State and Local Policy Project

State and Local Policy Project

Many states face crushing budget deficits, rising unemployment, and other economic and social ills. The State and Local Policy Project conducts research into the institutional drivers of state and local fiscal challenges to suggest potential solutions.  The project focuses on the relationship between the states and the federal government, interest group dynamics, and the incentives behind budget and spending issues to put forward ideas for sustainable budget reform. 

Research

Jeremy Horpedahl, Harrison Searles | Mar 06, 2014
Removing the federal tax deduction for state and local taxes would make taxes more equitable throughout the nation, as both high-tax and low-tax states are treated equally by the federal government. It may also provide an efficiency boost for states and localities, as they abandon some services that could be better provided by private companies. The removal of this deduction would also allow federal marginal tax rates to be cut across the board, providing a secondary boost to the economy while still remaining revenue-neutral at the federal level.
Justin M. Ross | Feb 25, 2014
The primer begins with a short discussion of criteria for evaluating tax revenue options (i.e., economic efficiency, equity, transparency, collectability, and revenue production). It proceeds to an overview of the different types of taxes employed at various levels of government and an evaluation of each tax against these criteria. The tax categories included here are individual income taxes, consumption taxes, real property taxes, and corporate income taxes.
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.
Keith Hall, Robert Greene | Sep 20, 2013
Virginia’s labor market is more troubled than its unemployment rate suggests. If labor force participation were at its 2007 level, the state’s unemployment rate would be as high as 8.6 percent. We estimate that 10 percent of Virginia’s workforce is indirectly employed by the federal government via federal contract expenditures. Excluding these jobs, private job loss in Virginia since 2007 is on par with the national average.
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.
Bruce Yandle | Jun 17, 2013
The US economy is creating new wealth and growing employment, albeit at a slow pace. But uncertainty is the key word that describes the economic situation at mid-2013. There are major unknowns with respect to Fed policy, taxing and spending, the effects of Obamacare on employment, the implementation of Dodd-Frank financial reform, regulatory policy affecting the production of electricity, and the prospects for Europe’s recovery from an extended recession. Add to this pallid picture reductions in growth in China, India, and the developing world taking some of the edge off the global boom, which, in spite of that growth haircut, is still tugging away on America’s export growth.

Testimony & Comments

Speeches & Presentations

Contact

Daniel M. Rothschild

Program Websites

Neighborhood Effects


Neighborhood Effects is a blog about American state and local economic policy and political economy issues, focusing on a variety of issues related to federalism, tax and budget, public sector spending, infrastructure, urban life, and economic policy.


Inside State & Local Policy


Inside State and Local Policy is a podcast hosted by the Mercatus Center at George Mason University focused on economics at the state and local level of government. This podcast is a resource for state policy makers, the media, and others with an interest in state issues and innovative solutions to the issues facing all states. Each brief episode features conversations with policy scholars, elected officials and other practitioners. Our goal is to bridge the gap between policy theory and policy making and provide state policy makers with scholarly analysis on the potential outcomes of legislative and regulatory reforms. This podcast is hosted by the Mercatus Center’s Director of Economic Education, James C. Musser.


Charts

Keith Hall, Robert Greene | Nov 25, 2013
In 2012, public-sector employment made up more than 16 percent of the US labor market. Direct government employment fails to capture the full impact of government spending on state labor markets. Using federal contract data obtained from USAspending.gov, we estimated the percentage of private sector jobs actually financed by federal contract dollars in each state. The following four maps visualize our findings.

Experts

Videos

Maurice P. McTigue | October 27, 2013
Maurice McTigue discusses Kentucky's economic competitiveness with other states.

Podcasts

Eileen Norcross | March 24, 2014
Eileen Norcross Discusses Massachusetts' Fiscal Condition on the New England Talk Show

Recent Events

Matthew Mitchell, Maurice P. McTigue, John Garen | February 10, 2012
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.

Books

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