State and Local Governments’ Fiscal Outlook: 2014 Update

Source: U.S. Government Accountability Office (GAO), GAO-15-224SP, December 17, 2014

From the summary:
Fiscal sustainability presents a national challenge shared by all levels of government. Since 2007, GAO has published simulations of long-term fiscal trends in the state and local government sector. These simulations have consistently shown that state and local governments face long-term fiscal pressures. Absent any policy changes, the sector will face an increasing gap between expenditures and receipts in future years. Closing this gap will require state and local governments to make policy changes to assure that receipts are at least equal to expenditures.

GAO’s model uses the Bureau of Economic Analysis’s National Income and Product Accounts as the primary data source and presents the results in the aggregate for the state and local sector as a whole. GAO’s model shows the level of receipts and expenditures for the sector until 2060 based on current and historical spending and revenue patterns. The model assumes that the current set of policies in place across state and local government remains constant to show a simulated long-term outlook.