Journal of Economic Perspectives: Vol. 18 No. 2 (Spring 2004)
Print Article Summary Export Citation
Sign up for Email Alerts Follow us on Twitter
State Budget Deficit Dynamics and the California Debacle
Sheffrin, Steven M. 2004. "State Budget Deficit Dynamics and the California Debacle." Journal of Economic Perspectives, 18(2): 205-226.
This paper analyzes the recent experience with state budget deficits in the United States, with an in-depth analysis of the California experience. Compared to prior recessions, states were slower to make adjustments in taxes and spending this time. The paper explores a variety of reasons for this difference including changes in the legal, political, and institutional environments, the unusual increase in capital gains revenue during the boom preceding the recession, and the inherent difficulties in forecasting revenues, particularly those derived from capital income. As the case study from California illustrates, states made long term commitments from temporary revenue sources and were required to make budgetary decisions in the face of very incomplete information about current and projected tax receipts.
Article Full-Text Access
Full-text Article (Complimentary)
Sheffrin, Steven M.
| Login to post a comment