As budget deadlines loom, local governments are grappling with how to allocate funds to respond to the coronavirus and catalyze economic recovery. While the need for public dollars in the next fiscal year will be widespread, the source and volume of support is uncertain. Federal relief funds are draining at a rapid pace. States are implementing austerity measures. Mayors are sounding the alarm for more resources. Our cities will be strapped for cash and the impacts on residents could be devastating.

In the face of these constraints, where and how our public leaders direct resources will have lasting consequences. Some economists attribute a historically slow economic recovery following the 2008 recession to overly restrained public spending, particularly at the state and local levels. But public spending tells only part of an economy's recovery story. In the past decade, private investment in America's cities has been vast but highly concentrated. Venture capital spending, for example, has increased from $26 billion in 2010 to over $107 billion in 2019, but over 85% of that growth has gone to just five metropolitan areas. Today, only 9% of venture capital investments go to companies with at least one female founder. Just 1% of venture capital-backed founders are black.

Our last recession and recovery proved that the benefits of economic growth are not equally distributed in America. Over a decade after the housing market crash, the nation's most distressed ZIP codes have lost 1.4 million jobs while the most prosperous ZIP codes have added 3.6 million jobs. Within America's cities, economic disparities are startling. Just blocks from bustling commercial corridors, many neighborhoods struggle with high poverty rates, poor health outcomes and disinvestment that makes it nearly impossible to start a business or find a high-quality job. This was the reality for 52 million Americans who, before the pandemic, had been living in communities with economic distress.

The coronavirus will continue to have a disproportionate impact on those who had been living on a thin foundation of financial stability. A survey last year found that only 40% of Americans could pay a $1,000 expense without taking on new debt. With more than 33 million people already having filed for unemployment insurance since the start of the pandemic, the fault lines of inequality will deepen, a divide we're already seeing run along racial lines.

As cities submit next years' budget proposals, they must launch an inclusive economic recovery, one that both addresses the inequalities present long before the pandemic and those exacerbated because of it. But governments do not have to go it alone. In fact, they shouldn't. Our economic future will rest on the ability of public and private investment to work together toward a shared vision of renewal. It will require investors to realize the economic potential of historically disinvested places and actualize this potential by replacing their short-term mindset with a commitment to generating returns in the long term. It will require public officials to recognize their unique role in ensuring new investment goes where it is needed most.

Before COVID-19, those in the impact investing world were immersed in a conversation about how private investment could spread economic opportunity in America's most underserved neighborhoods. This conversation was sparked by the launch of Opportunity Zones, a component of the 2017 tax reform bill that provides favorable tax treatment to those who reinvest their capital gains in low-income communities. In an effort to maximize the positive potential of this legislation, and to mitigate potential harm in these communities, countless people across sectors were mobilized to action.

Nonprofits developed tools to help investors direct capital to meet community needs. Universities published reports suggesting new models for generating community wealth. Companies created databases to measure local economic and social outcomes. Local governments developed presentations spotlighting their city's potential investment projects. Though these tools were sparked by Opportunity Zones, they can be used to advance public-private partnerships that increase economic mobility in underserved areas.

We've begun to see these partnerships bear fruit. In Kannapolis, North Carolina – a city devastated by the closing of its textile mill in 2004 – city, state and private developers worked together to revitalize downtown and bring new jobs to the area. In northeast Baltimore, a dilapidated shopping center with historic and commercial importance began transforming through a public-private partnership and years of community engagement. In Erie, Pennsylvania, a cross-sector economic development collaborative worked with private firms to track and measure the impacts of Opportunity Zone investments.

As we rebuild our local economies after COVID-19, the tools, knowledge and resources employed to make these public-private partnerships successful will be as relevant as ever. As the 2008 recovery proved, there is no guarantee that public or private investment will spread economic opportunity to places that need it most. But with intentionality, collaboration and transparency, public and private dollars can work together, far exceeding the power of strained government budgets.

There is no doubt that we will need massive government intervention to recover in the months and years ahead. Our public dollars are uniquely suited to provide large-scale emergency relief to those who need it. But as our local public officials formulate their long-term priorities and debate strategies to restart city economies, they must not exclude the communities largely forgotten during the last decade. These communities have unique assets, resilient workers and economic potential waiting to be unlocked. With deliberate planning and collaboration, public and private dollars can turn this potential into reality.