47 State Fiscal Policies for Budget Stabilization and Economic Growth: A Dynamic Scoring Analysis John Merrifield and Barry W. Poulson Economic downturns expose unsustainable fiscal practices. Widespread fiscal crises create opportunities to compare policy options that address especially adverse circumstances, especially pro- growth fiscal constraints that can stabilize state budgets over the busi- ness cycle. Our policy option assessments depart from the normal practice of assessing rules and policies independently. Our premise is that the fiscal policy mix determines its outcomes. We include dynamic scoring to provide a richer view of the policy interactions. In this article, we assess reforms that address fiscal stress issues. We were driven, in part, by our conviction that stable spending growth over the business cycle curbs fiscal stress-induced pressures to raise taxes and weaken caps on spending growth. To generalize our findings as much as possible, we apply our dynamic scoring model to California, Montana, and Utah—states familiar to us that span the blue state–red state gamut, with Montana in the middle. Utah is “famously conservative” (Woo 2010), with one of the top business tax climates (Tax Foundation 2011). California’s response to fiscal stress included large tax hikes, which helped create one of the worst busi- ness climates. With fiscal data and dynamic scoring, we simulate the economic growth and fiscal effects of income tax rate reductions and Cato Journal, Vol. 34, No. 1 (Winter 2014). Copyright © Cato Institute. All rights reserved. John Merrifield is Professor of Economics at the University of Texas-San Antonio (Downtown Campus). Barry Poulson is Professor of Economics Emeritus at the University of Colorado-Boulder.