Commentary on "can state and local governments rely on alternative tax sources?"

State finance ; Local finance

How well are the states of the Eighth Federal Reserve District prepared for the next recession?

Economic downturns often force state policymakers to enact sizable tax increases or spending cuts to close budget shortfalls. In this paper the authors make use of a Markov-switching regression model to empirically describe the expansions and contractions in the states of the Eighth Federal Reserve District. They use the estimated parameters from the switching regressions to form probability distributions of the revenue shortfalls states are likely to encounter in future slowdowns. This allows them to estimate the probability that each state's projected fiscal-year-end balances will be sufficient to offset the fiscal stress from a recession.Business cycles ; Recessions ; Federal Reserve District, 8th

State government finances: World War II to the current crisis

This article will explore the extent, causes, and proposed solutions of the current fiscal crisis from a historical perspective of state finance. Although the current fiscal crisis is severe, it becomes more difficult to assess unless one has a more complete understanding of the historical changes that have occurred in state revenue streams. This article will address the role of major revenue sources in the context of the current slowdown and also investigate how reliance on various revenue sources has changed over the past 50 years. The role of non-traditional revenue sources, such as state lotteries and casino gambling, will also be discussed. The article further addresses various fiscal institutions, such as tax and expenditure limitation laws, rainy day funds, and balanced budget rules, and explores the role each play in state budgeting and finance.Taxation ; Budget ; Finance, Public

Red ink in the rearview mirror: local fiscal conditions and the issuance of traffic tickets

Municipalities have revenue motives for enforcing traffic laws in addition to public safety motives because many traffic offenses are punished via fines and the issuing municipality often retains the revenue. Anecdotal evidence supports this revenue motive. We empirically test this revenue motive using panel data on North Carolina counties. We find that significantly more tickets are issued in the year following a decline in revenue, but the issuance of traffic tickets does not decline in years following revenue increases. Our results suggest that tickets are used as a revenue generation tool rather than solely a means to increase public safety. ; Formerly titled: Are traffic tickets countercyclical?Local government

State government finances: World War II to the current crises

This article examines the current state budget crises from a historical perspective. The role of major expenditures and revenue sources in the context of the current slowdown and how reliance on various revenue sources has changed since World War II are addressed. Tax revenue variability over the business cycle and the use of nontraditional revenue sources, such as state lotteries and casino gaming, are also discussed. The article further comments on the role of fiscal institutions, such as tax and expenditure limitation laws, rainy day funds, and balanced budget rules, in state budgeting and finance.Taxation ; Budget ; Finance, Public

Essays on the political economy of state government saving and the role of budget stabilization funds

This dissertation explores the saving behavior of state governments in the context of the ability of states to weather recessionary periods. The first chapter of the dissertation discusses the role of savings as a policy option for state decision-makers in light of the fiscal constraints facing state governments, reviews the previous literature that has examined the savings behavior of state governments, and outlines the research agenda for the dissertation. Chapter 2 provides statistics on the post-World War II savings of states to explore recent trends in their savings behavior and discusses the data employed in the dissertation. The third chapter examines an implication of the common pool problem associated with public sector savings by investigating how anticipated future changes in the controlling parties of states\u27 legislatures affect the current level of saving. The results provide evidence that state saving is adversely impacted by future changes in controlling political parties, suggesting that politically unstable states may be ill-prepared to deal with recessions relative to politically stable states. Chapter 4 of the dissertation examines the role that political stability and other factors have had on states\u27 choices to adopt budget stabilization funds. The results provide evidence that states which have experienced more long-term political instability, have been severely hit by recessions, and have expenditure and/or tax limitation laws in place, are more likely to adopt a budget stabilization fund as an additional vehicle for saving. The final research chapter of the dissertation investigates the effectiveness of budget stabilization funds by examining how states\u27 savings behavior has changed as a result of utilizing budget stabilization funds. The results from this chapter provide evidence that budget stabilization funds governed by explicit deposit and withdrawal rules can assist state decision-makers in saving and thus enhance a state\u27s ability to mitigate recessions in the future. Chapter 6 provides a summary of the dissertation and discusses areas of future research investigating state saving and budget stabilization funds

A spatial analysis of state banking regulation

We use a spatial model to investigate a state’s choice of branch banking and interstate banking regimes as a function of the regime choices made by other states and other variables suggested in the literature. We extend the basic spatial econometric model by allowing spatial dependence to vary by geographic region. Our findings reveal that spatial effects have a large, statistically significant impact on state regulatory regime decisions. The importance of spatial correlation in the setting of state banking policies suggests the need to consider spatial effects in empirical models of state policies in general.Banks and banking ; Bank supervision

Regional disparities in the spatial correlation of state income growth

This paper presents new evidence of spatial correlation in U.S. state income growth. We extend the basic spatial econometric model used in the growth literature by allowing spatial correlation in state income growth to vary across geographic regions. We find positive spatial correlation in income growth rates across neighboring states, but that the strength of this spatial correlation varies considerably by region. Spatial correlation in income growth is highest for states located in the Northeast and the South. Our findings have policy implications both at the state and national level, and also suggest that growth models may benefit from incorporating more complex forms of spatial correlation.Regional economics ; Income distribution

Reciprocity and Competition: Is there a connection?

One challenge states face in designing an income tax system is decidint how to treat non-resident earners. Numerous states have entered into reciprocity agreements with other states that exclude non-residents’ income from the tax base. These agreements provide a unique opportunity to explore the nature of state tax competition. We demonstrate that not only do reciprocity agreements dampen competition over income taxes, but the states that enact agreements also exhibit decreased levels of competition over other tax bases. This suggests that reciprocity agreements are a credible vehicle for states to act cooperatively and avoid a potential race to the bottom

DC isolation and protection system and circuit

A precision analog electronic circuit that is capable of sending accurate signals to an external device that has hostile electric characteristics, including the presence of very large common mode voltages. The circuit is also capable of surviving applications of normal mode overvoltages of up to 120 VAC/VDC for unlimited periods of time without damage or degradation. First, the circuit isolates the DC signal output from the computer. Means are then provided for amplifying the isolated DC signal. Further means are provided for stabilizing and protecting the isolating and amplifying means, and the isolated and amplified DC signal which is output to the external device, against overvoltages and overcurrents