ABSTRACT
Slack economic resources are an often-cited indicator of financial position. A government that holds assets in excess of its liabilities, the logic suggests, is less likely to increase taxes, change service provision schedules, defer pension obligations, default on debt, or engage in other undesirable behavior in the wake of periodic fiscal stress.1Professional associations such as the Government Finance Officers Association (GFOA) have endorsed this logic by recommending that governments and non-profit organizations maintain slack resources totaling some percentage of current annual expenditures, and bond raters, elected officials, state regulators, interest groups, citizens, and other stakeholders are known to monitor adherence to these recommendations (Larkin, 2000). We would therefore expect a certain degree of homogeneity in slack resource management policies and practices.
