During the most recent recession, many state governments faced substantial budget shortfalls.State politicians often blame the fiscal crises created by those shortfalls on factors largely outside their control, such as the declining economy or reductions in federal aid. Others have suggested...

The paper discusses the fiscal impact of the Great Recession of 2007-08 on state and local governments in the United States. It documents the sharp decline in tax revenue and discusses how states responded to close the budget gaps in order to obey the balanced budget provisions. It highligts the...