In this book on new fiscal approaches, nineteen experts examine topics ranging from constitutional reform and debt fatigue to fiscal rules and zero-based budgeting. Together, these contributions inform a multifaceted, nuanced argument for the need to formalize spending restraint and redefine state debt to include unfunded liabilities. Scholars will find the book useful as a reference tool explaining how rules-based fiscal policy is used to address debt fatigue and unsustainable spending growth. Legislators and practitioners will find the book useful as a reference source in designing and simulating second generation fiscal rules, and educators will find the book helpful for its close analysis of policies in representative states such as Illinois, New York, New Jersey, Nebraska, and California.
Barry W. Poulson is emeritus professor of economics at the University of Colorado.
John Merrifield is head of the Institute for Objective Policy Assessment and was a member of the faculty at the University of Texas at San Antonio for 32 years.
Part I State Debt and Fiscal Stabilization
Chapter 1 State Debt and Liabilities: A Holistic Approach
Chapter 2 U.S. State Debt Defaults and Constitutional Reform in Historical Perspective
Chapter 3 Pension Liability Stress for State Governments
Chapter 4 Preparing State Finances for a Time of Crisis
Chapter 5 Debt Fatigue in the States: Red States, Blue States, and Zombie States
Part II State Fiscal Institutions
Chapter 6 Budget Stabilization Funds
Chapter 7 Anti-Aid Provisions in State Constitutions
Chapter 8 Competition, Networks, and Public-Private Partnerships: Contributions to State Governance
Chapter 9 Extending Zero-Based Budgeting to Zero-Based Regulation
Part III Fiscal Federalism
Chapter 10 Government Growth, Institutional Erosion, and the Fiscal Squeeze: Nebraska as a Case Study
Chapter 11 Fiscal Federalism and State Budgeting
Chapter 12 Give People a Vote That Counts, and They Will Vote for Fiscal Responsibility
Chapter 13 Florida’s Fiscal Conservatism
The 13 essays in this volume focus on constraining state and local fiscal policy. The authors tend to have some connection to George Mason University, the American Legislative Exchange Council, or the Cato Institute. Although the contributions as a whole possess strong doctrinal conformity, this is leavened with historical context and case studies to present a somewhat broader view of state and local public finance. The first part of the collection is devoted to state debt and fiscal stability. State liabilities, including responsibility for infrastructure, pensions, and accumulating debt, are evaluated in the context of defaults during the 19th and 20th centuries. Rainy day funds and debt brakes are suggested to improve stability. The second section, dealing with fiscal institutions, contends with public-private business ventures as well as budgeting and stability issues. Zero-based regulation is recommended, keeping with efforts to attain zero-based budgeting. The final section critiques fiscal federalism, deprecating federal aid to state and local governments for a variety of reasons. A preferable fiscal federalism, one contributor suggests, would be to reverse revenue sharing, reminiscent of 18th-century federal funding under the Articles of Confederation. Recommended. Graduate students.
The analyses in this volume are applicable to all levels of government, especially for difficult conceptual issues, e.g. recognition of unfunded liabilities, right-sizing budget stabilization funds, regulatory budgeting, asset/liability valuation, and design of the essential budget constraint.
The arrival of New Perspectives on State Government Fiscal Challenges, an anthology edited by Barry Poulson and John Merrifield, couldn't be more timely. Expenditures by state and local governments have exploded since 1980, growing at a 6.2% annual rate, nearly double the annual rate of inflation over that period. The anthology insightfully covers the good, the bad, and the ugly. It offers creative prescriptions for states to avoid allowing their finances to spin out of control. This book is a welcome addition to a neglected subject: state and local public finance.
This volume offers a rich menu of food for thought for anyone who works on or studies state budgets and federalism, especially for legislators and those who advise them. It provides a sober assessment of states' fiscal health, a review of institutions that support sound policy, useful comparisons between the states, and recommendations for doing better. The diverse topics shine light into many important factors shaping state fiscal policy.