Research Report State Rainy Day Funds
Elaine Maag, Alison McCarthy
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States use rainy day funds (RDFs), or budget stabilization funds, as a cushion against financial shocks. Every state except Vermont has some sort of balanced budget requirement so that, unlike the federal government, they must balance expenditures and revenues in any given budget cycle (typically one year). States can have RDFs that allow money to be carried over from good years to lean years. Five states--Arkansas, Colorado, Illinois, Kansas, and Montana--do not have RDFs.
Research Areas Taxes and budgets
Tags State and local tax issues
Policy Centers Income and Benefits Policy Center