The fiscal structure of county governments from 2002 to 2019: the impact of the Great Recession and the run-up to the COVID-19 pandemic

This chapter analyzes the structure of county revenues and expenditures, and the financial condition of counties from 2002 to immediately prior to the COVID-19 pandemic. Expenditure growth significantly outpaced revenue growth from 2007-2012, indicating that the Great Recession resulted in a structural imbalance in county government revenues and expenditures. Revenue losses had not fully recovered by 2017, eight years after the recession officially ended. On average, the sector entered the Great Recession with a positive operating balance, suggesting healthy and sustainable pre-Great Recession finances. Post-Great Recession, the county government sector operating position has been negative. By most fiscal indicators, 2017 looks a lot like 2007, indicating a lost decade of county government finances and the high opportunity costs of the Financial Crisis and Great Recession. Also, entering fiscal year 2018 counties had less intergovernmental support and were more reliant on own-source tax revenues than in 2002.