It's no secret that many American states are in serious financial trouble. In a variety of fiscal rankings, including those from the Mercatus Center at George Mason University, the PEW Foundation, and the Institute for Truth in Accounting, nine states — California, Connecticut, Delaware, Hawaii, Illinois, Kentucky, Massachusetts, New Jersey, and New York — have consistently been identified as plagued by unbalanced budgets, unsupportable entitlements, decaying infrastructure, and especially underfunded public pensions.
For legislators in those troubled states, the typical budgetary fix of simply raising the least painful combination of taxes and fees has become problematic. Levies in many are already high enough to prompt a self-defeating exodus of affluent residents — a flight that only threatens to accelerate, now that Congress has capped the federal deduction for state and local taxes.
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