No. Federal law does not allow states to file for bankruptcy. Chapter 9 provides a process only for municipalities (cities, counties, certain districts) and only when state law authorizes it. If a municipality files, a federal bankruptcy court oversees a plan to adjust debts while essential services continue. State governments facing stress must address it through policy changes, refinancing, or other actions under state law.
Yes, you can approximate per-person costs by dividing spending in a service area (for example, police or parks) by the population served. Use your city’s adopted budget or annual financial report for the spending figure and Census population for the denominator. For comparisons across places, the Census finance survey reports expenditures by function for thousands of governments each year. Pair those with Census population tables to build consistent per-capita comparisons.
States can issue debt, mainly to fund capital projects like roads and schools, but most are required by law or constitution to maintain balanced operating budgets. While the federal government can run persistent deficits and expand its debt without a strict upper bound, states must generally align revenues and expenditures each year, sharply limiting how much debt they can accumulate for day-to-day operations.
Crucially, states cannot create new money or borrow unlimited amounts at will, unlike the federal government, which issues the U.S. dollar and can always finance its debt through the Treasury and Federal Reserve. This means state debt is more tightly constrained and subject to greater fiscal scrutiny – if states overspend, they must raise taxes, cut services, or risk downgrades and higher borrowing costs, since default or devaluation are not practical options. To see how much debt your state carries and how it is structured, consult Census debt statistics and your state’s financial reports. A Congressional Research Service overview explains balanced-budget practices.
States and localities operate under their own procurement and ethics laws, which require competitive processes and conflict-of-interest safeguards. When they spend federal grant funds, they must also follow federal procurement standards, including written policies, competition, cost reasonableness, and conflict rules. These federal standards are detailed in the Uniform Guidance. They apply to states, local governments, and certain nonprofits whenever federal assistance pays the bill, adding another layer of accountability.
The adopted budget and appropriation ordinances show which departments and programs receive funding and from which revenue sources. School funding may be in a separate school-district budget. Transportation projects often appear in a capital plan with one-time costs spread over multiple years. To understand categories and compare with other places, use the Census Bureau’s finance survey, which classifies spending by function (education, public safety, transportation, etc.). Your city or district’s budget pages provide the line-item details for local decisions.
Most governments publish a “budget-in-brief” or summary alongside the full budget. These explain major revenues, spending by department or program, and key changes from last year in plain language and charts. The adopted budget and annual financial report are usually posted on the city or county website under Finance, Budget, or the Clerk. If you need comparable data across places, use the Census Bureau’s State and Local Government Finance tables. These federal datasets are downloadable and let you compare your city or county with peers.
Look for timely posting of the adopted budget, mid-year updates, and the annual financial report with an independent auditor’s opinion. Check whether bond disclosures are current on EMMA and whether any Single Audit findings were resolved. These documents are public records. Together, they show how plans matched results and whether controls are strong.
Cities publish their annual financial report with an independent auditor’s opinion; look on the Finance or Clerk’s webpage. If your city spends significant federal funds, it will also have a Single Audit that is filed in the Federal Audit Clearinghouse. You can search the Clearinghouse by name and year to confirm whether a recent audit exists and read any findings and corrective actions.
Budget timelines and hearing notices are posted on your city or county website and often published as legal notices. You can submit comments in person, by email, or through online portals when available. Many meetings offer live streams and recorded replays. Use your state’s open-meetings and public-records rules to access agendas, presentations, and backup documents. Start at your city or county clerk’s page or use the USA.gov directory to find the right office.
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Pension promises are long-term obligations. If contributions and investment returns are lower than expected, unfunded liabilities can grow and put pressure on budgets. When plans are well funded and managed, the costs are steadier and more predictable. You can review plan assets, liabilities, and contributions in the Census Bureau’s public pensions survey and in your government’s pension financial reports and actuarial valuations, which are publicly posted.
When spending federal awards, governments must follow the Uniform Guidance rules for financial management, procurement, and reporting. Large recipients undergo a “Single Audit” that tests compliance with grant requirements. Single Audit reports are publicly searchable in the Federal Audit Clearinghouse. Combined with local budget and financial reports, they show how federal dollars were used and whether any findings need correction.
Because most must balance their budgets, states and localities often reduce spending, delay hiring or projects, tap rainy-day funds, or raise certain revenues when the economy weakens. Federal aid can help stabilize services, especially for public health, schools, and transit. GAO and CRS provide overviews of these tools and how they were used in past recessions. Reviewing these reports helps residents anticipate likely actions in their community.
When revenues fall below plan, states typically use a mix of tools: tapping rainy-day funds, freezing or cutting spending, delaying projects, transferring funds, or, less often, raising taxes or fees. Mid-year adjustments are common during recessions to keep budgets in balance.
Some states, like California, have highly progressive taxes that depend heavily on wealthier individuals who in turn income is often more dependent on Economic and Market conditions. Because of this, revenue maybe less stable, and be subject to windfalls and shortfalls. CRS and GAO summarize these options and how they have been used in past downturns, helping residents understand why states may change services or timelines mid-year.
States and localities adopt their own yearly budgets through public hearings and votes by city councils, county boards, or state legislatures. Most have balanced-budget requirements for operating funds, so they must match planned spending with expected revenues or make mid-year fixes when revenues fall short. Capital projects (like roads and water systems) are often funded separately through multi-year plans and bonds. The federal government follows a different process and can run annual deficits. To see state and local money flows and compare across places, use the Census Bureau’s State and Local Government Finance data; for your community’s specifics, read the adopted budget and annual financial report posted on your regional government website. Additionally, NASBO a non profit 501c3 offers great information on State budgets.
States collect non-tax revenues from charges for services (such as tuition or park fees), licenses, fines, fees, and enterprise activities, plus net proceeds from state lotteries where authorized. These sources can be significant for some states and programs. The Census finance survey reports revenues by type—including charges, licenses, and lottery proceeds—so you can see their role over time and compare across states.
When states provide more aid for schools, public safety, or infrastructure, local governments may need to raise less from property taxes to fund the same services. When state aid falls, localities often face choices: increase local taxes or fees, reduce services, or both. The Census finance survey reports intergovernmental aid from states to local governments and local property-tax collections. Reviewing both helps residents see how changes in state policy flow through to local bills.
Key financial performance indicators for state and local governments include measures like the general fund balance as a percentage of expenditures, trends in recurring revenues versus operating expenses, and debt service requirements as a share of annual income. Additional important indicators are liquidity (such as cash and investments compared to current liabilities), debt per capita, and the funding status of pensions and other long-term obligations. Looking at these figures over several years provides a clearer picture than any single year snapshot, helping spot persistent strengths or looming trouble.
These indicators, often available in annual budgets, Comprehensive Annual Financial Reports (CAFRs), and pension reports—help residents, analysts, and policymakers assess how resilient and well-managed their government is. Comparative data from federal datasets and municipal disclosures platforms, like EMMA or the Stanford Municipal Finance Dashboard, allow benchmarking against similar governments, making it easier to spot outliers or best practices and support informed public oversight
A fiscal note estimates how a proposal would change revenues, spending, staffing, or fees. In many states and cities, legislative rules require a fiscal note before a vote so elected officials and the public can see the likely costs. State legislative websites explain their fiscal note process and publish the notes online. The National Conference of State Legislatures provides a helpful overview and links to state practices.
All bonds are debt instruments, the issuer is taking on debt. A municipal bond is debt issued by state or local government, and is essentially a loan from investors to the debt issuer. Governments issue bonds to finance long term and capital intensive projects such as schools, water systems, and roads, spreading costs over the assets’ useful life. Some bonds are tax-exempt for investors; others are taxable. Official statements, continuing disclosures, and trade data for municipal bonds are posted on the SEC-regulated EMMA system. Reviewing these filings shows the purpose of the bond, repayment sources, and risks in plain view for residents.
A special assessment is a charge on properties that receive a specific benefit, such as a new sidewalk, street lighting district, or sewer connection. Unlike a general property tax, it is limited to parcels that benefit. State laws govern when and how assessments can be levied. The Census Bureau’s finance classifications define special assessments and how they are reported, which helps residents compare practices across places.
For states, divide state debt outstanding by state gross domestic product (GDP). The Census Bureau reports state debt, and the Bureau of Economic Analysis publishes GDP by state. This yields a transparent ratio you can compare year to year. There is no standard “city GDP” nationwide. For large areas, BEA reports metropolitan-area GDP; for individual cities that are not metro anchors, a proxy may not exist. Use local debt from the Census finance survey and compare to metro GDP with care, noting the difference in boundaries.
Property tax is charged on the value of real property (land and buildings) and is a primary local revenue source for cities, counties, and school districts. Sales tax applies to purchases of goods (and in some places services); it is typically collected at the point of sale and shared by states and localities. State income tax is based on individual or business income and is usually collected by the state, with some localities levying their own income taxes. You can see how much each tax contributes in your area by reviewing your state’s and locality’s revenue tables and the Census Bureau’s finance survey, which reports property, sales, and income tax collections by government and by year.
A rainy-day fund (also called a budget stabilization fund) is savings set aside to cushion revenue shortfalls or emergencies without severe cuts or tax spikes. Rules usually limit how much can be deposited or withdrawn and under what conditions. CRS and GAO describe how these funds work and how states used them in past downturns. Your state’s budget documents disclose balances and any planned deposits or withdrawals.
The adopted budget or a compensation schedule usually lists pay for elected officials and staff. Some states require centralized salary reporting portals. City charters or ordinances may also set pay and benefits and are posted by the clerk. Use the USA.gov directory to find your city’s official website or clerk’s office, then search for “budget,” “pay schedule,” or “compensation.” These are primary public records.
