COVID-19’s economic impact has been catastrophic for state and local governments. By Federal Reserve estimates, income and sales revenues will have declined by over $50 billion in fiscal year 2020 and may decline by as much as $137 billion in 2021. Pandemics are, of course, not the only catastrophic risks we may face in coming years. Financial crises, natural disasters, social justice crises, and climate change-related catastrophes all present serious risks, and often have a compounding effect on one another. These risks are especially salient for state and local governments, which are at the forefront of crisis response. A government’s legitimacy is tested and measured by its ability to respond to these challenges, but existing state and local financial frameworks have proven too thin and brittle to absorb shocks like COVID-19 or the Financial Crisis of 2007. This Essay describes how a national resilience fund, with subaccounts created for each state and territory, would strengthen the ability of state and local governments to respond to crises that will likely arise in the coming years. A national resilience fund could be based on a familiar, flexible structure that has been used for decades: the Unemployment Trust Fund. Such a structure would help insulate the resilience fund from local political pressures yet would have the financial strength to help state and local governments absorb the costs associated with severe crises such as pandemics and natural disasters, thereby helping to preserve the government’s legitimacy in times of severe social stress.
Robert J. Watkins/Procter & Gamble Professor of Law, Ohio State University Moritz College of Law. Thanks to Sam Mallory for excellent research assistance and to Cinnamon Carlarne and Diego Lopez for helpful comments on an earlier draft. Thanks also to the Northwestern University Law Review Online staff for their outstanding editorial work.
Copyright 2021 by Paul Rose
Cite as: Paul Rose, Toward a National Resilience Fund, 116 Nw. U. L. Rev. Online 41 (2021), https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=1310&context=nulr_online.