The Risks of Local Government Fiscal Emergencies
Local governments face a shifting fiscal environment due to
economic uncertainty, increased costs, higher interest rates and a
federal COVID funding cliff. These factors all heighten the risk of
local governments falling into severe fiscal distress.
Addressing local fiscal distress ultimately requires elected and
appointed officials making smart and often tough decisions about
the operations, finances and long-term economic strategy of a
community. A proactive, comprehensive process formalized in state
law gives officials the best opportunity to address signs of fiscal
distress before they become so severe that formal state
intervention, with diminishment of the powers of local leaders, is
required.
How A&M Can Help
Alvarez & Marsal has extensive experience helping state and local governments create plans to achieve long-term financial sustainability, including working with local governments that have experienced full financial emergencies. A&M can bring that experience, along with the research described herein, to help states:
- Evaluate and strengthen existing laws and processes around local fiscal distress monitoring and intervention
- Review and improve fiscal health indicators to be more effective in signaling fiscal distress before it's occurred
- Stand up technical tools and assistance for local governments facing fiscal distress before the situation worsens
- Build consent agreements between state and localities that
local leaders can implement to resolve fiscal distress
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
