As a result of devolution, state governments have taken on greater responsibility for financing and providing public services. Increasingly, states have adopted state-level tax and expenditure limitations (TELs) to manage the growth and size of state budgets. The adoption of TELs is supported by claims that they have a positive effect on state economies, although such claims lack empirical evidence and have been contested by several scholars. Despite the ongoing debate about validating the actual economic effects of state-level TELs, there is a lack of empirical assessments of their effects. The empirical results of this article indicate that the presence of state-level TELs has a negative effect on the level of employment but no effect on the state’s personal income per capita. The presence of state-level TELs has no effect on either the growth of personal income per capita or the growth of employment.