This is the Cato Daily Podcast for Tuesday, February 20th,

2004. I'm Caleb Brown.

Following massive handouts from the feds during the pandemic,

state governments remain in decent fiscal health.

Keeping it that way will require an appetite for reform.

In a new paper, Cato's Mark Joffey describes some cost-saving strategies for state fiscal health going forward.

It is probably surprising to a lot of people to hear that post-pandemic,

state fiscal health in general has been pretty good.

Yeah, states were on an enormous sugar high.

First, they got hundreds of billions of dollars of federal aid,

and then it turned out that the lower tax

collections turned into higher tax collections everyone thought there was

going to be a massive long-term recession which would take down state

finances and in fact quite the opposite

happened especially in states that had high progressive income tax rates with the

market going up and with company profits being very strong and higher end employees making a lot of money.

The money just kept rolling into state coffers well into 2022, but things are turning back to reality

now.

One of the concerns, and I think you and I actually discussed this,

was post-pandemic as money kept rolling in and as states,

as you mentioned, got this huge infusion of cash from the federal

government that states would foolishly turn those cash windfalls into long-term obligations.

...