An Exploration of the Great Recession's Impact on States’ Reliance on User Fees

Abstract

Drawing on a panel of US states from 2000 to 2013, we take advantage of the onset of the Great Recession to observe how states’ reliance on user fees changed as a result of the precipitous decline in tax revenue attending the global economic contraction. We further develop and test hypotheses exploring the relationship between various characteristics of states’ revenue and political systems—such as sales tax collections and political ideology— and user fee reliance. We find, among other things, evidence that states increased their reliance on user fees during and after the Great Recession but that the response is transitory with reliance slowly decreasing each year removed from 2008.