More than any other single factor, the performance of the national economy shapes the financial health of state and local governments. For sane governments, inflation and recession increase budget deficits, create cashflow problems or, in a few cases, even raise the specter of insolvency; for others the unfavorable bUdgetary effects are cushioned by revenue systans which are bouyant with respect to rising prices; and for still others the revenue-dampening effects of slow national growth and recession are more than offset by revenue gains accompanying favorable regional shifts in economic activity. The nature of these effects, their measurement, and how they differ across state and local governments are important national policy concerns.

This report is part of the collection of scanned historical documents available to the public.