CHICAGO —  States should consider adapting their tax and budget practices to avoid the deep bruising of downturns as their fortunes over the last decade have grown increasingly tied to economic cycles, the Federal Reserve Bank of Chicago recommends in a new report.

“State governments are facing a period of fiscal turbulence. To get through these stressful times, states must understand the dynamics influencing their tax revenue collections,” writes Leslie McGranahan, senior economist, and Richard H. Mattoon, senior economist and economic advisor. “If this trend persists, states should consider ways of adapting their budgeting practices to ensure that necessary services can be maintained.”

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