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

Adam Millsap | Sep 03, 2015
Several states administer grant programs that provide funding to businesses that relocate to the state or expand existing operations within the state. This study analyzes one such program administered by Pennsylvania, the Redevelopment Assistance Capital Program (RACP). Over the life of the program nearly half the grants awarded have gone to the two most populous counties in Pennsylvania, Allegheny and Philadelphia. Using grant data from 2010, I find that RACP grants do have a small effect on subsequent employment growth at the county level.
Justin M. Ross, Olivia Gonzalez | Aug 11, 2015
Taxpayers and policymakers alike are drawing attention to opaque tax practices at the local level. Recent evidence suggests that local officials have the incentive to raise extra revenue through less transparent means and are channeling this revenue into assets for future spending. States have an opportunity to make their tax structure more transparent by adjusting tax rates following property reassessments and making the calculation of their property taxes clearer.
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.
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.
Robert Krol | Jun 24, 2015
In a new study for the Mercatus Center at George Mason University, economist Robert Krol demonstrates that governments are more likely to set up barriers to new technology when the performance advantage of the new technology is small or incremental and lobbying costs are low. Incumbent businesses threatened by a new technology may use the government to block businesses using the new technology from entering the market. Ultimately, government protection of incumbent businesses reduces consumer well-being.
Justin M. Ross | Jun 23, 2015
An important concern to the efficiency of public finance systems is that voters suffer from various “fiscal illusions” that can politicians can exploit to expand the public sector. This paper contributes evidence of this effect on a public finance system through the revenue elasticity hypothesis, which is a form of fiscal illusion in which voters confuse tax rates with tax burdens in the approval of public spending. The applied empirical setting is Virginia cities and counties from 2001 to 2011, where the timing of mass property reappraisals is exogenous but known to local policymakers in setting the annual budget.

Testimony & Comments

Christopher Koopman, Thomas Stratmann, Mohamad Elbarasse | Jun 12, 2015
There is little evidence to support the claim that certificates of need are an effective cost-control measure; and Stratmann and Russ have found that these programs have no effect on the level of charity care provided to the poor. While controlling health care costs and increasing care for the poor may be laudable public policy goals, the evidence strongly suggests that CON regulations are not an effective mechanism for achieving them. Instead, these programs simply decrease the supply and availability of health care services by limiting entry and competition.
Eileen Norcross | Jun 11, 2015
In this brief comment, I will focus on the correct framework to use in selecting the appropriate interest rate when valuing public pension sector liabilities. A framework based on economic principles will accurately measure the market value of these liabilities and is superior to the actuarial approach.
Veronique de Rugy | Jun 02, 2015
Contrary to what you will hear from its supporters and beneficiaries, the Ex-Im Bank plays a marginal role in export financing—backing a mere 2 percent of US exports each year. The vast majority of exporters secure financing from a wide variety of private banks and other financial institutions without government interference or assistance. With US exports hitting record high levels, it is obvious that such financing is abundant and government assistance is superfluous.
James Broughel | Sep 02, 2014
This year’s report makes several important improvements over reports from previous years. However, there are still a number of ways in which this report can be made more useful if it is to be a meaningful representation to Congress and the American public of the effects of the regulatory system in the United States.
Matthew Mitchell | Oct 04, 2011
Matthew Mitchell testified before the House Committee on the Judiciary about state governments' experiences with Balanced Budget Amendments.
Eileen Norcross | Feb 09, 2011
Eileen Norcross testified before the U.S. House Committee on Oversight and Government Reform on the looming municipal debt crisis.

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

Michael S. Greve | Jul 20, 2015
Increasingly, states are deeply divided on central questions of national politics and policy. The divide is often viewed as a lamentable and perhaps dangerous form of political “polarization.” But those fears are exaggerated. In fact, the divide between and among the states offers an opportunity to reform federalism on a constitutional basis.

Experts

Videos

Eileen Norcross | August 20, 2015
Eileen Norcross testifies on PCN-TV to discuss Pennsylvania's public sector pensions.

Podcasts

, Bill Kramer | August 21, 2015
Guest Bill Kramer with the Council of State Chambers Discusses Policy Reform in the States

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

Michael S. Greve | May 22, 2015
This essay examines the sources and the scope of federalism’s failures. It provides a trenchant, constitutionally grounded analysis with profound implications for a range of current policy debates. Federalism’s restoration requires not merely rebalancing the federal-state relationship through decentralization. Rather, we must restore the structure of federalism to competitive federalism—which encourages states to compete to enhance freedom and economic growth—in response to the rise of cartel federalism, which squashes competition between the states and makes states dependent on the federal government.
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