Most Recent State and Local Fiscal Outlook Report

This April 2012 update to GAO’s model shows that the state and local government sector continues to face near- and long-term fiscal challenges that grow over time. The fiscal situation of the state and local government sector has improved in the past year as the sector’s tax receipts have slowly increased in conjunction with the economic recovery. Nonetheless, total tax receipts have only recently returned to the prerecession levels of 2007 and the sector still faces a gap between revenue and spending. As we have reported in previous models, and as shown in the figure below, the sector faces long-term fiscal challenges that grow over time.

GAO’s simulations show that the fiscal position of the sector will steadily decline through 2060 absent any policy changes. Because most state and local governments are required to balance their operating budgets, the declining fiscal conditions shown in GAO’s simulations suggest the fiscal pressures the sector faces and foreshadow the extent to which these governments will need to make substantial policy changes to avoid growing fiscal imbalances. That is, absent any intervention or policy changes, state and local governments would face an increasing gap between receipts and expenditures in the coming years.

To read our most recent report, click on the links below :

State and Local Governments' Fiscal Outlook
April 2012 Update
GAO-12-523SP, April 5, 2012

State and local governments’ fiscal outlook April 2012 charts (pdf)