|
Abstract:
|
The states' current fiscal crisis is due not only to the country’s economic downturn but also to
changes in fiscal federalism that have exposed state fiscal systems to the impacts of federal policymaking,
economic developments and demographic changes to greater degrees than in the past.
Essentially, the states face growing long-term contradictions between escalating spending pressures
and eroding tax bases over which states have only limited control. Short-term crisis-management
actions, such as cutting spending, increasing taxes, accelerating tax collections, delaying bill
payments, expanding gambling and using up reserves, are damaging, stopgap tactics. Long-term
solutions will require more fundamental remedial fiscal reform by both the federal government
and the states. |