Route Fifty

Heading Into 2021, State and Local Budget Gloom Lingers

At the local level, it could be well into 2021 or later before the damage the virus has caused to budgets becomes clear. There are also questions about the lasting marks for some local economies—for instance, if downtown offices will lose tenants if remote work continues or if businesses like restaurants and venues, hobbled by the pandemic, will be able to rebound. 

“We don’t even know how bad things are at the local level,” said Matt Fabian, a partner at Municipal Market Analytics. He noted that local government audits to put this year’s financial strain into perspective generally have not been released yet.

But there are signs that localities are under financial pressure. Fabian said he expects heavy activity into 2021 with local deficit financing and transactions known as “scoop and toss”—an often frowned upon refinancing practice. Near-term deficit borrowing could mean some localities end up extending their fiscal pain out two or three years.

https://www.route-fifty.com/finance/2020/12/state-local-government-budgets-coronavirus/171073/