skip navigation

Coronavirus (COVID-19) Local Government Fiscal Impacts

This page provides information on the fiscal impacts of the 2020 novel coronavirus pandemic (COVID-19) on local governments in Washington State, including revenue impacts, the CARES Act and federal stimulus funding, annual financial reporting, and furloughs.

It is part of MRSC's Coronavirus (COVID-19) Resources for Local Governments series.

Latest Updates

To help you keep track of the rapidly changing situation related to COVID-19, here is a summary of recent changes to this page:

Thursday, January 14

Tuesday, December 29

The federal appropriations/stimulus bill signed into law by President Trump on Sunday, December 27 includes two significant items to local government:

  1. Providing grant funding to states for distribution to public water and wastewater utilities for providing ratepayer assistance and reducing arrearages.
  2. Extending the deadline for expending previously appropriated CARES Act funds to December 2021. These are not additional funds but provide an opportunity to utilize those funds previously allocated to cities, towns, and counties under the CRF program administered by Commerce.

We will post more information as it becomes available. Here is the bill summary provided by the Government Finance Officers Association (GFOA).


The economic shock from the coronavirus pandemic has been sudden and unprecedented. Within the span of just a couple weeks, many businesses and public gathering spaces were shut down statewide, consumer spending on non-emergency items plummeted, and initial unemployment filings shattered old records. The full effect of these impacts will not be known for some time, but it is clear they will be significant.

For helpful economic information and data, see the following resources:

On-Demand Webinars

MRSC has recorded several webinars related to the fiscal impacts of COVID-19 and the implications for local government budget preparation.

Budget Impacts

Due to the sudden and extensive economic impacts, many local governments will see their revenues drop. In particular, local governments are likely to see drops in sales tax revenues, lodging taxes, motor vehicle fuel tax (MVFT) distributions, admissions taxes, and other related revenue sources.

Some counties are also deferring certain property taxes paid directly by individual property owners, which could have a significant impact on cash flow for a number of local agencies.

For more information, see:

Sample Documents – Mitigating Fiscal Impacts

  • Whatcom County Ordinance Nos. 2020-13 and 2020-14 (March 24) – Creating COVID-19 special revenue fund, including money from general fund and City of Bellingham, and authorizing interfund loan from utility enterprise fund to COVID-19 fund for cash flow purposes, to be repaid within 18 months in part through anticipated FEMA reimbursement.

CARES Act and Federal Stimulus

H.R. 748, the federal Coronavirus Aid, Relief, and Economic Security ("CARES") Act was signed into law on March 27. This is a massive and wide-ranging stimulus bill that includes significant aid for state and local governments.

Some funding will be distributed to local governments to use for necessary expenditures to address the impacts of COVID-19 that are not in the agency's current budget. Local governments with over 500,000 population may apply directly to the federal government for funds, but for all other local agencies the funding will be distributed to the State of Washington and it will be up to the state to decide how funds are passed through.

These distributions will be on a reimbursement basis using the Treasury Guidance for State, Territorial, Local and Tribal Governments.

The State of Washington initially announced plans to distribute almost $300 million to cities and counties with a population under 500,000 population, with each county receiving a minimum of $250,000 and each city and town receiving a minimum of $25,000. On August 31, the governor’s office announced that the total distributions would be increased to over $420 million, with each county receiving a minimum of $300,000 and each city and town receiving a minimum of $30,000.

The state Department of Commerce has released further guidance on Local Government Coronavirus Relief Funds. Initially, only COVID-related expenses incurred from March 1, 2020 to October 31, 2020 were eligible for reimbursement, with the deadline for submitting the final reimbursement invoice on November 15. However, in September the Department of Commerce announced that both deadlines would be extended by one month. Eligible expenses must now be incurred between March 1, 2020 and November 30, 2020, and the final reimbursement invoice must be received by the Department of Commerce no later than December 15. Any expenses incurred after November 30, 2020 will not be eligible for reimbursement.

Some local governments have submitted incomplete or incorrect CARES Act Coronavirus Relief Fund invoices, causing reimbursement delays. The state Department of Commerce has provided tips to help agencies receive reimbursement faster by avoiding two common mistakes. For more information, see the Association of Washington Cities website (note that the same guidance applies to counties too).

Other CARES Act provisions include increased supplemental Community Development Block Grant (CDBG-CV) funds and funding for a wide variety of existing federal programs. As with all federal grant programs it will be important to meet federal compliance guidelines of 2 CFR 200 (Uniform Guidance).

For more information, see the following resources:

Additional resources are below:

FEMA Reimbursement

It is important to document all costs (both direct and indirect) that may be eligible for Federal Emergency Management Agency (FEMA) reimbursement. For information on filing for FEMA reimbursement, see the following resources:

Accounting and Annual Financial Reporting

The State Auditor's Office has a COVID-19 Accounting and Reporting page providing all the BARS Manual and annual financial reporting news related to the pandemic.

The annual financial reporting deadline was also extended to 11:59 PM on July 1 this year and has now passed (see our COVID-19 Governor's Proclamations and State Guidance page for copies of the proclamations and extensions).

Furloughs and Layoffs

Fraudulent Unemployment Benefit Claims

Criminal actors are taking advantage of the coronavirus and unemployment crisis. Government employees have been targeted and have received what looks like legitimate ESD benefit claimant letters in the mail. Unemployment claims are also being made to their employing organization.

For more information, see our blog post Unemployment Claims Fraud Rises During COVID-19 Pandemic.

As local governments look to mitigating the fiscal impacts of COVID-19 on their budgets, many jurisdictions will be examining the possibility of temporary furloughs or permanent layoffs. For an overview of these considerations, see our blog post Furloughs and More: Employer Options During the COVID-19 Pandemic.

There have also been changes to unemployment benefit bills due to the CARES Act and the Protecting Nonprofits from Catastrophic Cash Flow Strains Act (signed into law August 3). For more information, see the Employment Security Department's July 17 letter to employers explaining upcoming changes.

Also see the local government examples below:

  • Auburn Furlough Leave Program FAQ – Auburn (2020) (April 17) – Answers frequently asked questions about the city's furlough leave program in response to COVID-19. City's program is an alternative to traditional furloughs and allows employees to essentially "buy" 46 hours of furlough leave to be used with supervisor's approval by the end of the year, in order to spread out the leave and minimize the impact on any individual paycheck.
  • Issaquah Ordinance No. 2905 (April 20) – Authorizes the mayor, city administrator, or designee to implement unpaid furloughs for non-represented positions and temporary salary reductions for high-level administrators from May 1 to December 31, 2020.
  • Mercer Island COVID-19 Workforce Reductions Memorandum (April 29) – Outlines layoffs and other actions to address revenue shortfall.

Last Modified: January 14, 2021