The Effects of the COVID-19 Crisis on the City of Phoenix’s Budget and Creditworthiness

Akheil Singla, Siân Mughan and Anthony Howell

Municipal Finance Journal, 2021, vol. 42, issue 1, 63 - 81

Abstract: This paper examines how the city of Phoenix navigated the economic, financial, and budgetary challenges wrought by the COVID-19 pandemic. Based on an in-depth analysis of budgetary documents and city council meetings, it shows that the city had low fiscal reserves and a high reliance on revenue associated with in-person commerce entering into the COVID-era. However, the analysis also reveals that planning and financial management choices allowed the city to maintain all core services and to avoid layoffs despite projected budget shortfalls estimated at more than $100 million. Specifically, it demonstrates the import of the CARES Act funding and how a small rule change governing use of funds allowed the city to balance its budget. Despite its early victories, Phoenix continues to face future challenges, including limited revenue growth, potential problems in enterprise funds, and inadequate fiscal reserves.

Date: 2021
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