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Abstract: 

The COVID-19 pandemic and the increase in work-from-home (WFH) arrangements have had substantial and lasting effects on local government revenues during and after the pandemic. This paper examines the impacts of the pandemic and particularly of WFH arrangements on local property taxes, general sales taxes, state-shared local revenues, hotel taxes, and revenues from transit and parking use. The authors believe that there is a potential for substantial reductions in commercial and industrial property values and personal spending at workplaces as more work is performed at home. The declines in property values and personal spending could lead to significant losses in local property and general sales tax revenues, especially in central cities. Other local tax revenues and transit fees are also affected by the pandemic. The results inform policymakers and the public about the likely revenue effects from changes in work arrangements, commuting patterns, and residential location.

Keywords: Illinois local government finances, COVID-19 pandemic, work from home (WFH) and taxes, WFH and property values, state-shared local revenues

Affiliations:  1: University of Illinois Springfield; 2: University of Illinois Springfield; 3: University of Illinois Chicago; 4: University of Illinois Chicago.