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. 

Getty
Getty
Article

Virginia System Helps Prevent Fiscal Emergencies

Quick View
Article

In 2017, Virginia’s independent state auditor designated Bristol—a 17,000-person city in the far southwest corner of the state—as “fiscally distressed,” meaning that its ability to provide basic public services was at risk. In addition to facing cuts to essential services, localities with deep and persistent fiscal problems may require costly state assistance or even long and painful bankruptcy processes.

Getty Images
Getty Images
Article

State Websites Offer Fiscal Data on Local Governments

Quick View
Article

Most states require local governments to submit financial data—typically on an annual basis—and at least 38 now present that local fiscal data on easily accessible online platforms to give the public easy access to important information on their cities, towns, and counties.

Getty
Getty
Article

Municipal Bankruptcies Over the Past 20 Years

Quick View
Article

On May 19, the city of Fairfield, Alabama, filed for bankruptcy, becoming the first U.S. city or county to file for Chapter 9 in close to a year. The 10,500-person town is seeking protection from creditors while it comes up with a plan to adjust its debt.

Aerial city view
Aerial city view
Fact Sheet

States Can Strengthen Localities' Fiscal Health

Quick View
Fact Sheet

As the coronavirus pandemic persists, rising costs and revenue shortfalls will challenge local officials’ ability to balance budgets while meeting residents’ needs. States can play a vital role in stabilizing the fiscal health of cities and counties by helping their officials identify growing problems and sound solutions. Small localities in particular may lack the capacity and resources to withstand and respond to the extraordinary budgetary challenges ahead.

Our Work

States of Innovation

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

State Strategies to Detect Local Fiscal Distress

Quick View
Report

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.

Report

The State Role in Local Government Financial Distress

Quick View
Report

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.