...Extent of Vulnerability Varies: Sizable swings in oil and gas prices will likely affect economic and revenue trends in certain cities, counties and single-purpose districts in oil-producing states. The extent of the impact will be a function of a municipality's location, its size and level of economic diversity, the nature of its participation in the industry and its revenue framework. Sufficient Tools In Place: Within legal and political constraints, affected local governments can be expected to respond to energy-related financial pressures with some combination of tax increases, other revenue sources, spending cuts and use of reserves. Data Positively Correlated: Fitch Ratings reviewed historical financial and economic data from selected Fitch-rated local governments in energy states (Texas, California, Alaska and Louisiana) and tested their sensitivity to fluctuations in oil and gas price changes since the 1980s. The data correlated positively with oil and gas prices, generally moving...
