Implications of the Coronavirus on Sales Tax Revenue and Local Government Fiscal Health




COVID-19, Sales Tax, Fiscal Health, County Government


The outbreak of COVID—19 has raised considerable alarm about public health and safety. The response to the outbreak, however, has also brought concern regarding its impact on local governments in the United States. Local governments have been a primary respondent in the fight against the COVID—19 disease, but the response has also reduced income from a key source of revenue, sales tax. Using North Carolina counties as a case study, we explore the shock to sales and use tax revenue faced by local governments from COVID—19; we, then, estimate its impact on county fiscal health. Our results show that while many local governments were financially struggling before the outbreak, the drop in sales tax revenue severely threatens their ability to provide continued response to the virus as well as their ability to remain solvent.

Author Biographies

  • Bruce D. McDonald, III, North Carolina State University

    Bruce D. McDonald III is an Associate Professor of public budgeting and finance at North Carolina State University. He is the incoming editor-in-chief of Public Administration and the co-editor-in-chief of the Journal of Public Affairs Education. He received his BA in communications from Mercer University, his MA in international peace and conflict resolution from American Military University, his MSc in economic history from the London School of Economics, and his Ph.D. in public administration and policy from Florida State University. His research focuses on public budgeting and finance in the context of the fiscal health of local governments.

  • Sarah E. Larson, University of Central Florida

    Sarah E. Larson is an Assistant Professor of public budgeting and finance in the School of Public Administration at the University of Central Florida. She earned her joint Ph.D. in public policy from the department of political science and the School of Public and Environmental Affairs at Indiana University. Her research focuses on issues in taxation policy; specifically, she examines sales, use, and property taxation as well as methodological advancements in public administration and policy.






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