A new study released by the National Association of State Budget Officers shows that across the country individual states are putting away money in anticipation of an economic downturn.
The states’ actions are in many ways a hangover from their experiences during the Great Recession when what are known as rainy day funds were tapped to make up for a loss of revenue from other sources.
Those funds were then used government initiatives, including some infrastructure work.
According to the study, while the average rainy day fund - as a percentage of general fund spending in the states - stood at 4.8 percent before the Great Recession, today that figure has increased to 7.5 percent.
Some states have even gone so far as to pass legislation that automatically deposits a share of forecasted general revenue funds into a rainy day fund account.
The study also indicated that a majority of fiscal officers felt that their states currently had large enough rainy day funds to survive, at the very least, a moderate recession.
Writing for the publication State Net Capitol Journal, veteran reporter Lou Cannon noted that many states in the process of expanding their budgets and hiring new workers in the summer of 2008 ended up being surprised by the downturn of the next three or so years.
“Today, it’s encouraging that so many states are putting money away to see them through the next fiscal crisis,” writes Cannon. “Unprepared states should get the message.”
According to the National Association of State Budget Officers’ study, current total state rainy days funds stand at around $68.2 billion, with estimates that that figure will increase to $74.7 billion by next year.
A report published earlier this year by the Pew Charitable Trusts indicated that Arizona had more than $900 million in rainy day funds, while Colorado had over $1.2 million, and New Mexico $1.1 million.
By Garry Boulard
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