How COVID shocked state and local revenue : BEA data track the ups and downs of federal grants-in-aid and local tax revenue

State and local governments receive two major sources of revenue: transfers from the federal government and their own tax receipts. Each of these series (since 1960) is plotted in the FRED graph above in billions of dollars at a seasonally adjusted annual rate. Both series trend upward over the past 70 years, as each has grown with the U.S. economy overall.
The graph shows the pandemic’s effect on the economy. First, the CARES Act, signed into law in March 2020, allocated hundreds of billions of dollars to state and local governments to fight the pandemic. The blue line spikes in the second quarter, with the surge in federal grants-in-aid to state and local governments, such as $150 billion through the Coronavirus Relief Fund. In the next two quarters, grants-in-aid remained above their long-run trend but fell from their very high level in April through June.
Second, there was concern that state and local

Federal Reserve Source

Author: RealEstate