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State and Local Government Law

Moral hazard

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State Finance In Times Of Crisis, Brian Galle, Jonathan Klick Sep 2009

State Finance In Times Of Crisis, Brian Galle, Jonathan Klick

All Faculty Scholarship

As recent events illustrate, state finances are pro-cyclical: during recessions, state revenues crash, worsening the effects of economic downturns. This problem is well-known, yet persistent. We argue here that, in light of predictable federalism and political economy dynamics, states will be unable to change this situation on their own. Additionally, we note that many possible federal remedies may result in worse problems, such as creating moral hazard that would induce states to take on excessively risky policy, both fiscal and otherwise. Thus, we argue that policy makers should consider so-called “automatic” stabilizers, such as are found in the federal tax …


Liability Insurance And Punitive Damages: Does Texas Public Policy Detest This Union Comment., Anthony H. Castillo Jan 2007

Liability Insurance And Punitive Damages: Does Texas Public Policy Detest This Union Comment., Anthony H. Castillo

St. Mary's Law Journal

There is a nationwide debate on whether punitive damages should be insurable. Insuring punitive damages causes courts concern regarding whether a wrongdoer escapes punishment by having the insurer pay for damages attributable to the wrongdoer’s egregious conduct. The United States Court of Appeals for the Fifth Circuit noted Texas’ public policy does not justify interference with private insurance contracts. The Court determined Texas allows liability insurance contracts to cover punitive damages and declared the inquiry ended. But, in the years since this determination, many Texas appellate courts have contracted the Fifth Circuit’s holding. The shifting discussion among Texas appellate courts …