The governments of the really big cities of the US were in fiscal trouble BEFORE the COVID crisis. The Democratic Party has long governed these places and throughout that period they made promises with regard to disbursements that far exceeded expected revenues. As an example, pensions for city employees were inflated to incredible levels. The NY City Police Department has 40,000 employees, etc., etc. With the rise in these obligations came massive growth in state and local taxes in these big city localities.
The near elimination of deductions for State and Local Taxes (SALT) in the Federal Income tax after 2017 was a mighty blow to rich people resident in the big cities. The loss of the SALT deduction in federal income taxes has greatly increased the departure of the moneyed class from these places. Where are they going? Since the US is a federal republic in which each state has its own law code and tax system, the rich can flee to states where there are much lower taxes. Texas, and Florida are examples.
As these people and their money depart, the tax base shrinks proportionately but the expenditures have not shrunk thus far. The governments of these cities have not been able to face the needed abandonment of the welfare and big government models that they have built.
And now, pilgrims we have the phenomenon of COVID-19 and the devastation wrought by government forced closures upon the many thousands of small businesses that lined the streets of these cities ante-COVID.
People are being trained by "staying home" to understand that they really do not need a lot of these businesses. They are also being made to understand that working from home is not a bad way to live. Their employers are being taught that perhaps they do not need to carry the burden of massive rented space in towering office buildings at the city's center.
Will the restaurants, small grocery stores and customer service businesses of all kinds survive the financial losses they have endured and bring themselves to re-open? That is an open question. Will they prefer to take "early retirement," husband their remaining resources and move away to less devastatingly expensive pastures?
Loss of revenue is affecting everything within the economic "well" of the big cities. A friend of mine lives near the New Jersey shore just south of New York City. There is a small fishing port near him. He told me that because the restaurants are closed in NY City the fishermen have lost their major market and are selling into the local market at devastatingly low prices. Example – North Atlantic lobster fresh off the boat at the pier for $5.50 / pound. In the long run these prices are a disaster for the fishermen.
The handwriting on the wall is clear for De Blasio, Andrew Cuomo and Gavin Newsom among others. They surely will not have the tax revenue needed to run these cities at the present scale of government. That is why you see careful restraint on the part of these people when speaking of Trump. They want federal subsidies on a massive scale. They want them today, tomorrow and forever.
Without that support these cities will inevitably shrink. pl