Strengthening Local Fiscal Health

Strengthening Local Fiscal Health
Last Updated August 23, 2021

Local governments are essential to the nation’s prosperity—central to the quality of life, jobs, and long-term prospects of most Americans. Many cities and counties continue to face serious challenges, such as costly infrastructure needs and growing long-term liabilities.

Both state and local policymakers have a critical stake in ensuring that localities remain fiscally sound. By working together, state and local decision-makers can strengthen cities’ and counties’ long-term fiscal and economic well-being and generate opportunities for economic growth. 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 to improve localities’ fiscal well-being. 

Two young boys facing back fly kites in a eroded neighborhood with construction signs, a truck, and unfinished roads
Two young boys facing back fly kites in a eroded neighborhood with construction signs, a truck, and unfinished roads
Opinion

Tax Limits Can Erode Local Fiscal Resiliency

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Opinion

Local governments play a critical role in daily American life, providing essential services such as responding to emergencies, maintaining and improving infrastructure, and supporting the economy. These important functions, and their costs, have been underscored during the pandemic.

Deadwood, South Dakota
Deadwood, South Dakota
Issue Brief

Local Tax Limitations Can Hamper Fiscal Stability

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Issue Brief

Tax limitations can create daunting challenges for cities and counties as they try to balance their budgets while maintaining the level of services their residents expect in the long term. And evaluating if and how states’ tax limitations impede the ability of local officials to manage their finances and provide services effectively is a key first step. Policymakers can then take the appropriate measures to ensure that local governments have the necessary tools to weather unexpected budget crises and strengthen their fiscal health into the future.

School buses line and parked at DPS- Hilltop Terminal in Denver, Colorado on Tuesday. November 10, 2020.
School buses line and parked at DPS- Hilltop Terminal in Denver, Colorado on Tuesday. November 10, 2020.
Article

How States Can Use Federal Stimulus Money Effectively

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Article

Just months ago, many states feared their budgets might face shortfalls for years because of the COVID-19 pandemic. But now most could have temporary surpluses after President Joe Biden signed the American Rescue Plan Act (ARPA) into law in March.

100 us dollar bill
100 us dollar bill
Article

States Use Cost-Benefit Analysis to Evaluate Tax Incentives

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Article

Policymakers expect tax incentive evaluations to provide detailed information about how the programs they have enacted affect their states and their residents. Cost-benefit analyses can help evaluators estimate an incentive’s fiscal and economic impact while also considering the degree to which business decisions may have been influenced by the available incentives.

Our Work

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

State Strategies to Detect Local Fiscal Distress

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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

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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.