State and Local Spending to Rise Faster than Revenues.

Position:News & Numbers

State and local governments will have an increasingly tough time covering their bills over the next 50 years, the Government Accountability Office (GAO) predicts in a recent study. Its model shows increases for both revenue and spending, but spending will rise faster, and revenues may not be sufficient to sustain the amount of government service currently provided. Healthcare costs will largely drive the spending increases, especially Medicaid spending and spending on health benefits, public employees, and retirees.

Federal policy changes could also affect the fiscal outlook for state and local governments. "For example, the effects of the recently enacted Tax Cuts and Jobs Act will likely depend on how states incorporate the Act into their state income tax rules," the paper notes. "In addition, other factors, such as economic growth and rates of return on...

To continue reading