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State fiscal crises: are rapid spending increases to blame?

The Cato journal, 2008-10, Vol.28 (3), p.435-448 [Peer Reviewed Journal]

COPYRIGHT 2008 Cato Institute ;Copyright Cato Institute Fall 2008 ;ISSN: 0273-3072 ;EISSN: 1943-3468 ;CODEN: CAJODC

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Title:
State fiscal crises: are rapid spending increases to blame?
Author: Stansel, Dean ; Mitchell, David T
Subjects: Analysis ; Budget deficits ; Causes of ; Cost control ; Economic Recession ; Expenditures ; Expenditures, Public ; Federal aid ; Fiscal policy ; Fiscal years ; Forecasts and trends ; Government aid ; Hypotheses ; Management ; Overspending ; Per capita ; Policy analysis ; Policy studies ; Public expenditure ; Public Finance ; Public policy ; Recessions ; Regression Analysis ; State budgets ; State government ; State taxes ; Statistical data ; Studies ; Tax cuts ; Tax increases ; Taxation ; Taxes ; United States
Is Part Of: The Cato journal, 2008-10, Vol.28 (3), p.435-448
Description: During recessions, state governments frequently face substantial midyear budget shortfalls. These fiscal crises are often blamed on the cyclical decline in revenue growth or reductions in federal aid. Cyclical fluctuations of state tax revenue create challenges for politicians. The state fiscal crisis created during a recession is not caused solely by slower revenue growth. Rapid spending growth has led some to blame the states for their own fiscal woes. Regardless of the cause, the smoothing of state government spending over the business cycle could help to alleviate the severity of the fiscal crises that occur during recessions. While other factors undoubtedly also played a role, results suggest that rapid spending increases during the preceding expansionary years did indeed play a substantial role in worsening the fiscal crises faced by states during the 2001 recession. States that restrain spending growth are likely to face less severe fiscal crises when the business cycle turns downward than those that allow spending growth to rapidly increase.
Publisher: Washington: Cato Institute
Language: English
Identifier: ISSN: 0273-3072
EISSN: 1943-3468
CODEN: CAJODC
Source: Digital Library of the Commons
ProQuest Central

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State fiscal crises: are rapid spending increases to blame?

COPYRIGHT 2008 Cato Institute ;Copyright Cato Institute Fall 2008 ;ISSN: 0273-3072 ;EISSN: 1943-3468 ;CODEN: CAJODC

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