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

                              Mar 3, 2024 - Moderate Revenue Growth Expected
                              • Local government revenue is forecast to grow at a 4.4% compounded annual rate from 2022 to 2027, comparable to 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. Employment increased slightly during 2023 and passed pre-pandemic levels late in the year, according to the US Bureau of Labor Statistics.
                              • The increase in remote working has reduced downtown real estate values in some communities, resulting in lower tax revenues for some local governments, according to The Baltimore Banner. The city of Baltimore has seen its property tax base shrink by $181 million just since July 1, 2023, due largely to updated appraisals to major commercial properties that have lost business and tenants since the pandemic, city Deputy Finance Director Bob Cenname said. Decreasing property values aren't limited to office space, as lower foot traffic resulting from the increase in remote working has also affected the value of retail space.
                              • 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.
                              • Officials at all levels of government continue to deliberate the most effective path for artificial intelligence (AI) regulation even as they seek the best approach to reap the benefits that the technology can provide in efficiency and service delivery, according to media and research firm Government Technology. Cities including Tempe, AZ, have adopted policies policy related to ethical use of AI, but Tempe Chief Data and Analytics Officer Stephanie Deitrick noted that the governance component will be critical for the city’s work. Southeast Pennsylvania Transportation Authority (SEPTA) Chief Innovation Officer Emily Yates notes that it is not necessary for every local government to reinvent the wheel regarding AI strategy, as local governments can learn from others that have found success in this area.
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