Forecasting Revenue Impacts from COVID-19: The Case of Florida Municipalities

• Author: Hai (David) Guo,Can Chen
• DOI: 10.1177/0160323X211012056
• Published date: 01 March 2021
• Date: 01 March 2021
• Subject Matter: Field Notes

Field Notes

Forecasting Revenue Impacts

from COVID-19: The Case

of Florida Municipalities

Hai (David) Guo

1

and Can Chen

1

Abstract

Early in the pandemic, Florida municipal managers indicated that forecasting the impact on local

revenues was one of their top priorities in responding to the pandemic, yet such a tool has not been

widely available. This study offers simple and straightforward fiscal planning guides for assessing the

short-term and long-term impacts of the COVID 19 recession on local government revenues by

estimating the revenue declines among 411 Florida municipalities from FY 2021 to FY 2023. The

forecast results predict revenues will be reduced by $5.11 billion from 2019 pre-pandemic levels for

Florida cities in fiscal years 2021 through 2023. The decline is forecast to be 3.54 percent in FY 2021,

4.02 percent in FY 2022, and 3.29 percent in FY 2023. The revenue structure matters for estimating

the revenue decline.

Keywords

COVID-19 pandemic, revenue forecasting, municipality, financial management

Introduction

The COVID-19 pandemic and its resulting eco-

nomic downturn imposed severe budgeting and

financial management challenges to the munic-

ipal governments. Reliable revenue forecasting

plays an essential role in the budget process of

revenue-driven entities like municipal govern-

ments (Willoughby and Guo 2008). Further-

more, forecasts for the pandemic’s impact on

local revenues were the highest priority identi-

fied by Florida municipal managers. This study

intends to respond to this need with data and

methods to forecast revenue changes across

individual revenue sources down to the local

level.

Availability of a consistent and stable reve-

nue stream to address community needs is

always a concern for local governments, but

the pandemic makes this critical. Revenue

structure matters while estimating the fiscal

impact of the pandemic. Local governments

that are highly dependent on tourism, direct

state aid, or volatile sales taxes have particu-

larly impacted.

Cities which rely on revenue sources that

have been more stable in the last year, such as

property tax and utility fees, have been at least

partially insulated from the economic damage

1

Department of Public Policy and Administration, Steven J.

Green School of International and Public Affairs, Florida

International University, Miami, FL, USA

Corresponding Author:

Hai (David) Guo, Department of Public Policy and Admin-

istration, Steven J. GreenSchool of International and Public

Affairs, Florida International University, PCA 352A, Miami,

FL 33199, USA.

Email: haguo@fiu.edu

State and Local GovernmentReview

2021, Vol. 53(1) 78-88

ªThe Author(s) 2021

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DOI: 10.1177/0160323X211012056

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