State and Local Governments' Fiscal Outlook: April 2013 Update

GAO’s State and Local Fiscal Simulations

Fiscal sustainability presents a national challenge shared by all levels of government. Since 2007, GAO has published long-term fiscal simulations for the state and local government sector. These simulations have consistently shown that, like the federal government, the state and local sector faces persistent and long-term fiscal pressures and, absent any policy changes, would face an increasing gap between receipts and expenditures in future years.

Using the Bureau of Economic Analysis's (BEA) National Income and Product Accounts (NIPA) as the primary data source, GAO shows the level of receipts and expenditures for the sector until 2060 based on current and historical spending and revenue patterns. The current set of policies in place across state and local government remains constant to show their impact on future fiscal outcomes. GAO simulates the long-term fiscal outlook for the state and local sector and incorporates the Congressional Budget Office's (CBO) economic projections. These projections capture near-term cyclical swings in the economy. Because GAO covers the sector in the aggregate, the fiscal outcomes for individual states and localities cannot be captured. This product is part of a body of work on the nation's long-term fiscal challenges. Related products can be found at www.gao.gov/special.pubs/longterm/.

The state and local government sector continues to face near-term and long-term fiscal challenges which add to the nation's overall fiscal challenges. The state and local sector faces a gap between revenue and spending and long-term fiscal challenges that grow over time. The fiscal position of the sector will steadily decline through 2060 absent any policy changes.

For more information, contact Stanley J. Czerwinski at (202) 512-6806 or czerwinskis@gao.gov or Thomas J. McCool at (202) 512-2700 or mccoolt@gao.gov.