U.S. State and Local Shortfall Update: December 2020

Source: Dan White, Emily Mandel, and Colin Seitz, Moody’s, December 17, 2020
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Will the money come from taxpayers over time funding federal debt or more immediately in tax hikes and austerity measures?

  • Without additional federal assistance we project states and local governments will be forced to raise taxes or cut spending by between $171 billion and $301 billion over the next year and a half.
  • Though nearly every state will see significant fiscal stress this year and next, the consequences of these shortfalls will vary even more than usual from one state to another.
  • How federal policymakers choose to react to these shortfalls will have significant implications for the economic outlook.