Economic Downturns: Protecting State and Local Budget Priorities in Challenging Times

States have been hit unevenly, but all face long-term uncertainty

Economic Downturns: Protecting State and Local Budgets
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State governments play a fundamental role in the lives of residents by collecting taxes and using that revenue to pay for schools, transportation, public safety, and other policy priorities. In particularly challenging times, when revenue is volatile and priorities may need to be reassessed, it is important that lawmakers manage budgets effectively to mitigate fiscal stress. Although leaders cannot control many external factors that influence state and local fiscal health—such as global economic conditions, federal policies, or demographic changes—they do decide how to react to those events. And these actions can help determine whether a state or locality remains fiscally sound.

In this series of publications, experts at Pew explore the limits that states face when preparing for fiscal stress and provides key considerations for leaders making budgetary decisions. The series also details fiscal and economic policy recommendations for managing effectively during unforeseen events (such as the COVID-19 pandemic) and preparing for future uncertainty. 

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States' Tax Revenue Recovery Improves

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Article

Tax revenue in a majority of states had rallied to pre-pandemic levels by the end of the first quarter of 2021, but total collections nationwide and those in 20 states had yet to fully recover, after adjusting for inflation. Preliminary estimates showed that tax revenue continued to grow widely in ensuing months, reflecting states’ brightening fiscal outlooks as the recession’s impacts waned—though threats from COVID-19 persisted.

Colorado State Capitol
Colorado State Capitol
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Proven Practices Can Help States Better Manage Their Budgets

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In Colorado, as in many states, the abrupt onset of the COVID-19 pandemic in early 2020 and the ensuing recession presented significant, urgent budgetary challenges.

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Library closed sign
Article

State and Local Government Job Growth Lags

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Article

More than a year after the sharpest monthly decline in state and local government employment on record, the return of jobs in much of the public workforce is lagging as the economy recovers from the pandemic-induced recession.

100 us dollar bill
100 us dollar bill
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States Use Cost-Benefit Analysis to Evaluate Tax Incentives

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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

fiscal 50
Data Visualization

Fiscal 50

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Data Visualization

Fiscal 50: State Trends and Analysis, an interactive resource from The Pew Charitable Trusts, allows you to sort and analyze data on key fiscal, economic, and demographic trends in the 50 states and understand their impact on states’ fiscal health.

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