Budgets

Budgets

Research

Robert Krol | Jul 14, 2015
A new paper for the Mercatus Center at George Mason University gathers and analyzes economic research on transportation benefit-cost analysis and the voting behavior of politicians, and concludes that current transportation infrastructure spending policies lead to inefficient decisions and are often driven by political forces.
Matthew Mitchell, Pavel A. Yakovlev | May 13, 2015
A new study for the Mercatus Center at George Mason University shows that differences in these rules can have significant effects on policy. The study finds that states with separate taxing and spending committees spend less per capita than other states. Voters concerned about the growth of government may want to take a closer look at this phenomenon.
Randall G. Holcombe | Feb 26, 2015
In a comprehensive assessment of Florida’s fiscal policy, Dr. Randall Holcombe of Florida State University examines the state’s education and health care spending, pension system, taxes and budget, land use regulation, homeowners insurance, and many other key policies. To read the entire paper, please download the PDF. To view individual sections by issue, see below.
David T. Mitchell , Dean Stansel | Jan 20, 2015
In a new empirical study of state-level fiscal data for the Mercatus Center at George Mason University, economists David T. Mitchell and Dean Stansel examine these competing hypotheses and conclude that fiscal stress at the state level is positively correlated with spending growth and negatively correlated with the size of the state’s rainy day fund.
Sarah Arnett | Jan 14, 2014
New research from Sarah Arnett examines states’ abilities to meet their financial obligations in the face of state budget challenges that have far outlasted the Great Recession. Fiscal simulations by the Government Accountability Office suggest that despite recent gains in tax revenues and pension assets, the long-term outlook for states’ fiscal condition is negative (GAO 2013). These simulations predict that states will have yearly difficulties balancing revenues and expenditures due, in part, to rising health care costs and the cost of funding state and local pensions.
Marc Joffe | Jun 25, 2013
The author uses an open-source budget-simulation model to evaluate Illinois’s credit risk and to compare it to that of Indiana, a neighboring state generally believed to have better fiscal management. Based on a review of the history and theory of state credit performance, he assumes that a state will default if the aggregate of its interest and pension costs reaches 30 percent of total revenues. His analysis finds that neither state will reach the critical threshold in the next few years under any reasonable economic scenario, suggesting no material default risk.

Testimony & Comments

Research Summaries & Toolkits

Expert Commentary

Jul 08, 2015

Anyone who pays attention to Internet sidebars can tell you there are many ways to rank the 50 states: the strength of their economies, quality of life, business climates, or legal environments, to name a few. And while some rankings may be designed as fodder for Internet “clickbait,” ideally they inform us about the best places to live, locate, and do business.
May 06, 2015

Efforts to add a new restructuring option to the mix may cast doubt on Puerto Rico's commitment to more substantive efforts to deal with its debt problem, such as shrinking its public sector and unleashing its private sector with regulatory reform. Retroactive changes to the law may cure creditors of their historically over-eagerness to finance Puerto Rico's public sector, which has not been good for the territory. But such changes also may cause the pendulum to swing too far the other way, as investors shy away from lending in the face of a potentially uncertain and shifting legal framework.
Jan 16, 2015

During recessions, politicians typically blame a poor economy, unemployment, or reductions in federal aid for budget shortfalls. But when the money is flowing in, they often choose to go on a spending spree rather than to heed the lessons of the past and exercise fiscal discipline.
Nov 17, 2014

Economists call a fiscal illusion a systematic misperception of key fiscal parameters, often leading to distorted behavior by citizens and governments. In particular, the failure to perceive the full extent of tax burdens can lead taxpayers to misunderstand and underestimate the true cost of public goods and services and redistribution activities by the government.
Jul 19, 2013

Detroit became the largest city in U.S. history to declare bankruptcy when it filed for Chapter 9 protection on Thursday. Mercatus experts weigh in:…
Jul 11, 2013

North Carolina lawmakers cut unemployment benefits by one-third. This disqualifies the state from receiving $700 million in federal funds for the long-term unemployed, affecting 170,000 jobless North Carolinians.

Charts

Using data from the Office of Management and Budget (OMB), the following two charts place the post-1960s explosion in federal grants to state and local governments in perspective.

Experts

Podcasts

Dean Stansel | January 27, 2015
Dean Stansel, a research scholar at the Mercatus Center, discusses how contributing to state rainy day funds helps minimize the fiscal stress of budget shortfalls.

Recent Events

Mercatus Center budget scholars will share their academic research and practical knowledge with local thought leaders in a half-day seminar hosted by the Bluegrass Institute in Lexington, Kentucky.

Media Clippings

Eileen Norcross | Feb 02, 2014
Eileen Norcross cited at The New York Times.
Sarah Arnett | Jan 17, 2014
The Mercatus Center cited at Philly.com.
Sarah Arnett | Jan 16, 2014
The Mercatus Center cited at Investor's Business Daily.
| Jan 16, 2014
Mercatus cited at Union Leader.
Eileen Norcross, Matthew Mitchell, | Jul 23, 2013
Detroit reports an unfunded pension liability of $634 million, but using more accurate accounting methods it's closer to $3.5 billion.
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