The State and Local Finance Initiative is an Urban Institute project in the Urban-Brookings Tax Policy Center. The initiative equips policymakers, citizens, and the media with tools to understand and address the fiscal challenges and opportunities facing state and local governments. The State and Local Finance Initiative provides current, reliable, and unbiased research, data, and analysis. The initiative integrates knowledge across policy domains and government levels to give decision makers the best possible information to navigate among competing options and understand tradeoffs.
The Initiative gratefully acknowledges support from the John D. and Catherine T. MacArthur Foundation, the Laura and John Arnold Foundation, the Ewing Marion Kauffman Foundation, and two anonymous funders.
Advisory Board
Jeffrey R. Brown
University of Illinois at Urbana-Champaign
William Fox
University of Tennessee
Robert Inman
University of Pennsylvania
Nicholas Johnson
Center on Budget and Policy Priorities
Therese McGuire
Northwestern University
Current Projects
State leaders face many challenges in their quest to develop sound fiscal policy. The Fiscal Innovations project aims to help states navigate those challenges. The project currently delivers coordinated technical assistance to Colorado, Kansas, Minnesota, and Washington, DC, and will potentially expand to more states in the future.
Economic Development Strategies
State governments have a range of policies available to spur economic development including tax incentives, cash grants, workforce training, and building and maintaining reliable infrastructure. But which programs lure and maintain businesses and help drive outcomes such as more and better jobs, higher wages and incomes, and higher tax revenue? This project examines what states are doing, what works, what doesn't, and how better policy analysis and government coordination can improve results.
The State Tax and Economic Review is the preeminent source of data and analysis on state tax collections. We regularly collect data and information from all 50 states, use this information to adjust national and state data from the US Census Bureau, and then provide the most timely, accurate, and in-depth look at how states are faring. We also examine the economic factors driving state tax collections based on data from US federal agencies like the Bureau of Economic Analysis, Bureau of Labor Statistics, and Federal Housing Finance Agency.
Modeling State Taxes and Federal Interactions
The Tax Policy Center uses its state-of-the-art microsimulation model to provide comprehensive, rigorous, and objective analyses of federal tax policy changes and major tax reform proposals. The State and Local Finance Initiative expanded the Tax Policy Center model to include effects of state tax policies and interactions between the state and federal tax systems. These enhancements allow us to answer questions such as how proposed federal tax changes affect residents of individual states and what is the combined effect of federal and state taxes on families of various sizes and income levels.
As state and local governments confront budget problems caused by the COVID-19 pandemic and recession, it will be more important than ever for state and local officials and their constituents to have the most timely, relevant, and actionable budget information. This project develops tools to aid budget decisions, including interactive web tools highlighting how policy choices, economic conditions, and demographic trends all drive tax and spending outcomes.
When states cut taxes does it create economic growth? Research offers mixed evidence but policymakers often face very strong pressures from the business community to create and maintain generous tax breaks. This project investigates how state taxes affect economic growth by analyzing relationships among marginal tax rates, employment, earnings, and investments.
Building State Budgets: Effective Process and Practice
All 50 states must create a budget that addresses its needs and maintains fiscal health. But rules and institutions vary. Our digital feature highlights what we know about state budget practices and how they can be improved. We discuss fiscal institutions that fall into three core categories: (1) budgeting timelines, baselines, and forecasting; (2) budget requirements and restrictions; and (3) budget transparency measures. In each section, we compare differences in design and implementation across states and highlight best practices from the literature.
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