Colin McNickle At Large

The road ahead: After coronavirus

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There now can be no doubt that the coronavirus pandemic has become an extended, two-front war – medical and economic. As the number of reported and projected infections grow, so has the economic damage.

And given that Pennsylvania’s shutdown will continue until at least April 30 (by order of Gov. Tom Wolf), that latter damage – even with federal and state “rescue” dollars – will create critical challenges for not just most businesses but government at every level and jurisdiction.

We don’t mean to be alarmists; after all, sound public policy prescriptions to counter such an unprecedented situation demand a thoughtful and measured response rooted not in emotion or political expediency but in fundamental economics.

But as Jake Haulk, president-emeritus of the Allegheny Institute, summarizes what’s to come, the scope of the challenge is enormous.

The state has already and will continue to lose large amounts of revenue from all manner of taxation, be it sales, income, corporate and gaming taxes, just to name a few.

While it cannot be precisely calculated, suffice to say the drop will be huge, the Ph.D. economist warns.

“Will the feds bail out the shortfall? Nationwide, the combined state losses will be gigantic; look at the complete disaster in New York and New Jersey,” he says.

“Massive layoffs will be a necessity if the plague does not play out soon,” he says. Waves of layoffs already have begun in some parts of the country.

At the state level, how will Pennsylvania respond?

“Will (it) borrow to fill the shortfall or begin prioritizing places to cut?” Haulk asks, further noting how pension funding requirements for public employees “move front and center again.”

And what about in Allegheny County?

“We will see Regional Asset District (RAD) tax revenues plunge, hotel taxes will collapse as will the county’s alcohol tax,” Haulk says. “Gaming dollars for tax relief and to the City of Pittsburgh could be in danger.

“Thus, money for retirement of sports stadiums debt and convention center debt could be in jeopardy.”

Then there’s the questionable rejiggered terminal project at Pittsburgh International Airport, with a $1.1 billion price tag that was sure to grow even before the pandemic struck.

“With all the immediate needs to be met, it would seem any airport rebuild will have to be sidelined, maybe permanently,” the think tank economist cautions.

As if these are not enough serious questions and challenges, there’s another “big question” that awaits an answer:

“How will property tax collections be affected?” ponders Haulk. “If there is a sizable decline, municipalities and school districts will be in a terrible fix.”

The City of Pittsburgh said Tuesday it will attempt to secure lines of credit to offset millions of dollars in lost tax revenue streams.

These are incredibly serious matters to comprehend in incredibly sobering times. And, as previously mentioned, it remains too early to ascribe hard numbers to such revenue losses and their effects.

But as public policy makers weigh what measures should be considered, they must remain cognizant of the fact that those proverbial cures worse than the disease will only retard recovery, not accelerate it.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

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Colin McNickle
Colin McNickle

Colin received his B.G.S. from Ohio University. The 40-year journalism veteran joined the Institute in October 2016. That followed a 22-year career with the Pittsburgh Tribune-Review, 18 as director of editorial pages for Trib Total Media. Prior that, Colin had a long and varied career in media — from radio, newspapers and magazines, to United Press International and The Associated Press.

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