Seemingly every day the media chronicles the dire fiscal straights facing virtually every state government. For many states, the deficits they face are unprecedented in size and persistence. And yet it seems we have been here before. At least once a decade in the past 30 or so years, the economy has taken a downturn, and state revenues have failed to keep pace with state expenditures. Despite the creation of "rainy day funds" in most states, policymakers continue to be caught unprepared each time the economy falters.
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