GOVINVEST: STRENGTHENING LOCAL GOVERNMENT FINANCES POST-PANDEMIC
The trends emerging from the Covid-19 recession are unlike any previous downturn and they’re having a disproportionate impact on cities. While the federal stimulus has stabilized the economy, sales and property taxes — the top tax revenue sources for most localities — have weakened. The stock market has rebounded, but the volatility still has had an impact on public pension liabilities that needs to be monitored. What’s more, public sector employee layoffs in the downturn means there will be fewer contributions to retirement systems going forward.
These trends are occurring in an already-low interest rate environment in which pension portfolio managers have taken on more risk to obtain a reasonable rate of return to fund maturing liabilities. As retirement systems strive toward fiscal sustainability, all of these factors must enter their calculus.
To do so, the GFOA recommends that governments at all levels forecast major revenues and expenditures several years into the future. The forecast, along with its underlying assumptions and methodology, should be clearly stated and made available to stakeholders in the budget process, as well as concisely presented in the final budget document.
This roundtable will engage city officials with their peers across the country to discuss steps they can take to understand the pandemic’s impact on their retirement systems, as well as labor negotiations, and what they can do generate sustainable forecasts and strengthen their budget in the years ahead.
Hosted by Funkhouser & Associates in partnership with GovInvest, the invite-only format will allow peers to exchange notes and get new ideas on how to tackle these challenges.