State and local government budgets are affected both sooner and later by the economy. It’s up to elected and appointed officials to balance the service-delivery demands and needs of residents with their governments’ capacity to cover the costs of these services. How can government leaders prepare for the economic uncertainty and fiscal strife that has already begun? This article discusses revenue volatility, including some of the ways in which widespread unemployment will likely affect metropolitan areas, and what history teaches us about the challenges of fiscal rebound and the possible effects on spending, revenue shortfall, and rainy day fund balances.

• Publication date: June 2020