State and local governments, many of which weren't in good financial positions even before the COVID-19 crisis, are now facing major funding challenge, as business closures and layoffs shrivel their tax base, even as their need for cash soars as they respond to the global pandemic, according to CNBC. Essentially, the economic chaos brought about by the COVID-19 outbreak is causing a cascading effect that's inducing a cash crunch among government entities: Businesses closing means that they're not paying property taxes and other levies that keep services such as schools, police, firefighters, and road work going; when these companies close, they lay off workers, which means they have less money to spend on consumer goods, which therefore means less sales tax revenue, too. CNBC said that this loss of revenue, in turn, means that governments themselves are furloughing or laying off workers, as well as cutting budgets at a time when they really need money. This, in turn means less government spending, which is seen as vital to promoting an eventual economic recovery. While the federal government, both through the CARES Act and the Federal Reserve, is taking measures specifically to aid state and local governments, CNBC sources says this likely won't be enough, and funding issues will remain even after the virus passes.

This crisis is further compounded by the fact that, according to Bloomberg, state governments are struggling to implement aid programs at least partially due to their antiquated technologies. Many government mainframes are decades old and, what's more, run on an ancient computer language called COBOL, of which there are few with any real fluency. To analogize, imagine having to update, say, a legal document to account for the pandemic, but it's written in Sanskrit, so now you have to scramble find someone, anyone, who can just understand what it even says, let alone do it well. Now imagine having to do this while half your staff is under lockdown. This is the tech challenge state governments now face.

Not that the federal government is free of problems. The Wall Street Journal said that the U.S. government is on its way to having its worst fiscal year since 2012, as its budget deficit grew 8 percent between October and March. Later data will likely be even worse, as the latest statistics were looking at a pre-lockdown world, before the government began pouring trillions of dollars into the economy. Exacerbating this deficit are the same factors that state and local governments are facing: As businesses close and people lose their jobs, federal tax revenues are expected to fall.