States are creating fiscal risks for themselves by neglecting to control the costs of tax incentives for economic development, according to a new report from the Pew Center on the States.

Even in tight fiscal conditions, state lawmakers often approve tax incentives for economic development without reliable estimates of their budget impact or limits on their annual cost, the Pew report noted. By omitting these steps at the outset, states have created incentives that can grow in price rapidly and unpredictably, raising the risk of budget shortfalls and unplanned spending cuts or tax increases to close them.

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