Local Governments

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 90,000 local government entities in the US include counties, municipalities, towns and townships, as well as special purpose entities, such as special districts and independent school districts. Local governments generate revenue from taxes, intergovernmental funding, and fees for services provided. They use this revenue to fund the delivery of services for education, health, police protection, highways, public welfare, sewerage, solid waste disposal, parks and recreation, utilities, housing, and government administration.

Dependence On Property Taxes

Taxes are the largest revenue source for local governments and property taxes account for about 72% of tax revenues.

Spending Mandates

Local governments are often required to spend money to comply with federal and state mandates, even when those mandates are unfunded.

Industry size & Structure

The average local government entity employs about 154 workers and generates $21-22 million in annual revenue.

    • Local government includes counties, municipalities, towns and townships, as well as special purpose entities, such as special revenue districts and independent school districts.
    • There are about 90,000 local government entities in the US with over 13.9 million employees and $1.9 trillion in annual revenue.
    • General purpose entities include 3,031 county governments, 19,495 municipal governments, and 16,253 town and township governments.
    • There are 38,542 special districts in the US, such as fire protection districts, public housing authorities, and irrigation management entities.
    • There are 12,754 independent school districts. These do not include school districts run by state, county, municipal, or town governments.
    • The largest city governments in the US, based on population, are New York, Los Angeles, Chicago, San Jose and Washington, DC.
    • The largest county governments, based on population, are: Los Angeles County, CA: Cook County, IL; Harris County, TX; Maricopa County, AZ; and San Diego County, CA.
                              Industry Forecast
                              Local Governments Industry Growth
                              Source: Vertical IQ and Inforum

                              Coronavirus Update

                              May 9, 2022 - Mask Mandates Fall Out Of Favor
                              • Mask mandates are falling out of favor with American public health authorities, and experts say that the bar to bring them back has been raised even as cases of the highly transmissible BA. 2 coronavirus variant increase. “In a time when we have fairly mild variant and a public that’s really mask-averse, it might not be the most important thing to mandate masks,” said Chrissie Juliano of the Big Cities Health Coalition. A new Centers for Disease Control and Prevention framework states that people should wear masks when their communities are considered high risk, but the definition of high risk has shifted to emphasize hospitalizations and the strain on the health-care system, rather than a high volume of cases. Many officials say that mask mandates would probably be tied to cases again under a scenario where a highly contagious variant that evades vaccine protection and causes more severe disease emerges.
                              • Fears of a pandemic-induced state and local budget crisis were unfounded. Many states ended fiscal 2021 (many state fiscal years end on June 30) with the largest surpluses in their history thanks to surging state revenues, investment income, and federal COVID-19 aid. The growing economy, rising stock market, and strong consumer spending continue to boost tax collections in early 2022, budget experts say. Revenues are so far above expectations that they’ll trigger tax rebates in some states, such as Colorado, Oregon and Indiana.
                              • Over 80% of Emergency Rental Assistance (ERA) funding was delivered to very low-income households (those earning 50% of area median income and below) in 2021. In the fourth quarter of 2021, more than 40% of all primary applicants receiving assistance self-identified as Black and more than 20% self-identified as Latino, and female-headed households made up close to two-thirds of ERA beneficiaries—in line with the rates at which Black, Latino, and female-headed households had faced eviction filings earlier in the pandemic, according to research by the Eviction Lab. The data also shows that Treasury has reallocated the initial tranche of ERA funding (ERA1) to grantees that are serving a higher share of extremely low-income households and more diverse communities than average.
                              • Local governments experienced rising expenditures due to the coronavirus and dealt with falling income as tax revenues declined due to business closures and widespread unemployment. Unlike the federal government, states and localities can’t compensate for lower tax revenues with increased borrowing. They must make up for them with some combination of lower spending, higher tax rates, or fees. However, large spikes in municipal debt anticipated early in the pandemic never materialized, according to the Schwab Center for Financial Research. The fiscal health of cities has been helped by federal stimulus policy, both in direct aid to cities and states and checks to individuals, which helped boost tax revenue through increased consumer spending.
                              • The second round of stimulus relief was passed in December 2020, but it did not include funding for direct aid to state and local governments. However, it included $600 stimulus checks that helped ease strapped state and local budgets by stimulating spending, increasing local tax revenues. In March 2021, President Biden signed the $1.9 trillion American Rescue Plan Act (ARPA). The third round of stimulus included $360 billion in aid to state and local governments. More than 80% of city finance officers said direct federal aid positively affected their fiscal year 2021 budgets, according to the annual City Fiscal Conditions survey released by the National League of Cities in October 2021. Two-thirds of cities said ARPA funding helped replace lost revenue, and more than half used ARPA funds to aid households, small businesses, nonprofits, and industries directly.
                              • Brookings Metro, the National League of Cities, and the National Association of Counties announced a partnership to launch the Local Government ARPA Investment Tracker. The online tool will compile information about how large cities and counties deploy State and Local Fiscal Recovery Fund (SLFRF) dollars allocated by the American Rescue Plan Act (ARPA). So far, the Local Government ARPA Investment Tracker gathers data from more than 40 large cities, more than 100 large counties, and seven consolidated city-county areas. The program will track spending across seven major categories: community aid, government operations, economic and workforce development, housing, infrastructure, public health, and public safety.
                              • The CARES Act provided $150 billion in direct aid to state and local governments (at least $1.5 billion per state), $5 billion in additional funding for Community Development Block Grants (CDBG), $454 billion in emergency loans for businesses and governments, and $25 billion in transit infrastructure grants. The funding from the Community Development Block Grants under the CARES Act (known as CDBG-CV grants) is working its way to the county and municipal level through state governments. The stimulus package passed in December extended to the end of 2021 the period state and local governments have to spend benefits provided under the CARES Act.
                              • Experts are beginning to think about what large cities can learn from the pandemic as they reopen and new life patterns take shape. Some suggest prioritizing affordable housing to reduce pockets of the overcrowded working poor, which could also lessen the impact of future outbreaks.
                              • Billions in federal rent aid have had trouble reaching those who need it, according to The Wall Street Journal. The US Treasury Department administers the Emergency Rental Assistance (ERA) program but processing aid applications and dispersing the funds has fallen on local governments and charitable organizations, many of which have been overwhelmed by the volume of demand. Manually vetting and approving the applications is time-consuming, and some local governments and organizations had trouble hiring enough staff and drafting funds distribution rules. Treasury required local governments and other organizations that haven’t disbursed at least 65% of rent relief funds by September 30 to submit an improvement plan for expediting payments. In early December, the Treasury Department began redirecting unused rental-assistance money from some states and localities to others that had backlogs of aid requests, according to The Wall Street Journal. According to the Government Accountability Office (GOA), as of the end of November 2021, the Treasury Department had disbursed nearly $38 billion of the $46.5 billion allocated for the ERA program, according to the Government Accountability Office (GOA).
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