At the outset of the COVID-19 pandemic, a consortium of municipalities across Bucks County, Pennsylvania sought to understand the potential fiscal impact on local tax revenues. Facing deep uncertainty about the pace and shape of economic recovery, municipal leaders needed a rigorous, scenario-based analysis to support budget deliberations and prepare for potential shortfalls in key revenue streams.
ESI gathered historic budget data and monthly tax collection data from 2018 through 2020. Starting from these trends, ESI developed scenario modeling tools to project future tax revenues under two distinct recovery trajectories: a “swoosh-shaped” recovery reflecting a gradual return to pre-pandemic baselines, and a “W-shaped” recovery reflecting a more volatile rebound with secondary declines. ESI then constructed a risk index to identify which consortium municipalities faced the greatest exposure to revenue shortfalls, enabling a targeted, community-specific analysis.
The analysis revealed significant projected declines in major revenue sources, including earned income tax, real estate tax, realty transfer tax, and business privilege tax, under both recovery scenarios. Municipalities with higher risk scores were advised to adopt conservative revenue estimates in their budgets. The findings directly informed municipal budget preparations across the consortium and were presented in workshops for municipal financial officers.
ESI produced a comprehensive financial projections report and delivered presentations to the Bucks County Consortium and workshops for municipal financial officers. This information helped municipalities across the County to navigate the challenging budget climate of the pandemic period.