Outside the Box: State finances are still in the red, even as the economy is growing

By most measures, the national economy is doing well. We have been in expansion for almost eight years, the unemployment rate is under 5%, the stock market has hit new highs, and personal income growth—while still slow—has turned positive since the Great Recession.

However, while the national economy is growing, most states are still struggling to recover from the recession and its aftermath. According to an analysis from the Associated Press, two-thirds of the states face a budget shortfall or are expected to confront one in the coming fiscal year. In 32 states, tax collections fell in the second quarter of 2016—ending seven consecutive quarters of growth in overall state tax revenue.

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