Local Government Funding Concerns

Issue brief
Local Government State Budgets Taxes & Fees 

In good economic times and bad, local governments are often required to operate under difficult fiscal circumstances. When the economy grows, local revenues tied to the economy go up, such as sales tax revenue or real estate excise taxes. However, one of the primary sources of local revenue, property taxes, is capped in how much it can grow. Meanwhile, even in a strong economy, inflation, contracting requirements, and competition for labor drive up costs for capital projects and government services. Alternatively, in a weak economy, local sales tax revenues may go down while the need for spending on social services goes up with increased caseloads.