What happens to local city and county cash flow if Florida cuts sales taxes like the UK just did to cope with the Wuhan Virus?

To deal with the Wuhan virus economy effects, the UK has just announced a program to reimburse employees 80% of their wages if laid off. No program yet for gig workers. They are closing all pubs also.

 

Then there are several tax reductions, including VAT (sales tax). Imagine if Florida was to waive sales taxes for the rest of the year, which is used by most cities and counties for paying for capital programs where they have borrowed funds.

 

So, if your local city or county government went and borrowed funds for capital spending to be paid back with future sales tax revenues, are you ready for the cash flow shortage if Florida follows the UK example?

 

Or are they ready for the possible emergency reductions in state taxes paid to local governments? I always said it only takes one crisis to reduce tax flow used to guarantee loans vs pay as you go.

 

But some local governments didn't learn the lesson from the last recession and have already bonded out their future sales tax revenue for capital projects.  And if those tax revenues are cut due to the virus "crisis" like the UK just did, layoffs and property taxes will increase to cope with the cash flow shortage.  

 

Just a thought - are any local governments planning for this possibility?

 

Vance Jochim

FiscalRangers.com