Who's gonna lend money to jurisdictions if a big rich place like Chicago or Illinois can't make its obligation,

media's obligations, and so these are really difficult choices.

And so I have some ideas about things we could do to make the problem better, but it's worth thinking about what you would do.

I mean, one of the things I found during the COVID period, there was a lot of intense arguing about what the federal government should be of a state bankruptcy law,

and should we offer all of this aid, he's in a blue state bailout, he's a red state bailout, and I found that the people talking about this really didn't take the time to realize how hard a set of choices were facing the government.

It was just a lot of yelling.

It is my pleasure to welcome to the podcast a very smart man, Yale Law School Professor and author of In a Bad State responding to state and local budget crises.

David Schleiker, welcome David.

Thank you so much for having me.

So congrats on this book.

Some people look at this and be like, what state and local budget crises are those a thing?

And there was a period when everyone thought they were going to be a big thing post COVID, where COVID shut the economies down, and I was seeing the headlines be like, hey, if these local governments have to fire a bunch of people, you're going to have a lot more fired people.

And then the feds came through in a very, very big way.

The CARES Act, I think it's about $5 trillion of stimulus in total, hundreds of billions of which went to state and local governments.

So all is okay, right?

Yeah, so I mean, the interest in some ways for a little while, the answer was yes.

So state and local budgets have been in error shape for the last couple of years.

They've been maybe in any point in American history, or at least certainly they've been as good between the fact that the economy never really got as bad as people expected, and particularly high end wealth, which is state local budgets that are dependent on high end income taxes and capital gains taxes did very well.

And then the utter boatloads of money that the federal government gave to local budgets weren't really strong shape.

But right now we're seeing an end to that federal money that might have been is drying up.

Some of it was even pulled back in the debt limit deal, and we're seeing revenue starting to fall.

And so you're starting to see projected budgets, budget deficits in California, Illinois, and New York, and New York City.

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