State and local governments are a major piece of the U.S. economy, accounting for about 13 percent of all employment. They typically have balanced budget requirements, which mean that shortfalls in revenues triggered by the pandemic must be offset with spending cuts or tax increases—actions which hurt taxpayers and impede the economic recovery. The December 2020 COVID relief package approved by Congress provides roughly $125 billion to state and local governments for education, health, public transit, and highways, but doesn’t include any general aid to states or localities to cover revenue losses. This issue of aid to state and local governments is likely to linger, as these governments continue to face higher demands on spending as a result of the pandemic, and revenue losses in some states are likely to exceed any federal aid received.
The Municipal Finance Conference’s annual winter webinar discussed several key questions, including: How has the pandemic affected state and local revenues, and how have these governments responded? How does the effect of the 2020 recession on state and local revenues compare to past recessions? What is the outlook for these revenues in the coming years? How have governments and the bond market reacted?
The event was hosted on Zoom, and attendees were invited to submit questions for the panelists using the Q&A function. Join the conversation on Twitter with #MuniFinance.
The annual Municipal Finance Conference is sponsored by the Hutchins Center on Fiscal and Monetary Policy at Brookings, the Rosenberg Institute of Global Finance at Brandeis International Business School, the University of Chicago Harris School of Public Policy, and Olin Business School at Washington University in St. Louis. The 2021 conference will be held virtually on July 12-14, 2021. Visit https://www.brookings.edu/municipal-finance-conference/ for more information in the coming months.
Treasurer - State of Michigan
Partner - Head of Investment Banking (Infrastructure and Public Finance) - Siebert Williams Shank & Co. LLC
Director of Finance - New York Metropolitan Transportation Authority
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