Local Governments

Industry Profile Report

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

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation 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 156 workers and generates $21-22 million in annual revenue.

    • There are about 90,000 local government entities in the US with over 14 million employees and $1.9 trillion 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.
    • 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

                              Recent Developments

                              May 16, 2024 - Weak Revenue Growth Expected
                              • Local government revenue is forecast to grow at a 3.75% compounded annual rate from 2024 to 2028, slower than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc. The primary revenue sources for local governments are taxes, federal and state funding, and fees charged for services. Local government employment increased slightly during the first quarter of 2024, according to the US Bureau of Labor Statistics.
                              • Local governments are among the public sector organizations making significant investments to strengthen their IT infrastructure, according to cloud computing company Nutanix's Public Sector Enterprise Index. Key investment targets include ransomware prevention, digital modernization, and artificial intelligence (AI) strategy. Dozens of states have created AI task forces to explore ways that the technology can improve state government efficiency, enhance digital services, and responsibly support innovation. About 80% of public sector respondents said they plan to increase investments in AI by 2025.
                              • The total amount of office space vacated since 2019 surpasses the amount vacated during the dot-com bubble and dwarfs that of the global financial crisis of 2007-08, according to real estate analysis firm Green Street. Lower office occupancy rates may result in lower tax revenues for local governments. Available office space was about 25% of existing supply at the end of 2023, both historic highs. Prior recoveries in US office occupancy have been mostly “V-shaped” in nature - a sharp rebound from a big decrease. This cycle is likely to play out differently, however, as it will take a lot more new jobs to generate the same level of office demand as in the past because remote work will act as a long-term headwind on office demand, according to Green Street.
                              • All types of cyberattacks against state and local government agencies increased in frequency during the first eight months of 2023, according to survey results from the Center for Internet Security (CIS). Malware attacks increased 148%, while ransomware incidents increased 51%. While the CIS report highlights state and local governments’ cybersecurity weaknesses, it also found areas where survey participants strengthened cyber protections, including identity management, cybersecurity awareness training, and implementing mitigation and recovery strategies in the event of an attack.
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