What is it about?
State imposed revenue and/or expenditure limits (TELs) are expected to affect the size of state reserves. We examine this question using a more comprehensive measure of TELs.
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Why is it important?
In an era of political support for constraining government spending by focusing on tax policy, we often find unintended consequences. In this case, the size of fund balances/rainy day funds are explored as a potential unintended consequence of TELs.
Perspectives
Scholars continue to explore the fiscal effects of the Great Recession, including the preparedness of state and local governments for dealing with fiscal shocks. We learned that in most cases, state rainy day funds were inadequate to deal with the "storm" of 2008-09. It is important to understand the factors that can better prepare state and local governments for the next fiscal shock. We think this is one step in that direction.
Prof. Craig S Maher
University of Nebraska at Omaha
Read the Original
This page is a summary of: The effects of tax and expenditure limits on state fiscal reserves, Public Policy and Administration, August 2016, SAGE Publications,
DOI: 10.1177/0952076716660607.
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