State and local governments face budget crunch, hurting hopes for a quick economic recovery
Pedestrians walk past closed shops along Lexington Avenue amid the coronavirus pandemic on April 7, 2020 in New York City.
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Spiking unemployment around the country and dire predictions for second quarter economic growth have created a budget crunch for many state and local governments, and it could be a long-term drag on the United States economy.
Robert Dye, chief economist at Comerica, said that sharp declines in employment and consumer sales will hurt tax revenues for state and local budgets, which often have legal restrictions that keep them from filling shortfalls with debt, and weaken a key source of jobs in the country.
“That certainly is a big load of challenge for state and local governments … they can’t run deficit financing. And the other thing is that state and local government spending is bigger than …continued .
[Source: CNBC News]