Every few years, local government leaders face new headwinds. As uncertainty swirls around us regarding the economy, our employees look to us for direction and stability. They read the same headlines as we do—about state budget deficits, reduced consumer purchasing, loss of grant funds, cyber attacks that cost millions. They wonder what these uncertainties will mean for them and for their families. At the same time, our elected officials want assurance from us that a path will be created. Our communities expect us to have a plan and that we communicate and execute that plan with precision so they can continue to rely on the services that matter so much to them.

Local government leaders must stay the course, even in the most extreme of circumstances, whether natural disasters or recessions. Over the past 25 years, local governments have gone through several downturns. These periods were tough, but they did not last. Around 2000, the “dot com” bubble burst due to over investment and speculation, and the economy entered a mild recession in 2001. A global financial crisis hit in 2007–2009 with widespread mortgage-backed securities failures and home foreclosures. U.S. unemployment peaked at 10% and banks were bailed out. The Covid pandemic created another recession in 2020, with lockdowns, supply chain disruptions, and massive drops in consumer activity. At that time, unemployment spiked to 15%.

Recessionary periods are cyclical, and cities and counties must be prepared. It is one reason that local governments need to maintain strong reserves and not spend every dollar that comes in. Hoping for the best yet planning for potential risks and downturns is just sound management. There are some important steps we can take in leading through uncertainties.

1. Be Positive and Provide Hope

• Leaders must be realistic, but not alarmist.

• Communicate that “this too shall pass.” We’ve faced difficult periods before and we will again, but we have a plan and a path forward.

• Remind staff of your shared purpose and core values. This builds unity and resilience.

2. Create a Plan Even When the Path Is Unclear

• Show your team that you’re not idle — you’re preparing.

• Develop flexible strategies that can adapt as more information becomes available (state budget deficits, sales tax lags, tourism uncertainty).

• Check your reserve levels and double-down on retaining or growing them.

• Re-analyze your financial forecast with different scenarios, which include “what if” scenarios for your major revenue sources.

• Encourage innovation and resourcefulness. Engage your team and elected officials in identifying aspects of the path forward.

3. Communicate Early, Often, and Honestly

• Be upfront about what you know and what you don’t. Don’t sugarcoat, and don’t hide the ball.

• Let employees know they’re not alone in their concerns.

• Keep them looped in on fiscal realities, operational planning, and any expected changes.

• Avoid hand-wringing. Instead, model the steadiness you want reflected at every level.

4. Equip Elected Officials with the Right Tools

• Provide concise, consistent messaging and FAQs they can use when speaking with the public.

• Help them communicate your community’s stability and preparedness while being transparent about challenges.

5. Inform and Reassure the Community

• Use every platform available—social media, newsletters, press releases, video messages, website updates—to communicate with residents.

• When people feel informed, they feel less fearful.

• Remind them that local government is watching closely and acting thoughtfully.

And Finally, Lead with Courage and Compassion

As leaders, whether in uncertain times or when things are on the upswing, we are charged with providing vision and steadiness. We are entrusted with the well-being of our staff, our elected officials, and of our communities.

There are challenges—and there always will be—but we can show we have the strength, creativity, and resilience to support and lead our team. They rely on us for that. We show up, listen, and offer hope and a plan. These actions will help our team members stay focused on the good work they set out to do each day.

JAN PERKINS, ICMA-CM, is a former city manager of two California cities and currently vice president of Raftelis.

TAMARA LETOURNEAU, ICMA-CM, is city manager of Laguna Niguel, California, USA.