In recent months, a narrative has emerged that puts some states on the brink of bankruptcy. To a large degree, that narrative confuses short- and long-term fiscal challenges, and overlooks the relatively strong financial positions of most states. Two recent analyses address this confusion, put these issues into historical context, and shed light on the actual liabilities states face in funding both their debt and pension requirements.
January 2011, Volume 29, Issue 1
A Solution in Search of a Problem
When it was announced in 1998, the Master Settlement Agreement between 46 states and the tobacco industry looked like a guaranteed revenue flow that states could use to bolster other sources of state revenue. Several years on, it turns out that a certain provision of the settlement could put a portion of that stream of payments at risk.