This article begins by presenting evidence of the current fiscal pressure on state and local governments nationwide. Trends in state and local revenues and expenditures are examined, as well as the role that declining federal aid has had in leading to the current fiscal pinch.
The focus then turns to why the Seventh District's fiscal track record has followed a different pattern from the rest of the U.S. The answer lies in the District's economic performance in the 1980s, in conjunction with discretionary measures taken by District governments to maintain balanced budgets in response to the District's slower revenue growth.