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States Leaning Heavily on Spending Cuts to Balance Budgets

April 19, 2012

States made almost $3 in spending cuts for every $1 in new revenues to close the huge budget gaps that resulted from the Great Recession, our new analysis finds.  It is the first attempt to quantify how states collectively balanced their budgets in the face of...

Where Do Our State Tax Dollars Go?

April 6, 2012

As the April 17 tax-filing deadline approaches, we’re taking time this week to examine where our tax dollars go.  Earlier this week, we looked at what federal tax dollars pay for.  Today, we turn to the state level.

States spend more than half of our tax dollars on education and health...

Hard for States to Follow Texas’ Footsteps

April 3, 2012

The Governor of Oklahoma and policymakers in Kansas, Missouri, and other states have proposed income tax cuts that they say will boost economic growth.  To make their case, they have cited the example of Texas, which has no income tax and where growth has been strong.

But in reality, Texas is not a helpful model for economic growth for the rest of the country.  True, the...

Economic Recovery Unlikely to Lift State Revenues out of Deep Hole

November 11, 2011

The encouraging 8.4 percent growth in state revenues in the 12-month period ending in June 2011 offers a glimmer of hope that states are beginning to climb out of the fiscal hole caused by the recession. Unfortunately, that hole was so deep that even if revenues continue to grow at last year’s rate — which is highly unlikely, as explained below — it would take seven years to get them back on a normal track.

Five Things You Might Not Know About Public Employees

October 28, 2011

Our updated short report on state and local workers includes some basic facts worth keeping in mind in debates over public employees.

Exaggerated Claims Obscure State Budget Picture

October 28, 2011

A group called State Budget Solutions issued a report this week that claims to “reveal” the true size of state debt and warns of a looming state budget crisis. In reality, this report does more to obscure than to reveal the fiscal health of the states.

Helping States Better Understand Budget Choices

October 21, 2011

To understand how a proposed state policy change — say, expanding or restricting Medicaid eligibility — would affect the state’s budget, policymakers and the public need to know the cost of simply continuing the program in its current form, after adjusting for factors like inflation and demographic changes. Yet only 22 states plus the District of Columbia (see map) produce the document needed to make this comparison, called a “current services baseline.”

State Tax Breaks a Costly, Ineffective Way to Attract Wealthy Seniors

October 17, 2011

Can a state get an economic boost by giving senior citizens special tax breaks? Maine’s governor, Paul LePage, claims so. Last week he renewed his proposal to exempt all pension income from the state’s income tax. (Maine already exempts Social Security income and some pension income.) He argues that this tax cut would encourage wealthy retirees to move to Maine. Other states have considered similar proposals.

Income Taxes Show Their Value

July 11, 2011

State revenues — especially income tax collections — are beginning to recover from the worst recession since the 1930s. As we described in our recent paper, at least 28 states have reported that tax collections for the just-ended fiscal year will exceed the amount expected when their budgets were adopted last spring.

Six Plans Show That Common-Sense Pension Reforms Work

July 8, 2011

The news coverage of state and local pension programs in recent months has been unremittingly negative, so it’s refreshing to read a new report by the National Institute on Retirement Security (NIRS) — a non-partisan research institute — that looks at some plans that are functioning well and explains what they’re doing right.