What are tax and expenditure limits? Q.What are tax and expenditure limits? A.Tax and expenditure limits (TELs) restrict the growth of government revenues or spending by either capping them at fixed-dollar amounts or limiting their growth rate to match increases in population, inflation, personal income, or some combination of those factors. As of 2020, 31 states had at least one kind of TEL, including those states requiring a supermajority vote of the legislature to raise new taxes or revenues. Read more about What are tax and expenditure limits?
What are state balanced budget requirements and how do they work? Q.What are state balanced budget requirements and how do they work? A.Balanced budget requirements (BBRs) are constitutional or statutory rules that generally prohibit states from spending more than they collect in revenue in a fiscal year. However, these state rules vary in stringency and design. Research finds that stricter BBRs can produce “tighter” state fiscal outcomes such as reduced spending and smaller deficits, but they also can force states to quickly cut services or raise taxes in the middle of an economic downturn. Read more about What are state balanced budget requirements and how do they work?
What types of federal grants are made to state and local governments and how do they work? Q.What types of federal grants are made to state and local governments and how do they work? A.The federal government distributes grants to states and localities for many purposes. Some grants are delivered directly to these governments, but others are “pass-through” grants that first go to state governments, who then direct the funds to local governments. Some federal grants are restricted to a narrow purpose, but block grants give governments more latitude in spending decisions and meeting program objectives. Regardless of type, the bulk of all federal grants are related to health care. Read more about What types of federal grants are made to state and local governments and how do they work?