Recent Trends in the Finances of the State and Local Sector

This article reviews recent trends in the finances of the state and local government sector. It finds that the sector has become increasingly self-sufficient, successfully managing its way in the eighties through the back-to-back recessions and the decentralization of the federal role in state and local fiscal affairs. The outlook for the sector now depends more on general economic trends and the actions of state and local governments, than trends in federal aid.