Advocates of term limits argued that term limits would help reduce out-of-control government spending by removing veteran legislators who became acclimated to the prospending environment in our nation’s capitals. However, previous research shows that term limits may increase spending, which could jeopardize state fiscal health. The primary purpose of this article is to examine whether states with term limits encounter more fiscal problems than non-term-limited states. I suggest that the short-term fiscal outlooks and loss of experienced legislators produced by term-limit turnover lead to poor fiscal conditions. Myopic legislators may avoid tough fiscal decisions, while inexperienced legislators may be ill-equipped to develop sound fiscal policy. Analysis of budget data on U.S. states from 1983 to 2008 reveals that legislative turnover decreases budget balances. Results further show that these effects do not appear in the upper chamber, perhaps because state senates have more experienced legislators than the lower chamber.
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