What Can a State Do in a Recession?

What can a state do in a recession?  I testified on this topic before the Oregon legislature today.  Download OrLegTestimony200610.pdf

In the testimony I discuss the risk of recession, the nature of a recession if one occurs, and how our state will be affected.  The second section describes the basics of contingency planning, applied to state governments.

In our state, as in many others, there is substantial effort made to forecast revenues, but there is little or not contingency planning–what will we do if revenues are less than forecast?  In addition, there is an ignorance about flexibility.  Flexibility is the ability to cut expenses when necessary.  New programs with staffing and commitments to the public limit flexibility.  It’s a tough problem for state governments.