Argonne developed the Territorial Government Revenue Vulnerability Index (TGRVI) to help identify territorial governments whose revenues are particularly vulnerable to the impacts of COVID-19 and other economic downturns.
What is the TGRVI?
Disruptive events such as a pandemic can have lasting impacts on national and local economies, as has been made clear by the economic downturn caused by COVID-19. Reduced economic activity also impacts state, local, tribal, and territorial government budgets, which limits their ability to respond to the needs of community members.
Argonne National Laboratory (Argonne), in coordination with the U.S. Department of Interior (DOI) Office of Insular Affairs (OIA), developed the Territorial Government Revenue Vulnerability Index (TGRVI) to help estimate the revenue vulnerability of territorial governments due to the impacts of COVID-19 and other economic downturns. This index focuses on estimated losses in fees, taxes, and other sources of revenue resulting from the shutdown of non-essential businesses, protective actions, and resulting job losses.
What Does the TGRVI Measure?
The TGRVI measures the vulnerability of territorial government revenues by estimating monthly changes relative to January 2020 (baseline). Revenues included in the index include: taxes on products and sales, transportation and housing revenues, individual income taxes, severance taxes and royalties, and property taxes. This revenue data is aggregated to produce the index. Compared to data for state and local government revenue vulnerability indices (SGRVI and LGRVI, respectively), the TGRVI has some limitations, including less uniform and detailed baseline data, and less data availability to differentiate revenue impacts over time for a given revenue source between different territories.
Why Is the TGRVI Important?
This index provides up-to-date estimates of which territorial governments are likely to be experiencing the greatest revenue losses, which can in turn help identify territorial governments most in need of outside support. As part of a suite of other data, the TGRVI can also be used to provide a more complete picture of the socioeconomic impacts of the pandemic.
How Can I Use the TGRVI?
The TGRVI may be used as a first step in identifying territorial government financial vulnerabilities by indicating which governments rely on revenue streams that are likely to have been most heavily impacted by the pandemic. The territorial scores produced by the TGRVI reflect the estimated impacts on revenues collected by each territory relative to January 2020. A government with a TGRVI score of 96% for a given month, for example, is expected to collect 96% as much revenue from economic activity that occurred in that month as it collected from January 2020 activity. When interpreting index scores for the TGRVI, lower scores reflect higher revenue vulnerability, and higher scores reflect lower revenue vulnerability. This index provides important context for understanding the combined and relative impacts of the vulnerability of various revenue sources on territorial economies.
What Limitations Should I Be Aware Of?
There are several limitations that should be considered when using this index. First and foremost, the TGRVI is an estimate of revenue impacts based on proxies, rather than on government revenue reporting. Data for territorial government revenue can be limited as compared to U.S. counties and states. The index does not account for differences between territorial governments in policy and behavioral responses, timing of revenue collection, fund balances or debt levels, or changes in government expenditures. It is also important to keep in mind that the TGRVI is designed to measure impacts relative to January 2020, rather than to what economic activity would have been in the absence of COVID-19. In other words, if economic activity would have increased after January 2020 in the absence of COVID-19, the index may underestimate the impacts of the pandemic.
Argonne National Laboratory’s work is supported by the U.S. Department of Homeland Security, Federal Emergency Management Agency, via interagency agreement through U.S. Department of Energy contract DE-AC02-06CH11357. FEMA does not endorse any nongovernment entities, organizations, or services.