COVID-19 Impacts on Local Finance

Amidst the global COVID-19 pandemic, considering impacts to local finances and budgets is a challenge. This page was created to share emerging information and research that the League has found together with its membership during these challenging economic times.

Local factors drive all of these critical revenue streams and expenditure needs. No two cities’ analyses will look the same due to local characteristics and demographics. In addition, it may be best, to begin with a short-term assessment of anticipated revenue decreases and increased expenses such as a 60 to 90-day range, as the longer-term economic outlook is unclear. However, we can keep in mind some longer-term impacts as we plan.

League Resources:

The League has a tool aimed to help cities frame up a 90-day outlook for local revenues.​ 

​Iowa State University Extension and Outreach:

Government Finance Officers Association:

National League of Cities:

U.S. Treasury Report:
U.S. Department of the Treasury- State and Local Governments) 


Property Taxcity distributions from the March 2020 installment of property taxes may lag, with future collections dependent on the duration of the downturn.

Local Option Sales Tax (LOST):  collections may see a significant impact, and the timeframe for decreases may be felt immediately and longer-term due to economic conditions/recession.

  • ​Timing of LOST will be important for cities to consider. As the Iowa Department of Revenue distributions may lag impact, the 4th quarter LOST payments may begin to be impacted but will see further realized impacts in FY21. If no budget adjustments for reduced forecasting were made for FY20, cities may anticipate further FY21 decreases realized. 
  • When considering LOST, local governments may think about what types of LOST are collected. ​Are they largely from restaurants, other highly impacted businesses? 

Retail Sales: 


  • ​A short-term impact is close to certain for communities with hotel/motel revenues, which are distributed on a quarterly basis. A long-term impact may be anticipated if there is a recession. Any shortfall will impact other recipients of this tax.

Road Use Tax Funds (RUTF) – The Iowa Department of Transportation will provide monthly memos on RUTF.

Franchise Fees:

  • The short-term impact may be anticipated for those with franchise fees as businesses are shuttered and energy needs decline.
  • Cities may also want to factor in weather and usage when they estimate potential losses.

Local Programs 

  • Consider revenues related to local programs such as parks & rec and library rental income and leases, program fees vs. expenses that aren’t already incurred, etc.

Investment Income

  •  Investment income will likely decrease, due to lower interest rates.

Public Pensions

  • IPERS and MFPRSI are structured as pension systems based on long-term investment. Still, as with any investment portfolio, economic decline and recession are impactful and make short and long-term impacts on local government employers. We can anticipate that the economic downturn would significantly impact return-on-investment assumptions. In both IPERS and MFPRSI, these may impact contribution rates. Because the MFPRSI system would likely directly increase employer contribution rates, cities may experience a higher rate increase with a lag. For both IPERS and MFPRSI, the history of major economic recession has shown these trends. It is still unclear the impact that may also occur related to workers’ compensation policies for IPERS and medical costs MFPRSI related to COVID-19.

Tax Increment Finance: Cities should consider their urban renewal/TIF if there are major declines locally in economic development and property valuations.

  • How have they been structured – are there minimum assessment agreements, for example? 
  • Is the city obligated to issue rebates or other payments? 
  • How old are the TIF districts?  
  • How have they performed? 

Other fees or revenue streams:

  • City-owned Utilities- deferred payments/penalties, which could affect operational budgets and revenue bond obligations.
  • Parking Fees – related to the decline in vehicle traffic, there may be a drop in the amount of people parking and paying related fees.
  • Court Fees – consider court fees and trends.
  • Planning Fees – consider sign inspections, subdivision and site plan reviews, and related charges a city may impose for related services.
  • Transit – decrease in fares and advertising revenues, if applicable.
  • Grants – local grants may be impacted by COVID-19. Are there any grants available to help offset COVID-19 impact?
  • Gaming/Racing – not all communities have gaming revenues, those that do will anticipate at least short-term losses as casinos remain closed. There may/may not be a longer-term impact upon reopening related to recession and/or fear of larger gatherings.
  • Airport – consider airport-related revenue streams, if applicable.


Some of the COVID-19 related expenses that the League has heard about have included:

  • Costs related to technology for staff now working remotely or relocating/separating team members: laptops, phone systems, headsets, etc.
  • Cost for contractual services related to cleaning/disinfecting.
  • Cost for securing sanitizers, PPE, etc. related to current use and future planning i.e. for when public buildings reopen.
  • Intergovernmental expenses i.e. assisting county hospitals, etc.
  • City-owned utilities.
  • Overtime for staff incl. public safety.
  • Emergency management.

The League also wishes to stress the importance of DOCUMENTING everything related to any increased expenses, you might incur. If there becomes funding or reimbursement monies available, good documentation will be needed. Be sure to include: 

  • The reason for the expense
  • Total and breakdown of expense 
  • Approval expenditure 
  • Receipts

Other Considerations

  • How have 28Es been impacted? 
  • Have emergency management activities impacted the budget?
  • Budgetary impact from health/social services?
  • Will insurance premiums be impacted?  Will workers’ compensation policies impact local finances?
  • Are there anticipated longer-term impacts: remote work, demographic shifts at the local level?
  • Will cities be able to leverage the lower interest rate environment to refinance debt?
  • How long may it take to recover delinquent property tax, if applicable?

The pandemic has highlighted both the importance of fiscal planning and adequate local budget reserves, and that communities will be faced with long-term, not short-term recovery of local budgets and other processes.

For information related to electronic meetings related to COVID-19, visit Iowa Public Information Board’s website​ and read the League’s electronic guidance.

IOWA League