This is the Cato Daily Podcast for Tuesday, January 14th, 2020. I'm Caleb Brown.

During good economic times, state governments should be cutting taxes and

maybe putting something aside for a rainy day.

So as state legislatures get back to work this January,

what's a state to do with windfall revenues?

It's a good problem to have, but a bigger problem than you might imagine.

Ray Hetterman is Vice President for Policy at the Buckeye Institute in Ohio.

We spoke last month in Phoenix.

A lot of states are doing fairly well economically and are running surpluses.

And my home state of Kentucky is not one of them.

But what is the big risk of running surpluses?

Sure. You know, states are about finishing a decade of growth.

They're spending more after the Great Recession,

their budget's going up every year,

and right now most states are flush with cash

due to a strong economy.

Tax receipts are coming in.

There are a few states that are still on financial difficulty.

These are going to be states that depend heavily on fossil fuels,

coal, oil, you know, Alaska, Wyoming, Kentucky,

a few others are struggling.

Some states like Illinois are having a little bit of a

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