Thinking Outside the Box?
- Studies in Fiscal Federalism and State–local Finance series
Edited by Sally Wallace
Chapter 2: Major State–Local Policy Challenges: Outside-the-Box Solutions Needed
Ronald C. Fisher1 INTRODUCTION What are the key or most fundamental fiscal policy challenges currently facing state and local governments in the United States? That simple question is the somewhat daunting topic for this chapter. Of course, this requires that the characteristics that make a challenge ‘key’ or ‘fundamental’ be identified. The objective here is to identify long-run issues that are fiscally important for states and localities, have been relatively intractable in a policy sense, and have a broad impact on society beyond the solely fiscal implications for subnational governments.2 I anticipate (and indeed hope) that the views expressed in this chapter will be somewhat controversial, challenging and contrary. They should be controversial because the reader may believe that the wrong issues have been selected and identified. Perhaps one believes that some of these do not meet the four characteristics noted above, or readers may believe that other issues are more fundamental or important than the six selected (see below). The discussion should be challenging because part of the objective is to stimulate creative thinking and new ideas that may help to resolve these difficulties, both for the state and local governments and for the broader society. And the issues may be a bit contrary from the perspective of economists who work on subnational government fiscal policy. Only two of the six issues discussed are tax policy issues; the others reflect spending or programmatic activities of state and local governments. This is not the first time it has been noted...
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