Mercatus Center State Policy Guide

7/29/2019 Mercatus Center State Policy Guide

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STATE POLICY

GUIDE

2013


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The Mercatus Center at George Mason University is the worlds premier

university source or market-oriented ideasbridging the gap betweenacademic ideas and real-world problems.A university-based research center, Mercatus advances knowledgeabout how markets work to improve peoples lives by training graduatestudents, conducting research, and applying economics to oer solutionsto societys most pressing problems.Our mission is to generate knowledge and understanding o theinstitutions that aect the reedom to prosper and to fnd sustainablesolutions that overcome the barriers preventing individuals rom livingree, prosperous, and peaceul lives.Founded in 1980, the Mercatus Center is located on George MasonUniversitys Arlington campus.www.mercatus.org

ABOUT THE

MERCATUS CENTER


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MERCATUS CENTER AT GEORGE MASON UNIVERSITY

The Mercatus State Policy Guide is intendedto summarize and condense the best research

available on the most relevant topics. Its a starting

point for discussion, not a comprehensive overviewof economic policy.

Each statement is supported by academic

research, with links provided in the endnotes.

Mercatus scholars are available to further explain

the results of their studies.

We hope the guide will prove to be a valuable tool

in your economic policy research.


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HOW TO CONTROL

SPENDING

Research Findings

Strict balanced budget requirements should prevent annual decits and

accumulated debt.

Astrictbalancedbudgetrequirement(1)requiresactualasopposedtoprospec-

tivebalance,(2)prohibitsadecittobecarriedovertothenextyear,and(3)has

anindependentlyelectedauthorityevaluatethebudget.

Onaverage,stateswithstrictbalancedbudgetrequirementsspendlessthanother

statesnearly$200percapitaperyear.1

The item-reduction veto is an important tool or governors.

Insteadofforcinggovernorstoeitheracceptorrejectaspendingitemoutright,the

item-reductionvetoallowsthegovernortoreducetheamountappropriated.


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5

Implementinganitem-reductionvetocanbeexpectedtoreducespendingbyover

$450perpersonannually.2

A supermajority requirement will limit tax increases.

Stateswithasupermajorityrequirementtopassanytaxincreasereducespending

onaveragebyover$100percapitaeachyear.3

Separate tax and spending committees in state legislatures reduce the unding o

pet projects.

Ifacommitteehasjurisdictionovertaxingbutnotspending,itsmembersunable

tosteerspendingprojectstowardtheirconstituencieswillhaveanincentiveto

keeptaxratescompetitivebecausetheywillnothaveawaytocatertovotersonthe

spendingside.

Stateswithseparatetaxandspendingcommitteesspendover$1,000lesspercapita

annually.4

Binding tax and expenditure limits restrict spending increases.

Taxandexpenditurelimits(TELs)areconstitutionalorstatutorylimitsonstatespendingthatforbidlegislatorsfromgrowingexpendituresaboveacertainrate.

ThemosteectiveTELsarecodiedconstitutionally,restrictpercapitaspending

toincreasingonlywithination,refundexcesssurplusrevenuestotaxpayers,and

requireahighbarforanoverride.5


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6

Temporary ederal grants oten increase long-term state spending.

Whenstatesaccepttemporaryfederalaidtocreateorexpandapublicprogramtoday,theywillinevitablybeforcedtoeithercuttheprogramorraisestateandlocal

taxestocoveritscostswhenfederalaidends.

Inpractice,temporaryfederalgrantstodaytendtoresultinhigherstateandlo-

caltaxestomorrow.Foreachdollaroffederalaidthatstatesreceive,theycanbe

expectedtoraisetaxesbetween33and42centstocoverprogramcosts.Localities

canbeexpectedtoraisetaxesandfeesby23to46centsforeachdollaroffederalaidtheyreceive.6

Budget gimmicks can mask the true cost o government and allow legislators to avoid

dicult decisions.

Statescanmakebudgetingprocesseslesssusceptibletofrequentlyusedscaleva-

siontactics.

Tacticsincludeinsertingloopholesintobalancedbudgetrequirements,pushing

forwardpayrolldates,deferringtaxrefunds,andhavingweaktaxandexpenditure

limitsthatallowspendingtoincreasefasterthaninationandpopulationgrowth.7


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7

Policy Challenges

Whilemoststatesarenolongerfacingthelevelofbudgetshortfallsthattheysaw

overthelastfewyears,21ofthe50statesstillexpectlowerrevenuesin2013than

theyhadbeforethecrisisbeganin2008.8

Statesrelyongrantsfromthefederalgovernmentfornearlyone-thirdoftheirentire

budgets.Giventhelikelihoodoffederalspendingcutsinthefuture,statescannot

andshouldnotcountonfederalsupporttobalancetheirbudgetsindenitely.9

StatebudgetswillfaceunprecedentedpressurefromrisingMedicaidandgovern-

mentemployeepensioncostsinthenearfuture.10

Medicaidisnowthemostexpensiveiteminstategeneralfundbudgets,withnearly

aquarterofeverybudgetdollargoingtowardtheprogram.11

Thebiggestdriverofstatedebtistheunfundedliabilitiesofgovernmentemploy-

eepensionplans.Asof2012,stateshadenoughassetstocoveronly41percent

ofpromisedpensionbenets.Thatleftanunfundedliabilityof$4.6trillion,using

marketvaluation.12

Ofthe50states,49havesomeformoflegalrequirementtobalancetheirbudget.

Stategovernmentsatleastinprincipleareprohibitedfromrunningannualdecitsandaccumulatingdebt.Butlegislatorsinmanystateshavedisregardedthespirit

ofthesebalancedbudgetrequirementsandsoughtloopholesforcontinueddecit

spending.13


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8

Policy Proposals

Reformthebudgetingprocessbyinstitutingstrictbalancedbudgetrequirements,

thuspreventingtheuseofgimmicksthatcircumventrulesmeanttocontrolspend-

ingandprotecttaxpayers.

Empowerthegovernortoreducespending,andgivevoterstheoptiontointroduce

bindingtaxandexpenditurelimitsthatrestrictspendinggrowth.

Createinstitutionalreformsthathavebeenproventocontrolspending.Examplesin-cluderequiringasupermajoritytopassataxincreaseandseparatingthelegislative

committeesresponsiblefortaxesandforspending.

Rememberthatfederalaidcomeswithstringsattachedandthatincreasedfederal

grantswilleventuallyresultinlargergovernmentprogramsandhigherstatetaxes.


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HOW TO FIX

PENSIONS

Research Findings

Accurate accounting methods can reveal the true cost o pension plans.

CurrentgovernmentaccountingstandardsresultinUSpublicpensionplansunder-

statingthevalueofpensionspromisedtoworkers.Theresultisthatstateplansare

moredeeplyunderfundedthanstatepolicymakersreport.14

Toaccuratelyrepresentpensionobligations,statesshouldbeusingtherisk-free

discountrateofthe15-yeartreasurybond.Instead,statestypicallyusetheexpected

rateofreturnontheirinvestments.Thispracticegivesstatesandmunicipalitiesa

pretexttomakeinsucientannualcontributionstotheirpensionfundskickingthe

cantofuturegenerationsandsettingthestageforadebtcrisis.15

Inordertodevelopanaccurateunderstandingoftheirstateslong-termscalhealth,

policymakersshouldrequirepensionauthoritiestomeasureandreportonpension

liabilitiesbasedonthemarketvalueoftheseliabilities.Thispracticewouldproperly

accountfortheguaranteednatureofstatepensions.16


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10

Moving rom dened benet plans to dened contribution plans makes public-sector

compensation comparable to private-sector compensation.

MoststateandlocalgovernmentsintheUnitedStatesoeronlydenedbenet

(DB)pensionplanstotheirworkers.UnderaDBplan,theemployerpromisesem-

ployeesregularpensionpaymentsovertheworkersretirementyears.

Inthesepublic-sectorDBplans,theinvestmentriskisbornebytaxpayers,sincethe

employerspaymentisguaranteedregardlessoftherateofreturnthatthepension

fundsearn.WheninvestmentreturnsareinsucienttocoverthebenetspromisedunderDBplans,statesandmunicipalitiesmustprovidethedierencebyraising

taxesorcuttingspendingonotheritemsinthebudget.17

Transitioninggovernmentemployeesfromdenedbenettodenedcontribution

(DC)retirementplanstakesdecisionsaboutfuturepensionbenetsoutofthehands

ofpoliticiansandempowersworkerswithmorechoicesconcerningtheirretirementin-

vestments.Additionally,aDCplanallowspublicemployeestheexibilitytotaketheir

retirementbenetswiththemiftheywanttoleaveajobbeforepensionvesting.18

Some states have instituted best practices to control employee pensions.

InRhode Island,thegovernorandlegislaturetooktherstserioussteptowardpen-

sionreformin2011byenactingtheRhodeIslandRetirementSecurityAct.Thislegis-

lationimmediatelyreducedunfundedliabilityby$3billionbyraisingtheretirementage,creatingahybriddenedbenetdenedcontributionplan,andsuspendingthe

cost-of-livingadjustment.19

New Jerseytooksmallrststepsin2010withreformsthatincreasefunding

andreducebenetsfornewlyhiredpublicemployees.Thestateshouldcontinue

toreformbyoeringnewhiresthesameDCplancurrentlyusedbypublic

universityemployees.20


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ThePennsylvanialegislatureisdebatingashifttoDCplansforfutureemployees,

whichwouldbecriticalforlong-termsustainabilityforstatenances.However,the

statewillimposetransitioncostsandwillnotmitigatethecostofbenetsforexist-ingemployeesonDBplans.21

Some states have taken dangerous steps to deal with ununded liabilities.

InDelaware,therealizationthatunfundedliabilitiesaregrowinghasledocials

toinvestpensionfundsintoriskierassets.Thisisadangeroustrendthatputsbothretireesandtaxpayersatsubstantialrisk.Suchanactionisanunsuitablesubstitute

forseriousstructuralreform.22

Policy Challenges

Theunfundedliabilitiesofgovernmentemployeepensionplansarethebiggestdriv-erofmassivestatedebt.23

Stateocialshavepromisedanestimated$4.6trilliontocurrentandfutureretirees

thatarenotbackedbypensionfundassets,whichistheunfundedliability.24

Pensioncostsdonotappearaslineitemsinbudgetstoday,andmanypolicymakers

makespendingdecisionsthatdonottakethesefuturecostsintoaccount.25

Currentaccountingmethodsdrasticallyunderestimatefutureretireecosts.These

methodsassumethatpensionfundportfolioswillgrowatratesthatareunrealisti-

callyoptimistic(nearly10percentperyearinsomeinstances)whereasguaranteed

benetsshouldbevaluedattherisk-freerate.26


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12

MoststateandlocalgovernmentsstillenrolltheiremployeesinDBpensionpro-

grams,asystemthathaslongbeenabandonedbytheprivatesector,inpartbe-

causeitlimitsretirementoptionsforworkers.27

DBprogramsforcetaxpayerstoassumealloftheriskforfuturegovernmentem-

ployeebenets.Ifthepensionfundcannotfulllallofthebenets,taxpayersmust

makeupthedierence.28

Policy Proposals

Measureunfundedpensionliabilitieswithmarketvaluation.Thisistherststepto

takeinanymeaningfulpensionreform.

TransitiongovernmentemployeestoDCplans,whicharethestandardforworkers

outsidethepublicsector.DCplansgiveemployeesmorecontrolovertheirretire-

mentbenetswhilealsosparingtaxpayersfrombearingtheriskassociatedwith

unfundedpensionliabilities.

StudyRhodeIslandspensionreforms.Thisstatespublicemployeeshavethechoice

tosegueintohybridplansthatincludeelementsofbothDBandDCplans.

Considerotherstructuralchangesthatwouldaddresspensioncosts,including

changingthecost-of-livingadjustmentformulaandraisingthenumberofyearsemployeesmustworkbeforebeingvestedintheirpensionplan.


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HOW TO CONTROL

HEALTHCARE COST

Research Findings

From a practical perspective, it is unlikely that the ederal government will make the ull

amount o Medicaid payments now scheduled under law.

StategovernmentsthatchoosetoexpandMedicaidareatriskthatthefederalgov-

ernmentwillreduceMedicaidspending,leavingstatestoeitherassumethesecosts

orcutbenets.29

Federal grants impose large costs in the orm o uture increases in state and local taxes.

WhenstatesacceptfederalaidtocreateorexpandpublicprogramssuchasMedic-aidtoday,theyinevitablymustdecidewhethertocuttheprogramortondaddi-

tionalrevenueoftenthroughtaxhikeswhenfederalaidends.

Statetaxeswillrisebetween33and42centsforeverydollarinfederalgrants

receivedtoday.30


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14

Medicaid reorms that encourage preventive care and discourage emergency room visits

can benet both patients and taxpayers.

NonemergencyvisitstoemergencyroomsbyMedicaidpatientsareoneofthe

largestcostdriversoftheprogram.TreatmentintheERissignicantlymore

expensivethanthesametreatmentdeliveredbyaprimarycarephysicianoutside

ofahospitalsetting.31

WestVirginiaranatrialprogramthatincentivizedMedicaidpatientswithenhanced

planbenetsiftheysignedapledgetousetheERonlyinactualemergencies.Thisre-

formsawmoderatereductionsinunnecessaryERvisitswithincertaindemographics.32

The 1996 ederal welare reorm, which replaced ederal matching grants with block

grants to states, serves as a guide to block granting Medicaid to the states.

Blockgrantsenabledpolicyexperimentsinthelaboratoryofthestatesthatyield-

edbenetstothenationasawhole.33

Blockgrantsgenerateanincentiveforstatestobemoreinnovativeandecientin

usingtaxdollars.34

InlieuofblockgrantsforMedicaid,statesshouldtakefulladvantageoftheoppor-

tunitytoexperimentunderwaiverprograms.Mostoftheinnovativestateprograms

thatencouragewelfare-to-worktransitionswereinitiatedunderwaiverprogramsbegunbeforethe1996welfarereform.35


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15

Policy Challenges

Oftotalstatespendinginscal2011,23.6percentwenttoMedicaid,thesinglelarg-

estportionoftotalstatespending.36

Medicaidisjointlyfundedbythefederalgovernmentandstategovernments.Most

Medicaidenrollees(about7in10)arelow-income,buttheprogramalsocoversben-

etsforlong-termseniorcareanddisabledAmericans.37

ThequalityofcareunderMedicaidisinferiortothatprovidedunderprivatein-

surance.ThereasonisthatmanydoctorschoosenottoacceptMedicaidpatients

becausereimbursementratesaresolow.38

WiththedramaticexpansionofMedicaidunderthenewhealthcarelaw(thePatient

ProtectionandAordableCareAct,orACA),theprogramwillconsumeevenmore

ofstatebudgetsinthefuture.39

StatepolicymakersfaceachoiceundertheAordableCareAct:expandMedicaidcoveragewithtemporaryfederalgrantsormaintainexistingMedicaidsystems.40

Policy Proposals

DonottreatfederalgrantsforMedicaidasfreemoney.Eachdollaroffederalgrants

leadstofuturetaxincreasesof33to42cents.41

Budgetwiththeassumptionthatthefederalgovernmentwillnotbeabletokeepits

promisesforfutureMedicaidfunding.


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SeekwaiverstogivestatesmoreexibilitytotailorMedicaidprogramsforeach

statespopulations.

Emphasizepreventivecareforpatients,andcreateincentivesforpatientstoavoid

usingtheemergencyroomfornonemergencysituations.


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HOW TOSTREAMLINE

GOVERNMENT

Research Findings

Productivity dividends are one way to reward increased perormance and

discourage ineciency.

Statestypicallyuseincrementalbudgetingtoallocatefunding,givinganagency

ordepartmentthesamebudgetithadtheyearbeforeplussomeadditional

funds.Thispracticeneitherrewardsincreasedperformancenordiscourages

inecientpractices.42

PioneeredbyNewZealandinthe1980s,productivitydividendsassumethatpub-

lic-sectorlaborproductivity,likeprivate-sectorlaborproductivity,shouldincrease

graduallyovertime.Thus,thegovernmentreducesnominalbudgetsbyasmall

amountperhapsaround2percentrequiringagenciestoproducethesameresults

withfewerresources.43


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18

The civil service must be brought into the 21st century.

Inmoststates,thetermsandconditionsofgovernmentemploymentarebasedon

anindustrial-eramodelofpublicsectorproduction.Intodaysknowledgeeconomy,

thismodelisoutdated.44

A21stcenturycivilservicewouldbasepayandperformancerequirementsonpri-

vate-sectorlabormarketequivalence.45

Independent streamlining commissions provide a way to test new ideas.

Streamliningcommissionscanoerstategovernmentsusefultoolsforshrinkingthe

costofgovernmentwhilelimitingcutstothegoodsandservicesthatstategovern-

mentisinthebestpositiontoprovide.46

Stateswillbewellservedbycarefullydesignedcommissionsthathaveclearandrealisticmissions.Theyshouldseekpolicyrecommendationsfromahighlyqualied

commission,withaslittleinuencefromspecialinterestsaspossible.47

Robust transparency laws ensure that government perormance data is easily accessible.

Transparencyingovernmentprovidesanincentivefordecision-makerstoactina

spiritofcompliance.

Stategovernmentscandeveloptechnologicalsolutionstoensurethatallreporting

requiredbylawiscompletedandmadeimmediatelyavailabletothepublic.The

mosteectivestateshavebuiltwebsitesthatcontainvastbuteasilysearchable

informationregardingbudgeting,performancecriteria,andregulatoryprocedures.48


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Policy Challenges

Duringtherecenteconomicdownturn,stateshavefaceddiculttrade-osasdemand

forpublicserviceshasincreasedinthefaceoflowerstaterevenue.Increasingtaxesis

bothpoliticallyunacceptableandeconomicallyunsound,sostatepolicymakersmust

ndinnovativesolutionstomaintaingovernmentservices,givenfewerresources.As

short-termstatebudgetsgraduallyrecover,long-termdebtobligationsandunfunded

pensionliabilitiesindicatethatdicultbudgetdecisionsareheretostay. Toomanyelectedocialsmeasurethesuccessofgovernmentprogramsbyhow

muchisspentonthem,regardlessofwhetherornottheyachievedesirableresults

fortaxpayers.

Thecivilservicestilloperateson20thcenturytermsandconditionsthatarecom-

pletelyunsuitablefora21stcenturyknowledge-basedeconomy.

Wetakeforgrantedthatproductivitywillincreasegraduallyovertimeinthepri-

vatesector,buttheoppositeistrueforthepublic-sectorlaborforce.Incremental

budgetingallocatesmoreandmoretostateagenciesovertimejusttoachievethe

sameresult.

Manycitizenshavenowayoflearninghowtheirtaxdollarsarebeingspentandhow

ecientlytheirpublicservicesperform.


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Policy Proposals

Demandproductivitydividends.Thepublic-sectorlaborforceshouldbecomemore

ecientovertime,soweshouldspendlessnextyearthanwedothisyeartoobtain

thesameservices(accountingforination,ofcourse).

Creategovernmentstreamliningcommissions.Theycanbeawaytotestinnovations

onasmallscaletodeterminewhethertheywillworkforconstituents.

Passtransparencylawsthatgivethepubliconlineaccesstothespendingandper-

formancerecordsofgovernmententities.Thecapabilityofthepublictoeasilyexam-

ineandreviewthefullperformanceandnancialstatementsofgovernmententities

leadstocondenceandtrustinthepublicsector.

Implementprivate-sectorstandardsforthepublic-sectorworkforce,includingpay

andbenetsthatarebasedonperformance.


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HOW TO EVALUATE

REGULATIONS

Research Findings

Beore designing a regulation, regulators should dene the problem the regulation is

supposed to address.

Regulationsshouldonlybeusedtoaddresswidespreadandsystemicproblems.49

Manyproblemsarenotsystemic,butanecdotal,inwhichcasethebestcourseof

actionisnottoregulate.50

Once a problem has been identied, regulators should consider a wide range o alterna-

tives beore selecting a course o action.

Insomecases,thebestsolutionmayinvolveregulatoryintervention,butinother

cases,suchinterventionmayactuallycausemoreharmthangood.51


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Understandingthebaseline,whichisaprojectionofwhatislikelytohappeninthe

futureintheabsenceofnewregulation,allowsstateagenciestoevaluatewhether

regulationwillchangeaprojectedtrend.52

Somealternativesmayinvolveadditionalgovernmentactioneveniftheydonot

involverestrictivenewregulations.53

Regulation cannot be expected to have benecial efects unless a signicant, systemic

problem exists that can be alleviated by changing the rules o the game.

Therearethreetypesofsystemicproblemsthatregulationcanaddress:market

failures,governmentfailures,andoverridingsocialneeds.54

Remedyingthersttwotypesoffailuresimproveseconomiceciency,thatis,it

allowseithermarketsorgovernmenttoproducethemixofgoodsandservicesthat

consumersvaluemosthighly.55

Thethirdtypeofproblem,anoverridingsocialneed,usuallyinvolvessomeaspectoffairnessorjusticethatmayormaynothaveanexpliciteciencyrationale.56

2


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Policy Challenges

Regulationsareimplementedwiththestatedintentofensuringthatmarketsoperatefairly,informationowsfreely,andhazardstosafetyandhealthareminimized.How-

ever,manyregulationsyieldunwantedandunintendedconsequences,sometimes

evenexacerbatingtheveryproblemsthattheyweremeanttocorrect.57

Policy Proposal

Makeameasuredanalysisoftheproblemathandandconsiderallpossibleoptions

beforeenactingadditionsandmodicationstotheregulatorycode.


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HOW TO DEVELOPCOMPETITIVE TAX

POLICIES

Research Findings

I states bribe companies to relocate, eventually those states will have to bribe them

again to stay.

Statesshouldinsteadworktocreateataxandregulatoryclimatethatallowsallrmstocompeteanddoesnotoeranyspecialorone-oregulationsto

individualrms.58

High personal income tax rates compel productive workers to migrate to other states.

Stateslosehouseholdstomoretax-friendlystatesby(1)loweringthehigh-incomethresholdsoastocapturemorehouseholds,(2)increasinghigh-incometaxrates,

and(3)increasingpropertytaxrates.59

25


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25

Dedicated tax streams tend to result in larger government but do little to increase und-

ing or their intended target.

Taxrevenuesarecalleddedicatedwhenaspecictypeoftax(oftenanexcisetax)is

automaticallyearmarkedforaparticularcategoryofexpenditure(educationspend-

ing,healthspending,etc.).

Themajorityofdedicatedtaxrevenuesareineectiveatincreasingspendingon

theirtargetedcategory,butinsteadincreaseoverallexpenditures.60

Sin taxes on items such as cigarettes and alcohol can be an efective means o raising

revenue, but they come with dangerous unintended consequences.

Sintaxesareinherentlyregressive.Low-incomeconsumers,whohavethefewest

alternativesavailabletothem,willshouldertheheaviesttaxburdens.61

26


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26

Policy Challenges

Manystatesoertargetedtaxbreakstoindividualrmsorparticularsectorsinordertolurebusinessandcreatejobsintheirstates.Butoncestatesbribecompa-

niestorelocate,theywilleventuallyhavetobribecompaniestokeepthemfrom

leaving.

Dedicatedtaxrevenues,inwhichallrevenuesfromaparticularsource(suchasgaso-

linetaxes)canonlybespentononecategory(suchaseducationortransportation),

tendtobeineectiveinincreasingspendingintheintendedareas.

Policy Proposals

Setcompetitivepersonalandbusinesstaxratesthattreatallpartiesequally.This

practiceisabetterwaytocompetethantargetedtaxbreaks.

Avoiddedicatedtaxrevenues.Ifaspendingitemisdeemedsucientlyimportant,

legislatorsshouldndawaytopayforitfromthegeneralfund.

Lowersintaxestoeasetheburdenonlow-incomeconsumers.


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REFERENCES

1. DavidPrimo,Rules and Restraint(Chicago:UniversityofChicagoPress,2007).

2. MatthewMitchellandNickTuszynski,InstitutionsandStateSpending(WorkingPaper11-39,MercatusCenterat

GeorgeMasonUniversity,Arlington,VA,Oct.2011) http://mercatus.org/publication/institutions-and-state-spending;

MatthewMitchell,StateBudgetGapsandStateBudgetGrowth:BetweenaRockandaHardPlace(WorkingPa-

per10-42,MercatusCenteratGeorgeMasonUniversity,Arlington,VA,July2010)http://mercatus.org/sites/default

/les/publication/WP1042_Budget%20Gaps%20and%20Spending%20Growth.pdf.

3. Ibid.

4. Ibid.

5. MatthewMitchell,TELItLikeItIs(WorkingPaper10-71,MercatusCenteratGeorgeMasonUniversity,Arlington,

VA,Dec.2010)http://mercatus.org/publication/tel-it-it.

6. RussellSobelandGeorgeCrowley,RatchetingTaxes(MercatusonPolicyNo.82,MercatusCenteratGeorge

MasonUniversity,Oct.2010) http://mercatus.org/publication/ratcheting-taxes.

7. EileenNorcross,FiscalEvasioninStateBudgeting(WorkingPaper10-39,MercatusCenteratGeorgeMasonUni-

versity,Arlington,VA,July2010) http://mercatus.org/publication/scal-evasion-state-budgeting; EileenNorcross

andBenjaminVanMetre,IllinoissFiscalBreakingPoints(WorkingPaper11-40,MercatusCenteratGeorgeMason

University,Oct.2011) http://mercatus.org/publication/illinoiss-scal-breaking-points ;EileenNorcrossandBenjamin

VanMetre,TheAppearanceofFiscalPrudence,The Maryland Journal2(Rockville:MarylandPublicPolicyInstitute,

2012)http://mercatus.org/sites/default/les/The-Appearance-Fiscal-Prudence-Norcross-VenMetre.pdf.

8. TheNationalAssociationofStateBudgetOcers,Fiscal Survey of States, Fall 2012 (Washington,DC,Fall2012)

http://www.nasbo.org/publications-data/scal-survey-states/scal-survey-states-fall-2012 .

9. MatthewMitchell,TotalStateExpendituresbyFundingSource(Chart,MercatusCenteratGeorgeMasonUniversity,Arlington,VA,Jan.,2011)http://mercatus.org/publication/total-state-expenditures-funding-source.

10. CharlesBlahous,TheAordableCareActsOptionalMedicaidExpansion:ConsiderationsFacingStateGovernments

(MercatusResearch,MercatusCenteratGeorgeMasonUniversity,Arlington,VA,March2013)http://mercatus.org

/publication/aordable-care-acts-optional-medicaid-expansion-considerations-facing-state-governments.

11. TheNationalAssociationofStateBudgetOcers,Fiscal Survey of States, Spring 2013(Washington,DC,Spring

2013)http://www.nasbo.org/publications-data/scal-survey-states/scal-survey-states-spring-2013.

28
http://mercatus.org/publication/institutions-and-state-spendinghttp://mercatus.org/sites/default/files/publication/WP1042_Budget%20Gaps%20and%20Spending%20Growth.pdfhttp://mercatus.org/sites/default/files/publication/WP1042_Budget%20Gaps%20and%20Spending%20Growth.pdfhttp://mercatus.org/publication/tel-it-ithttp://mercatus.org/publication/ratcheting-taxeshttp://mercatus.org/publication/fiscal-evasion-state-budgetinghttp://mercatus.org/publication/illinoiss-fiscal-breaking-pointshttp://mercatus.org/sites/default/files/The-Appearance-Fiscal-Prudence-Norcross-VenMetre.pdfhttp://www.nasbo.org/publications-data/fiscal-survey-states/fiscal-survey-states-fall-2012http://www.nasbo.org/publications-data/fiscal-survey-states/fiscal-survey-states-fall-2012http://mercatus.org/sites/default/files/The-Appearance-Fiscal-Prudence-Norcross-VenMetre.pdfhttp://mercatus.org/publication/illinoiss-fiscal-breaking-pointshttp://mercatus.org/publication/fiscal-evasion-state-budgetinghttp://mercatus.org/publication/ratcheting-taxeshttp://mercatus.org/publication/tel-it-ithttp://mercatus.org/sites/default/files/publication/WP1042_Budget%20Gaps%20and%20Spending%20Growth.pdfhttp://mercatus.org/sites/default/files/publication/WP1042_Budget%20Gaps%20and%20Spending%20Growth.pdfhttp://mercatus.org/publication/institutions-and-state-spending


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12. EileenNorcrossandAndrewBiggs,TheCrisisinPublicSectorPensionPlans:ABlueprintforReforminNewJer-

sey(WorkingPaper10-31,MercatusCenteratGeorgeMasonUniversity,Arlington,VA,June2010)http://mercatus

.org/publication/crisis-public-sector-pension-plans.

13. NationalConferenceofStateLegislatures,NCSL Fiscal Brief: State Balanced Budget Provisions(Washington,DC,

Oct.,2010)http://www.ncsl.org/documents/scal/StateBalancedBudgetProvisions2010.pdf.

14. RobertNovy-MarxandJoshuaRauh,TheLiabilitiesandRisksofState-FundedPensionPlans,Journal of Economic

Perspectives 23,no.4(Fall,2009)http://www.stanford.edu/~rauh/research/JEP_Fall2009.pdf.

15. NorcrossandBiggs,CrisisinPublicSectorPensionPlans.

16. EileenNorcrossandBenjaminVanMetre,RhodeIslandsLocalPensionDebts(WorkingPaper11-43,Mercatus

CenteratGeorgeMasonUniversity,Arlington,VA,Nov.2011)http://mercatus.org/publication/rhode-islands-local-pension-debts;EileenNorcross,TheCrisisinPublicSectorPensionPlans,PensionReformInPennsylvania

(TestimonybeforetheCommonwealthofPennsylvaniaHouseStateGovernmentCommittee,May1,2012)http://

mercatus.org/publication/pension-reform-pennsylvania.

17. ScottBeaulier,FromDenedBenettoDenedContribution(WorkingPaper11-37,MercatusCenteratGeorge

MasonUniversity,Arlington,VA,Sept.,2011)http://mercatus.org/publication/dened-benet-dened-contribution.

18. Ibid.

19. NorcrossandVanMetre,RhodeIslandsLocalPensionDebts.


21. EileenNorcross,TheCrisisinPublicSectorPensionPlans,PensionReformInPennsylvania(Testimonybeforethe

CommonwealthofPennsylvaniaHouseStateGovernmentCommittee,May1,2012)http://mercatus.org

/publication/pension-reform-pennsylvania.

22. EileenNorcross,DelawaresPublicEmployeesRetirementSystem:ACompleteandTransparentAccounting

(WorkingPaper13-03,MercatusCenteratGeorgeMasonUniversity,Arlington,VA,Feb.2013)http://mercatus.org

/publication/delawares-public-employees-retirement-system-complete-and-transparent-accounting.

23. JereyMiron,TheFiscalHealthofU.S.States(WorkingPaper11-33,MercatusCenteratGeorgeMasonUniversity,

Arlington,VA,Aug.2011)http://mercatus.org/sites/default/les/Fiscal_Health_of_the_US_States_Miron

_WP1133.pdf.

24. AndrewBiggs,PublicSectorPensions:HowWell-FundedareThey,Really?(StateBudgetSolutions,Chestereld,

VA,July,2012)http://www.statebudgetsolutions.org/doclib/20120716_PensionFinancingUpdate.pdf.

29


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25. Ibid.


27. Beaulier,FromDenedBenettoDenedContribution.

28. Ibid.

29. CharlesBlahous,TheAordableCareActsOptionalMedicaidExpansion:ConsiderationsFacingStateGovern-

ments(MercatusResearch,MercatusCenteratGeorgeMasonUniversity,Arlington,VA,March2013)http://

mercatus.org/publication/aordable-care-acts-optional-medicaid-expansion-considerations-facing-state

-governments.

30. RusselSobelandGeorgeCrowley,DoIntergovernmentalGrantsCreateRatchetsinStateandLocalTaxes?Testing

theFriedman-SandfordHypothesis(WorkingPaper10-51,MercatusCenteratGeorgeMasonUniversity,Arlington,

VA,Aug.2010)http://mercatus.org/publication/do-intergovernmental-grants-create-ratchets-state-and-local

-taxes.

31. TamiGurley-Calvez,GenevieveM.Kenney,KosaliSimon,andDouglasWissoker,MedicaidReformandEmergency

RoomVisits:EvidencefromWestVirginiasMedicaidRedesign(WorkingPaper12-26,MercatusCenteratGeorge

MasonUniversity,Arlington,VA,Oct.2012)http://mercatus.org/publication/medicaid-reform-and

-emergency-room-visits-evidence-west-virginias-medicaid-redesign.

32. Ibid.

33. DanielSutter,WelfareBlockGrantsasaGuideforMedicaidReform(WorkingPaper13-07,MercatusCenterat

GeorgeMasonUniversity,Arlington,VA,March2013)http://mercatus.org/publication/welfare-block-grants-guide

-medicaid-reform.

34. Ibid.

35. Ibid.

36. TheNationalAssociationofStateBudgetOcers,FiscalSurveyofStates,Spring2012(Washington,DC,Spring2012)http://www.nasbo.org/sites/default/les/Spring%202012%20Fiscal%20Survey_1.pdf.

37. CentersforMedicareandMedicaidServices,2011 Actuarial Report on the Financial Outlook for Medicaid(Washing-

ton,DC:DepartmentofHealthandHumanServices,March2012)https://www.cms.gov/Research-Statistics

-Data-and-Systems/Research/ActuarialStudies/downloads/MedicaidReport2011.pdf.

30
https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/downloads/MedicaidReport2011.pdfhttps://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/downloads/MedicaidReport2011.pdfhttps://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/downloads/MedicaidReport2011.pdfhttps://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/downloads/MedicaidReport2011.pdf


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38. ScottGottlieb,MedicaidIsWorseThanNoCoverageatAll,The Wall Street Journal,March10,2011,http://online

.wsj.com/article/SB10001424052748704758904576188280858303612.html .

39. Blahous,TheAordableCareActsOptionalMedicaidExpansion.

40. Ibid.

41. RusselSobelandGeorgeCrowley,DoIntergovernmentalGrantsCreateRatchetsinStateandLocalTaxes?Testing

theFriedman-SandfordHypothesis(WorkingPaper10-51,MercatusCenteratGeorgeMasonUniversity,Arling-

ton,VA,Aug.2010)http://mercatus.org/publication/do-intergovernmental-grants-create-ratchets-state-and-local

-taxes.

42. MauriceMcTigue,EmilyWashington,andDanielRothschild,StateGovernmentStreamliningCommissions:Ten

FactorsforSuccess(ResearchSummary,MercatusCenteratGeorgeMasonUniversity,Arlington,VA,Dec.2011)http://mercatus.org/publication/state-government-streamlining-commissions-ten-factors-success.

43. MauriceMcTigueandDanielRothschild,SevenKeyAspectsofGoverningDuringCrisis(MercatusonPolicyNo.

74,MercatusCenteratGeorgeMasonUniversity,Arlington,VA,May2010). http://mercatus.org/publication

/seven-key-aspects-governing-during-crisis.

44. McTigue,Washington,andRothschild,StreamliningCommissions.

45. Ibid.

46. Ibid.

47. MauriceMcTigue,TransparencyandAccountabilityinLouisiana(PresentationtoGovernmentandFiscalReform

AdvisoryCouncil,Nov.2007) http://mercatus.org/sites/default/les/publication/Louisiana_Testimony__Final.pdf.

48. PatrickMcLaughlinandJerryEllig,RegulatoryReforminFlorida:AnOpportunityforGreaterCompetitivenessand

EconomicEciency(workingpaper,forthcoming,MercatusCenteratGeorgeMasonUniversity,Arlington,VA).

49. JerryBritoandSusanDudley,TheoriesofRegulation:Whydoweregulate?chapter2inRegulation:APrimer

(Arlington:MercatusCenter,Aug.2012)http://mercatus.org/publication/regulation-primer.

50. Ibid.

51. Ibid.

52. Ibid.

53. Ibid.

31
http://online.wsj.com/article/SB10001424052748704758904576188280858303612.htmlhttp://online.wsj.com/article/SB10001424052748704758904576188280858303612.htmlhttp://mercatus.org/publication/seven-key-aspects-governing-during-crisishttp://mercatus.org/publication/seven-key-aspects-governing-during-crisishttp://mercatus.org/sites/default/files/publication/Louisiana_Testimony__Final.pdfhttp://mercatus.org/sites/default/files/publication/Louisiana_Testimony__Final.pdfhttp://mercatus.org/publication/seven-key-aspects-governing-during-crisishttp://mercatus.org/publication/seven-key-aspects-governing-during-crisishttp://online.wsj.com/article/SB10001424052748704758904576188280858303612.htmlhttp://online.wsj.com/article/SB10001424052748704758904576188280858303612.html


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54. MauriceMcTigue,OurViews:HowtoTreatOut-Migration,The Advocate (BatonRouge,May12,2007)http://

mercatus.org/media_clipping/editorial-our-views-how-treat-out-migration.

55. AntonyDaviesandJohnPulito,TaxRatesandMigration(WorkingPaper11-31,MercatusCenteratGeorgeMason

University,Arlington,VA,Aug.2011)http://mercatus.org/publication/tax-rates-and-migration.

56. Ibid.

57. GeorgeCrowleyandAdamHoer,TheEectsofDedicatingTaxRevenues(MercatusonPolicyNo.109,Mercatus

CenteratGeorgeMasonUniversity,Arlington,VA,June2011) http://mercatus.org/sites/default/les/The

-Eects-Dedicating-Tax-Revenues-Crowley-Hoer.pdf.

58. AdamHoer,WilliamShugart,andMichaelThomas,SinTaxes:TheSize,Growth,andCreationoftheSindustry

(WorkingPaper13-04,MercatusCenteratGeorgeMasonUniversity,Arlington,VA,Feb.2013)http://mercatus.org/sites/default/les/Shughart_SinTaxes_v2_1.pdf.

59. DaviesandPulito,TaxRatesandMigration.

60. GeorgeCrowleyandAdamHoer,TheEectsofDedicatingTaxRevenues(MercatusonPolicyNo.109,Mercatus

CenteratGeorgeMasonUniversity,Arlington,VA,June2011) http://mercatus.org/sites/default/les/The

-Eects-Dedicating-Tax-Revenues-Crowley-Hoer.pdf.

61. Hoer,Shugart,andThomas,SinTaxes.
http://mercatus.org/sites/default/files/The-Effects-Dedicating-Tax-Revenues-Crowley-Hoffer.pdfhttp://mercatus.org/sites/default/files/The-Effects-Dedicating-Tax-Revenues-Crowley-Hoffer.pdfhttp://mercatus.org/sites/default/files/Shughart_SinTaxes_v2_1.pdfhttp://mercatus.org/sites/default/files/Shughart_SinTaxes_v2_1.pdfhttp://mercatus.org/sites/default/files/The-Effects-Dedicating-Tax-Revenues-Crowley-Hoffer.pdfhttp://mercatus.org/sites/default/files/The-Effects-Dedicating-Tax-Revenues-Crowley-Hoffer.pdfhttp://mercatus.org/sites/default/files/The-Effects-Dedicating-Tax-Revenues-Crowley-Hoffer.pdfhttp://mercatus.org/sites/default/files/The-Effects-Dedicating-Tax-Revenues-Crowley-Hoffer.pdfhttp://mercatus.org/sites/default/files/Shughart_SinTaxes_v2_1.pdfhttp://mercatus.org/sites/default/files/Shughart_SinTaxes_v2_1.pdfhttp://mercatus.org/sites/default/files/The-Effects-Dedicating-Tax-Revenues-Crowley-Hoffer.pdfhttp://mercatus.org/sites/default/files/The-Effects-Dedicating-Tax-Revenues-Crowley-Hoffer.pdf


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