Proposition 13: Now THAT was a financial crisis. The landmark 1978 anti-tax measure had the immediate effect of precipitous losses of local property taxes. Even with mitigating revenue shifts from the state, employment and service level cuts to city, county, special district, and school programs were severe. And yet, the financial impacts were reasonably predictable, certainly by comparison to what we are now facing.

I began my career in municipal government in 1983, stepping into the economic lull of the early 1980s and the wake of Proposition 13. We were managing in a time of financial distress and uncertainty: a steep on-going loss of revenue and vexing cuts to local funding by the state legislature during budget times.

Since then, major public health and economic crises came and went. The most profound negative impacts on city, county and special district finances came primarily from the combination of cost and revenue shifts by the state legislature and voter approved revenue raising limitations driven by anti-tax groups. In its flailing efforts to grapple with its recurring budget problems, the state legislature shifted revenues from local governments and offloaded costs to them. Again, it was property taxes and those most dependent on them that took the brunt with Educational Revenue Augmentation Fund (ERAF) shifts beginning in 1992. Still, those hits, while severe for most, were more quantifiable and predictable than what we are dealing with today.

Along the way, local governments secured voter approved constitutional amendments preventing state takeaways including Proposition 1A (2004) and Proposition 22 (2010). These have brought cities, counties and special districts protection new financial stability and predictability. Property taxes, once the most manipulated and at-risk local revenue source are today a relative bedrock of local funding, delayed in economic response, less volatile, and more predicable than other revenue sources. And today, all cities and counties receive substantially greater shares of property tax collections thanks to the VLF (vehicle license fee) for Property Tax swap of 2004.

And then COVID-19 arrived. The financial turmoil that local governments face today stands out without precedent in the last century. Nearly every city, every county and many special districts are dipping into reserves while they cut positions, contracts and services in the face of substantial, immediate revenue losses. The revenue victims here are directly tied to the specific areas of the economy most impacted by the pandemic and our response to it: taxable sales (other than food/drug and online), transient occupancy (hotel) taxes, and some business taxes. Little or none of the financial impacts to local governments are the result of actions of the state legislature. Where higher property tax dependent agencies (e.g., full service cities, bedroom communities, counties, non-enterprise special districts, etc.) were most severely impacted in prior crises, this one is hitting those with high tourism and entertainment especially hard and has accelerated the trend toward online sales and away from traditional “brick and mortar” retail.

This was not what anyone predicted, but it is in the realm of what we have been preparing for – or should have been. Now is where your attention to financial health and resiliency, to financial policies, shows rewards.

More than its severity, the vexing thing about this crisis is its mystery. Once, enacted, prior financial reckonings related to state-enacted revenue shifts were relatively quantifiable. The economic impacts of the pandemic are novel and difficult (nearly impossible) to predict. What will be the course of the virus? How will we be able to adapt safely? How will this complicate enduring fires, hurricanes and other disasters? When will better treatments, testing, tracing, and vaccines be validated and available such that we might be able to truly re-open safely? And all of these questions are substantially affected by our actions as a society, by the success of our medical and science industry, and by the leadership and policies of our state and – most importantly – federal government. Even as I type this, Congress and the White House wrangle to reach a long-awaited deal that should include critical funding to local government.

The prospects for a strong economic recovery, when we get there, are good. Most of the worst impacted areas of the economy: tourism, entertainment, dining, transportation, are likely to bounce back with vigor once we are past the pandemic. More uncertain is when we will really be “past the pandemic” and into that recovery. As we’ve seen, the virus does not indulge denial. It is not swayed by politicly motivated pronouncements or fantasies or alternative realities.

So, here’s the hope: we will certainly overcome this virus. The most severe economic and financial impacts will abate. There will be longer lasting effects, such as changes in how we work, how we purchase things, and these will have effects on our revenues – generally manageable – perhaps with some reforms to improve equity, efficiency and effectiveness in the system. And many of the changes coming out of this are overdue for better governing, a better society: reforms to public safety and to address systemic – not just individual behavioral – racism. These issues fall squarely in the wheelhouse of our responsibilities as public agencies and employees.

This crisis, different and more difficult than even Proposition 13 of 1978 or any other in the last century, provides us with a great opportunity for betterment.

“Every positive change–every jump to a higher level of energy and awareness–involves a rite of passage. Each time to ascend to a higher rung on the ladder of personal evolution, we must go through a period of discomfort, of initiation. I have never found an exception.” ~ Dan Millman