State and local governments set the budgets for local police and fire departments, public schools, health departments, road constructions and repair, public transportation and many other essential public services. How each state, city or town gets revenue varies widely, though it ultimately is some combination of income, sales and property taxes. No matter what the combination, when the economy is hurting – people are unemployed and are buying less and businesses are closing – state and local governments can take a huge hit. “There are a lot of state and local governments who are seeing very, very strong impacts, and they’re going to have to make very sizable tax increases or spending cuts, especially at the local level,” said Dan White, director of government consulting and fiscal policy research with Moody’s Analytics, which has estimated that budget deficits will total about $80bn to $100bn even with federal aid from Congress’s stimulus packages.