STATE FINANCE AND TAXING POLICIES

The states have moved through three distinct periods in finance and taxing policies. First, until the 1930s, states dominated over congress in taxing powers. During the Great Depression, many programs were initiated which involved the states in close grant-in-aid arrangements with the federal government. A second period was initiated during the 1960s. when the number of federally-funded grants exploded. States were soon involved in a variety of new responsibilities. This period has now been supplemented by a third, which is characterized by tax reductions and spending limits, often imposed through referenda.