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States have a pivotal interest in the fiscal health of their localities so that they can continue providing vital services to their citizens. Local government budgets have begun to feel the impacts of the recession, which probably will continue for some time. By implementing and improving early warning systems, states can proactively identify fiscal weaknesses and provide assistance to their local governments when necessary, potentially helping them avoid fiscal disaster.
The Great Recession of 2007-09 challenged the budgets of many local governments, eroding their ability to provide services such as water, sewer, and road upkeep to residents. This incentivized states to adopt or strengthen fiscal monitoring systems, which can identify financial instability before it becomes a crisis.