While the twin economic and financial market crises dealt a severe blow to state and local government finance on the revenue side, they also have a direct impact on state and local governments’ spending side. In this part we focus on two areas of government spending under pressure now or in the near future as a result of the financial market meltdown: government borrowing cost, and public pension benefit cost.

This article is supporting documentation for the Alliance for Innovation Navigating the Fiscal Crisis white paper.