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The 1980s will be a period of fiscal adjustment for state and local governments. The formerly rich states will be struggling to bring their relative quality of public services down to a level they can afford; the formerly poor states will be struggling to raise service levels in response to the demands of their new populations; and all will be trying to adjust to a higher rate of inflation and a slower growing U.S. economy. The lessons on getting along with less will painfully be learned by more than a few state and local governments. How will changes in the U.S. economy affect state and local government finances in the 1980s, and what governmental policy responses will be necessary?

To answer these important questions, we first consider those national economic and demographic factors that may shape the outlook, then discuss the essentials of a national urban policy and of the possible adjustments by state and local governments. We conclude with a guess at what the next few years in state and local government finance will hold.


(c) 1981 by Sage Publications, Inc. Posted by permission.

AUTHOR'S NOTE: This chapter is an expansion of Chapter 6 of my "State and Local Government Finances and the Changing National Economy." prepared for the Special Study on Economic Change of the Joint Economic Committee.

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