Abstract
Occurring at a time when the efforts, made necessary by the prolonged recession, to keep expenditures down and to increase some categories of receipts were materializing, economic recovery in the US led to substantial budget surpluses for the State and local public sector in 1983 and 1984. These surpluses partly counteracted the effects on the economy of the federal deficit. More recently, they have been slightly decreasing, due to expenditures resuming their growth and to receipt — own-source as well as federal grants — increases slowing down. Uncertainties surrounding the evolution of economic activity and the directions in federal fiscal policy may foreshadow the threat of a renewed strain on the non-federal public sector finances.
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