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Federal Reserve Bank of New York
Current Issues in Economics and Finance
The recession's impact on the state budgets of New York and New Jersey
Richard Deitz
Andrew F. Haughwout
Charles Steindel
Abstract

In the wake of the most recent U.S. recession, both New York State and New Jersey have faced multibillion-dollar budget gaps. An analysis of the makeup of their budgets reveals that the states' heavy reliance on personal income taxes--particularly from high-wage earners in the finance sector--has exacerbated revenue shortfalls. To close their budget gaps, New York and New Jersey have had to make difficult choices about tax increases and service cuts. In the future, the states might take steps to avert such budget quandaries by establishing "rainy day" funds or restructuring taxes to make them less sensitive to the business cycle. Subseries: Second District Highlights


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Richard Deitz & Andrew F. Haughwout & Charles Steindel, "The recession's impact on the state budgets of New York and New Jersey" , Federal Reserve Bank of New York, Current Issues in Economics and Finance, volume 16, issue Jun/Jul, 2010.
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Keywords: Budget ; State finance ; Federal Reserve District; 2nd ; Recessions ; Economic conditions ; Budget deficits
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