I don't think cities can run a deficit. They would have to pass tax increases to fund that, which would be unpopular.

> They would have to pass tax increases to fund that

Or reallocate money previously allocated to libraries, social workers, community colleges, public transportation, etc. etc.

You’re right for cities and counties (and the state itself) in California. None are allowed to operate at a deficit, hence the creation of the state “rainy day fund” by Gov. Brown after the 2008 recession which has worked very well in tempering the current fiscal issues in the Covid pandemic, at least at the state level.

Any reason they wouldn't move the budget away from other services?

Hello from Chicago

In Alberta (and perhaps elsewhere in Canada), cities are legally not allowed to run deficits.

New York City is running a budget deficit of $5,250,000,000.