Our projections for the fiscal future of state and local governments were updated today and it shows, unless changes are made, those governments will face a gap between spending and revenue over the next 46 years.
For over a decade, GAO has run these simulations of state and local governments’ finances to see what the future holds. This new update to our state and local fiscal outlook model continues to show that one of the primary drivers of the fiscal imbalance is the rising costs of healthcare. But state and local revenues remain largely constant as a percentage of GDP.
State and local legislators will face difficult policy choices to address this imbalance. Raising additional revenue might mean increasing taxes on income, property, or retail sales. Alternately, state and local governments may look to reduce healthcare or other types of spending. The escalating costs of health care at the state and local level is a national problem that will need to be addressed by all levels of government.
Explore our state and local fiscal outlook model to learn more.