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Area Development

Pandemic Will Elicit Varied Responses from State and Local Governments

The public and private sectors must work together to continue to move business and community forward.

Q2 2020
During the triage period of the COVID-19 crisis, we have seen vastly different responses from states and local governments. Some have injected significant dollars into employers through relief programs. Others have relied primarily on federal programs rather than using state/local dollars.

Reopening the economy demands the confluence of business and government on many levels. Our clients seem anxious to return to an investment mode and undoubtedly all locales will be equally anxious to reduce unemployment. However — just like during the triage period — the recovery period of this disaster will see widely varied approaches from state/local governments, and a visible difference will be the use of incentives. Will we see states and municipalities use incentives aggressively to encourage companies to rehire and to invigorate the economy (like we did following the Great Recession)  Many will take this approach, but it is far from a simple answer.

State and local leaders must balance the need to incentivize economic development with the imminent fiscal challenges on the horizon. Beginning immediately and with effects lingering for years, states and local units of government across the U.S. will collectively lose hundreds of billions of dollars of tax revenue. Every imaginable type of state and local tax will be impaired by this crisis. State and local leaders must balance the need to incentivize economic development with the imminent fiscal challenges on the horizon. Now more than ever, the public and private sectors must continue working together, collaborating, and finding creative ways to move business and community forward together.

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