State and Local Fiscal Policy

State and Local Fiscal Policy

Thinking Outside the Box?

Studies in Fiscal Federalism and State–local Finance series

Edited by Sally Wallace

In this broad and illuminating work, experts on public finance discuss innovations in state and local tax policy that have been implemented or considered over the course of the last three decades. The authors provide original work that analyzes whether state and local governments have ‘gone outside the box’ to deal with the strains of current public finances or have gotten along by adhering to the status quo. This book provides researchers, students and policy makers with evaluations and analyses by well-known scholars in the area of state and local public finance of actual practices and analysis of potential policy changes for the future.

Chapter 10: Out-of-the-box conference: an epilogue

Bert Waisanen

Subjects: economics and finance, public finance, public sector economics, politics and public policy, public policy

Extract

Bert Waisanen The conference that led to this volume was held in May 2008 in Atlanta, Georgia. At that time, an atmosphere of uncertainty was beginning to permeate the US economy in numerous regions. A credit crisis was playing out, threatening municipal financing in certain sectors; headline inflation had passed 4 percent and was nearing 5 percent; and energy and food prices in particular were of growing concern. The housing contraction continued to weigh on transaction-based tax revenues. Yet so far, state budgets had held up, due to cautious spending and forecasting in recent quarters. However, signs were emerging that growth was slowing and spending and revenue forecasts would remain uncertain for many states. A straw poll taken at the conference revealed the economic savvy of the group – 90 percent believed the economy would deteriorate in the next six months. Fisher (Chapter 2) recounts the large and continuing policy challenges affecting tax policy, including education finance, property tax pressures, the fact that one in five Americans depends on Medicaid, and incarceration of young men who are then absent from the workforce and parenting responsibilities. He asked about possible solutions, and questioned whether there is a lack of research, or whether there is a lack of policy change. He posed an out-of-the-box question to ponder: should we engineer and advocate, or just analyze? Tannenwald et al. (Chapter 3) discuss how state and local governments have turned to creativity in tax policy, because large structural changes face too much push-back to gain...

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