Question

How do you think local governments combat unpredictable/unenforceable changes to their budgets or financial plans?

Answer 1

The local governments deal with such changes by borrowing from institutions and other sources. They have to deal with any changes that might come up later after preparation of the budget. For e.g. this present situation of Corona virus. Nobody could have predicted that such a situation would occur and hence no local government would have anticipated the expenses they are now bearing because of the medical and infrastructure requirements of people. Hence, the governments have no choice but to borrow in order to finance their expenses. This borrowing can be from organizations such as IMF, financial institutions and insurance organizations etc.