This paper develops a new measure of state and local fiscal sustainability called the "trend gap," which is based on socioeconomic and other fundamental factors and removes the short-term influence of the business cycle. The paper estimates the trend gap and finds that the nationwide per capita...

This paper develops a new measure of state and local fiscal sustainability called the "trend gap," which is based on socioeconomic and other fundamental factors and removes the short-term influence of the business cycle. The paper estimates the trend gap and finds that the nationwide per capita...

Local governments in New England rely on state aid to finance the provision of essential public services. Yet in response to the recent and ongoing fiscal crisis, state governments across the region have cut local aid deeply, often by the same percentage in each community. This across-the-board...

This policy brief evaluates the distribution of municipal aid in Massachusetts in FY 2011 and suggests an approach for reforming municipal aid without redistributing current aid. We use the “municipal gap,” a measure that is outside the control of local officials, to determine a community's...

This paper develops a framework that distributes reductions in state aid based on underlying local fiscal health. Under this framework, the state gives smaller aid cuts to communities that are in worse underlying fiscal health and receive less existing aid. This framework therefore provides a...