On occasion, many state and local governments are faced with significant budget shortfalls. One recent example of a cause of widespread budget shortfalls was the Coronavirus pandemic, during which state and local governments increased spending levels while receiving less revenue through taxes.

In those types of economic conditions, states and localities are faced with difficult decisions about how to make up for budget deficits, including cuts to education and essential services, and/or by asking for additional federal funding to help state and local governments.

Opponents have argued that it is not the federal government’s responsibility to bail out state and local governments, and that states should be allowed to declare bankruptcy.

This deliberation looks at the concept of federalism and how local and state governments function. Students will explore and analyze arguments relating to this topic and answer the question: Should the federal government bail out state and local governments that are facing budget shortfalls?

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Background Articles

• States and cities are “falling off a cliff” as the economic crisis sets in– Vox

• Can states file for bankruptcy? Should they? What you need to know– PolitiFact
  

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