Texas public policy foundation
Texas and Alaska Rainy Day...
Jul 25, 2012  |  BLOG

While most states have tapped or drained their "rainy day" funds to weather the ongoing economic storm, Texas and Alaska still have large reserves moving into fiscal 2012 and 2013, according to the National Association of State Budget Officer's  Fiscal Survey of the States: Spring 2012.

From the report:

States have also relied on balances, including budget stabilization funds or "rainy day funds," to help offset future revenue declines and increasing spending demands . . . In fiscal 2012, states' budgetary reserves slightly decreased, bringing balance levels to $43.6 billion or 6.5 percent of expenditures from $46.4 billion or 7.2 percent of expenditures in fiscal 2011. For fiscal 2013, governors' recommended total balance levels of $53.2 billion, 7.8 percent of expenditures. The balance levels of Texas and Alaska make up 46.5 percent of total state balance levels in fiscal 2012 and 51.5 percent in fiscal 2013. The remaining 48 states have balance levels that represent only 3.8 percent of general fund expenditures for fiscal 2012 and 4.0 percent for fiscal 2013. [emphasis added]

Maintaining large "rainy day" funds  benefits Texas and Alaska in three ways:

1) These states do not rely  on large pots of one-time funding to pay for ongoing expenses, but rather balance their books by bringing spending in line with revenues;

2) These states  have reserves on hand to deal with emergencies; and

3) Having a large "rainy day" fund improves the states' bond rating which means lower interest rates for borrowing.

Other states should take a cue from Texas and Alaska as they plan for the future.