In his March 23, 2021 commentary, HilltopSecurities Head of Research and Analytics Tom Kozlik, discussed how federal relief packages could strengthen what he calls the “Golden Age of Public Finance.” The American Rescue Plan Act provided state and local governments with a boost in capital to offset the economic effects of COVID-19. And a recent Wall Street Journal article noted that state and local government receipts that include federal aid was 23% above pre-pandemic levels.

Now, the recently passed $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) will likely add further support to municipal credit quality and provide another boost to the Golden Age of Public Finance. Additionally, if the Build Back Better agenda is passed, the legislation would bring the total amount of COVID-19 related fiscal policy spending to nearly $10 trillion.The financial relief that state and local governments have received so far helped equip some municipalities to be more economically resilient in the face of the pandemic. In fact, the Committee for a Responsible Federal Budget has argued that state and local finances have more than stabilized.

“There’s no denying that there is a Golden Age of Public Finance right now. Although I believe that the Golden Age will last longer for some entities compared to others,” said Kozlik. “Federal government aid for public finance and relatively strong revenues for many entities create a very positive backdrop for overall municipal credit quality.”

Recent HilltopSecurities Municipal Commentary About the Golden Age of Public Finance

• House Passed $1.2 Trillion Infrastructure Plan on Friday, Boosting What We Deemed (in March) as the Golden Age of Public Finance, Nov. 8, 2021
• Infrastructure Could Strengthen Golden Age of U.S. Public Finance, Prelim Talks to Begin, March 23, 2021
• American Rescue Plan Provides Massive Economic Boost, U.S. Public Finance Could Be on Brink of a Golden Age, Especially if Infrastructure Stimulus Follows, March 19, 2021