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budgets and eliminate expenditure programs that do not give

residents value for their tax dollars--particularly income

transfer programs.  It also forces states to concentrate on

the dynamic economic impacts of tax policy changes.  There

is now little doubt that tax changes can have a profound im-

pact on the relative economic conditions of states.

Our great concern, however, is that in this era of na-

tional prosperity states have forgotten all of the lessons

of the 1980s and again are embarking on a fiscally reckless

spending spree.  The past two years have brought an unprece-

dented acceleration of state spending.  Republican governors

who advertise themselves as fiscal conservatives have been

some of the worst offenders.  Fiscal prudence suggests that

the revenue windfall from a strong economy should be re-

turned to taxpayers, not carelessly spent by governors and

state legislators as if it were manna from heaven.