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State government budgets and the Recovery Act

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  • Katharine L. Bradbury

Abstract

State and local governments, with revenues reduced sharply by the recession, are responding by cutting services, increasing tax rates, and drawing down reserves; they are also receiving some relief in the form of stimulus funds provided by the federal government. The stimulus funds legislated in the American Recovery and Reinvestment Act only partly offset the recession-induced shortfalls and are scheduled to phase out before most analysts believe state and local governments will see fiscal recovery well underway. Thus, observers are concerned that the state-local sector will create a substantial drag on the overall economy during fiscal year 2011 and into 2012. This brief compiles data on state gaps, responses, and stimulus funding nationwide and discusses potential implications for the national economy.

Suggested Citation

  • Katharine L. Bradbury, 2010. "State government budgets and the Recovery Act," Public Policy Brief, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbpb:y:2010:n:10-1
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    File URL: http://www.bostonfed.org/economic/ppb/2010/ppb101.htm
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    References listed on IDEAS

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    1. Congressional Budget Office, 2010. "Policies for Increasing Economic Growth and Employment in 2010 and 2011," Reports 41813, Congressional Budget Office.
    2. Congressional Budget Office, 2010. "Policies for Increasing Economic Growth and Employment in 2010 and 2011," Reports 41813, Congressional Budget Office.
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    Cited by:

    1. Paul R. Flora, 2010. "Budget gaps and balanced-budget proposals in Third District states," Research Rap Special Report, Federal Reserve Bank of Philadelphia, issue Jun.

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