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

Marc Joffe, Jesse Martinez | Apr 12, 2016
Puerto Rico is facing a severe fiscal crisis, and new crises will be almost inevitable in the absence of major institutional changes in the commonwealth. History has bequeathed the island inefficient state-run enterprises and a government unable to balance its budget, but Puerto Rico could have a bright future if it undertakes the right reforms.
Jason Sorens | Feb 09, 2016
When local governments in the United States and other developed nations become more dependent on the central government’s grants, they tend to become less efficient, spending more and taxing more for the same level of services. Voters can also find it difficult to understand which level of government is responsible for which policy.
Edward J. Timmons | Jan 26, 2016
Increasing licensing requirements for healthcare professionals is often promoted as a measure to improve the quality of care, but its main effect may be to raise costs for patients.
Stephen Miller, Zachary Gochenour | Jan 19, 2016
A new study written for the Mercatus Center at George Mason University analyzes North Carolina’s performance on key issues, the way in which the state government manages itself, and opportunities for improvement. North Carolina has recently implemented proactive reforms to its tax system, indicating that state lawmakers are capable of executing the other positive policy changes outlined in this study.
Mark J. Warshawsky, Ross Marchand | Jan 07, 2016
A new study for the Mercatus Center at George Mason University examines both the overall financial condition of state and local pension plans and the legal impediments to pension reform. It argues that reform proposals that assume the federal government will bail out state and local pen- sions are politically and economically unworkable and unfair. Instead, it presents a two-pronged reform proposal: (1) require state and local authorities to disclose the financial condition of their pension plans to beneficiaries in plain language and using standardized conservative accounting assumptions, and (2) allow state and local governments to offer beneficiaries a choice between accepting the uncertain and risky future benefits originally promised or receiving a discounted lump-sum benefit right away.
Erick M. Elder | Jan 06, 2016
Rainy day funds are one tool that most US states use to help mitigate the fiscal stress caused by economic slowdowns that reduce state government revenue. Past research I did with Gary Wagner uses a switching regression to estimate parameters in order to form a distribution of potential budget shortfalls for each state. This paper updates those results to include post–Great Recession data. A comparison of this distribution to the actual amount of savings that states have accumulated allows an assessment of how prepared each state is for an economic downturn and the resulting decline in tax revenues. What ability do states have to weather economic downturns without raising taxes or reducing spending? States are ranked based on their current ability to weather future economic downturns.

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

Marc Joffe | Oct 28, 2015
According to recent research, expanding state Medicaid spending is “crowding out” spending on other major state programs, most notably education and transportation infrastructure. This growth in state Medicaid spending, however, does not seem to be increasing state debt burdens.

Experts

Videos

Adam Millsap | January 07, 2016
Adam Millsap talks about Alaska’s rainy day fund on NBC News 2.

Podcasts

Eileen Norcross | October 08, 2015
Eileen Norcross discusses a recent op-ed on the need for transparency surrounding property tax increases in Virginia with Mike Schickman on WSVA.

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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