Very Serious with Josh Barro

David Schleicher on the Fiscal Whipsaw in State Governments


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How are state and local governments faring post-COVID? It's a pretty different picture than what we're seeing with the federal budget deficit. States enjoyed generous federal aid and surprisingly strong tax collections during the pandemic. In 2021, state governments were flush — sometimes, they even made responsible choices, making deposits into their pension funds and building up their rainy-day funds to extremely high levels. Other states committed to new programs and spending. Now it's a mixed bag. To talk about how the states are managing all of that, I talked to Yale Law School professor David Schleicher, an expert on state and local government finance, for a wide-ranging conversation about how states have (and have not) learned the lessons of their budget crises from the Great Recession, and how they’re adjusting to once-again lean times.

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