Impact of Antirecession Assistance on 15 State Governments

Title II of the Public Works Employment Act of 1976 established a program to provide State and local governments with antirecession assistance payments. The program sought to reduce the need for these governments to take budgetary actions which would counteract Federal efforts to stimulate economic recovery, such as employee layoffs, tax increases, and reductions in services.

Twelve of the 15 States visited took one or more of these counterproductive actions. Although the effects of antirecession payments could not be conclusively assessed, the following effects were noted: in five States, antirecession funds were used to help balance the budget; in four States, the funds were used to maintain or augment surpluses; in four States, the funds were used to increase the authorized expenditure levels; and in two States, the funds were used to increase the authorized level of expenditures, and remaining funds were retained in surplus. Antirecession funds reportedly had a favorable effect on employment in 11 States. The 13 States receiving payments in November 1976 appropriated essentially all of their first payments within 6 months, as required by the act, and had disbursed over 70 percent. Most of the States made budgetary adjustments during the recession, but these adjustments were not always attributed to the recession. Increases in expenditures were usually attributed to inflation. "Excess unemployment" was not considered a reliable indicator of a recession's effect, and the Secretary of the Treasury was directed to investigate other data for allocating payments.