glance, the NLC estimate seems high to me. For example, Moody’s has projected that local governments nationwide could lose $152 billion over 2020 and 2021—just a bit higher than the NLC’s one-year estimate. (And the Moody’s figure includes counties.) Also, note that the City of Seattle has estimated that its general fund revenues for 2020 could drop from $1.4 billion to $1.22 billion, or 12.9 percent.

We’ll know more when we begin to see actual tax collections. In the meantime, the NLC report does offer an interesting comparison of how cities could fare across states.