October 15, 2002

By Elizabeth C. McNichol and Kevin Carey


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             The 1990s was a time of tremendous economic growth in the United States.  As a result, state governments enjoyed the best fiscal conditions they have encountered in decades.  State revenues grew above expectations at the same time that spending pressures declined for many of the safety net programs that are the responsibility of state governments.

             Some have argued that states responded to these good economic times by overspending.   Critics of state government actions sometimes cite the unadjusted total growth in state spending of 90 percent between 1989 and 1999 as evidence that state spending exploded during this period.  A few suggest that the current state fiscal crisis is the result of this overspending.  The evidence does not support these claims.

            This report focuses on state spending trends during the 1990s.  Examining current data available from sources such as the Census Bureau and the National Association of State Budget Officers the report finds that states did not overspend during the 1990s.

In summary, states did not overspend during the 1990s.  State spending growth was low by historical standards.  States generally increased spending prudently in response to various cost pressures while making limited new investments.

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