This page will provide a description of economics of local (and State) governments.

The term local government here refers to state, county, or city governments taken separately.

It is the function of every local government to provide services to its citizens. In providing these services, the local government incurs expenses. These services include education, street and highway maintenance, sanitation, local protection (fire and police), general governance (local laws ordinances and enforcement) and many other services. The expenses incurred in providing these services include teachers pay, school maintenance, materials and labor for street and highway maintenance, sanitation materials and personnel, lawmakers, personnel and materials for fire and police protection, and on and on…The funds to cover these expenses come from local (and (state) taxes. If the local government collects more taxes (income) than it needs in order to provide the required services, then the local government has acquired a surplus. If the local government incurs more expenses than it collects in taxes, then it has incurred a negative surplus or deficit. In order to continue providing these services it must raise taxes and or incur debt. Another option is to decrease the amount or quality of services in order to decrease expenses. If the local government incurs debt and the interest expense and the principle (amount borrowed) payback is now an added expense against future tax collections.

surplus = (income tax collection) – (cost of providing services)

if 
    (cost of providing services) 
        is greater than
    (income tax collection)

then
    surplus is less than 0 (negative) 
        and 
    a deficit exists (they do not have funds to provide services);

therfore
    the local government must either
        cease operation (stop providing services)
            or
        borrow money to continue operation (incur debt);
            if
                the operation is seen as not feasible 
                (building large debt in order to continue a continuing non feasible operation)
            then
                 it is possible no one will be willing to supply the loan
                    and
                 the local government must cease operation(stop providing services)

Solution:

It is not acceptable for the local or state government to cease operation.
In order to continue operation (providing services) the local or state government must either
    cut expenses in providing services
         (paying less for services may decrease their quality or reliability)
        or
     increase the income by increasing taxes