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The recent devolution to the states of responsibilities previously held by the federal government -- a key goal of the deficit-reduction, smaller-government agenda of the 1990s -- has far-reaching implications for state budgets. At the moment, a strong economy has put most states into a strong enough fiscal condition to shoulder such burdens as welfare reform and public investment. But beneath the current surpluses are structural problems that are unlikely to withstand the next economic downturn; as a result, any essential public needs will be left unmet. This book deal with three major areas...

Exploring the consequences of federal devolution on state budgets, this work deals with three major areas of concern: the effect of moving large numbers of welfare recipients into labour markets; the planned federal reforms in the health care field; and trends in federal aid.