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The 2002 Downturn in State Revenues: A Comparative Review and Analysis

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  • Giertz, J Fred
  • Giertz, Seth

Abstract

We analyze the behavior of state revenues since the early 1950s to determine the severity of the revenue declines experienced by states after the 2001 recession. Both total state revenues for the nation and state–level data for each state are studied. We conclude that the states were indeed hit with an unprecedented downturn in revenues—unlike anything that had been experienced in the preceding half–century. Further and contrary to general perceptions, revenue increases in the years preceding the downturn were not particularly strong compared to revenue increases in the years leading up to previous recessions. We further conclude that most proposed budget rules dealing with either taxes, spending, or savings would have been insufficient to address the states’ problems and that states will need major discretionary structural changes in state revenues and expenditures to return to fiscal balance.

Suggested Citation

  • Giertz, J Fred & Giertz, Seth, 2004. "The 2002 Downturn in State Revenues: A Comparative Review and Analysis," MPRA Paper 18316, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:18316
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    File URL: https://mpra.ub.uni-muenchen.de/18316/1/MPRA_paper_18316.pdf
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    References listed on IDEAS

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    1. Poterba, James M, 1994. "State Responses to Fiscal Crises: The Effects of Budgetary Institutions and Politics," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 799-821, August.
    2. Mary C. Daly, 2003. "Understanding state budget troubles," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue aug15.
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    Cited by:

    1. Saeid Mahdavi, 2013. "State Government Tax Revenue, Tax Revenue Composition and Tax Effort Index: An Assessment of the 1978-97 period," Working Papers 0213eco, College of Business, University of Texas at San Antonio.

    More about this item

    Keywords

    State Revenues; Business Cycle; State Budget;

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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