Fiscal Federalism

Fiscal Federalism

Research

Eileen Norcross | Jul 07, 2015
In new research for the Mercatus Center at George Mason University, Senior Research Fellow Eileen Norcross ranks each US state’s financial health based on short- and long-term debt and other key fiscal obligations, including unfunded pensions and health care benefits. The study, which builds on previous Mercatus research about state fiscal conditions, provides information from the states’ audited financial reports in an easily accessible format, presenting an accurate snapshot of each state’s fiscal health.
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.
Matthew Mitchell, Anna Mills, Dana Williams | Jan 15, 2015
In this paper we discuss three ways that states can benefit patients by making their health care markets more competitive: they can abolish certificate-of-need laws, liberalize scope-of-practice regulations, and remove barriers to telemedicine.
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.

Testimony & Comments

Expert Commentary

Sep 01, 2015

How serious was the default by Puerto Rico on its bond obligation? As a member of parliament and associate minister of finance during the recovery in New Zealand during the mid-1980s when the commonwealth almost went bankrupt, I have firsthand knowledge of how difficult recovery is — but I also know that it is possible.
Aug 30, 2015

In a new study based on states' audited financial reports, I rank New Jersey 49th out of 50 states for its fiscal health. Recently, I testified before the state Senate in Harrisburg on Pennsylvania's ranking, which is on a similar path at 41st. Fortunately, it may have time to change course by executing some of the same reforms that would help pull New Jersey out of its tailspin.
Jul 23, 2015

Michigan has struggled to emerge from the Great Recession, just like so much of the rest of the nation — and it still has a great deal of work to do. The latest evidence is a new report published by the Mercatus Center at George Mason University, which shows the state’s “fiscal health” ranking is slipping.
Jul 23, 2015

If there’s a lesson to draw from the financial disasters in Greece, Puerto Rico and Chicago, it’s this: When governments take on too much debt and continually defer their bills, it eventually spells trouble — for both taxpayers and those who rely on government pensions or services.
Jul 14, 2015

State fiscal health: It may not sound like the most exciting topic, but knowing a little bit about the fiscal health of the states can help people answer questions that impact their everyday lives. For example, is it likely that your state will need to raise taxes in the future in order to pay its bills? Does your state have enough cash in its rainy day fund to soften the blow of another economic downturn? If you're a state or local government worker, will your state be able to pay the full pension it promised you?
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Jul 14, 2015

Given that most highways in the United States are toll free, overuse is to be expected. The only way we can determine whether or not we need to build more highways is to charge drivers who travel during peak hours. These charges or prices reflect the value drivers place on using the highway. These pricing signals can then be used to determine whether it makes economic sense to build more highway capacity. When the value drivers place on using a highway exceeds the cost of additional lanes, more lanes should be built.

Charts

This week’s charts use data from a National Public Radio compilation of public Department of Defense records of grants issued to state and local law enforcement bodies through its Excess Property Program, also known as DoD 1033. The charts display the total value of all known grants to municipalities in real 2013 dollars along with the total value and number of mine-resistant and combat vehicles distributed from 2006 to April 2014.

Experts

Podcasts

| July 23, 2015
Michigan’s fiscal solvency lags behind numerous other states. Ted Bolema analyzes the situation for the Frank Beckman Show on WJR in Michigan.

Recent Events

Media Clippings

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 | Aug 30, 2012
Eileen Norcross cited discussing high risk financing.
Charles Blahous | Jun 14, 2012
Charles Blahous comments on President Obama's recent statement that state and local governments are the prime source of weakness in the economy.
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