FISCAL CAPACITY, FISCAL NEED, AND FISCAL COMFORT AMONG US STATES - NEW EVIDENCE

During its lifetime, the U.S. Advisory Commission on Intergovernmental Relations periodically published estimates of each state's relative f iscal capacity. This research note provides neo estimates updated to f iscal year 1994, the latest year for which all requisite underlying da ta are available. We find that dispersion in capacity narrowed from 19 87 to 1994, largely because the capacities of California and the North east states, historically enjoying ample capacity, fell relative to th e national average. We also find that these states generally experienc ed an increase in relative fiscal need, further narrowing interstate d ispersion in fiscal comfort (capacity relative to need). We conclude w ith evidence suggesting that slates with low fiscal comfort generally prefer relatively low levels of state and local public services.