Brookings’ end of the year wrap-up of what happened and didn’t happen in 2011.

The year’s top story in state and local government was “hundreds of billions of dollars” in municipal bond defaults. Oh wait, that didn’t happen.

2011 was also the year that local property taxes finally dropped. The resilience of property tax revenues until now may seem puzzling given 30 plus percent housing price declines. The explanation is that it typically takes 2 to 3 years for lower prices to show up as lower assessed values and property tax bills.

What’s next for 2012? Making New Year’s predictions is a mug’s game, but there are a few trends worth watching.

First, chickens will come home to roost. It’s hard to imagine voters will fail to notice cumulative effects of real cuts to state and local government spending per capita in 2009 and 2010. Tracking government outputs and service quality is always tricky. However, news reports suggest longer waitlists, uninvestigated crime reports, shorter school years, etc. If the economy does not pick up steam and voters continue to resist tax increases, we can expect more of the same in 2012.

Read the rest of the predictions: State and Local Budgets in 2011: The Crisis that Didn’t Happen (Yet?) – Up Front Blog – Brookings Institution.