We examine the influence of COVID-19 and federal responses to it on budget dynamics of local governments in the US. While it is commonly and implicitly assumed that budgetary difficulty primarily results from deep budget cuts, managing large increases also raises the uncertainty local leaders face. Situated in the logic underpinning Punctuated Equilibrium Theory, we assess the degree of volatility and expansion in local budgets in the wake of the federal response to the pandemic. We use an original dataset of 21,918 changes in local budgets in the state of West Virginia, spanning a decade of spending across 55 counties and 162 sub-categories. Standard measures of change indicate that federal aid provided stability to local budgets, yet new methods we implement reveal more frequent and drastic shifts in spending as well as a positive shift in the value of changes. When assessing counties individually, we report substantial differences in volatility and expansion of budgets between the pre – and post-COVID periods that we show are associated with economic distress. Our findings have implications for the future of local-level budget and expenditure studies and the empirical research on the complexity of policy change in the US, Europe, and elsewhere.