Strengthening Local Fiscal Health

Strengthening Local Fiscal Health

Local governments are essential to the nation’s prosperity—central to the quality of life, jobs, and long-term prospects of most Americans. However, research from Pew finds that even as many cities and towns struggle to recover from the Great Recession, new challenges are emerging. Local governments face costly infrastructure needs, reduced state and federal aid, and growing long-term liabilities.

Both state and local policymakers have a critical stake in ensuring that localities remain fiscally sound. Strong local economies, in turn, generate revenue for governments at all levels.

By working together, state and local decision-makers can strengthen cities’ long-term fiscal and economic well-being and generate opportunities for economic development. To inform these critical conversations, Pew conducts research on the fiscal landscape of cities, best practices for proactively assessing local governments’ financial condition, and promising policy options that can improve localities’ fiscal outcomes. 

State Strategies to Detect Local Fiscal Distress
State Strategies to Detect Local Fiscal Distress
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State Strategies to Detect Local Fiscal Distress

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As local governments across the country struggle to resolve budgetary challenges, some states are exploring ways to help their counties, cities, towns, and villages avoid defaulting on loans or filing for bankruptcy.

Chicago
Chicago
Issue Brief

The Fiscal Landscape of Large U.S. Cities

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Issue Brief

Although the U.S. economy made great strides in 2014, showing the strongest growth since the Great Recession, cities are recovering unevenly. An analysis of the fiscal health of America’s 30 major cities by The Pew Charitable Trusts found that most saw their revenue and spending rise that year.  In 2014, some began to surpass peaks set before the Great Recession, which ran from late 2007 through mid-2009. But many cities have not made up lost revenue.  Indeed, revenue has continued to drop in some, and they have responded by cutting spending. 

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The State Role in Local Government Financial Distress

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iStock Note: In April 2016, this report was updated to include revised information about Louisiana’s intervention practices and to improve the clarity of citations. What role, if any, should states play in helping cities, towns, and counties recover from serious financial trouble, what officials generically call “intervention?” The Pew Charitable Trusts conducted a study examining the range of state involvement in local government finances that drew on current literature, statutes, a survey of state officials, and interviews with government finance analysts. "The State Role in Local Government Financial Distress" examines various intervention practices, identifies challenges, and elaborates on three key policy guidelines. The analysis and state profiles can help inform state decision making about whether, when, and how to assist municipalities facing fiscal stress, the likely outcomes of various approaches, and the implications for cities, counties, states, and taxpayers.

Reflection of skyscrapers on windows
Reflection of skyscrapers on windows
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After Municipal Bankruptcy

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The recent high-profile bankruptcy filings by Detroit and a handful of other local governments around the country have renewed state and local policymaker interest in strategies to prevent future financial crises as well as in the choices states face about whether to intervene to help distressed cities and counties.

Additional Resources

City
City
Issue Brief

Fiscal Health of Large U.S. Cities Varied Long After Great Recession’s End

Impact of economic downturn persisted for many local governments

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This brief focuses on the cities that anchor the nation’s largest metropolitan areas. The fiscal health of the cities varied considerably in fiscal 2013, depending on their circumstances. Still, a number of trends emerge concerning the cities’ revenue, spending, and reserves.

Construction
Construction
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New Money Issuances Are Low in 30 U.S. Cities

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An analysis by The Pew Charitable Trusts finds that borrowing in 30 large U.S. cities since the end of the Great Recession, which ran from late 2007 through mid-2009, was notably different from past recoveries.