Cato Podcast State Fiscal Health and Cost‐Saving Strategies
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Feb 20, 2024 Exploring state fiscal health post-pandemic, increased debt expenses, and cost-saving strategies. Discussion on challenges of implementing cost-saving measures, pension reform, and workforce transitions in transit systems. Examining fiscal responsibility in states like Utah, Idaho, Florida, Texas, and California for national economic health.
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Unexpected State Fiscal Strength
- States received significant federal aid and higher tax revenues than expected post-pandemic.
- This resulted in a surprising period of fiscal strength, especially for states with progressive income taxes.
California's Misuse of Federal Aid
- California failed to repay federal unemployment loans despite receiving federal aid.
- Instead, they invested in costly homeless housing, leaving employers with a $20 billion debt.
Return to Fiscal Reality
- The end of federal aid and strong market performance creates fiscal challenges for some states.
- States with high progressive income tax rates, like New York and California, face revenue drops and resistance to spending cuts.