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To prepare for the next recession, states take stress tests

Posted by   /  December 12, 2016  /  No Comments

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Beacon Financial Strategies

Beacon Financial Strategies

No government can be fully prepared for every economic twist and turn. Still, some are trying.

By Liz Farmer | Governing

The Great Recession was uniquely devastating for states and localities because it hit all three major tax revenue sources: income, sales and property. It was a scenario that few, if any governments, were really prepared to absorb. As a result, governments were forced to make massive budget cuts.

Now, as the recovery trudges on longer than most, a growing number of states are making sure they aren’t blindsided by the next downturn.

Enter stress testing. The idea, which was borrowed from the U.S. Federal Reserve, essentially throws different economic scenarios at a state budget to see how revenues would be impacted.


Related: Economic Forecast Data for Arizona

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