Rainy Day Funds
Appendix A. State Budget Stabilization Funds
The states of Arkansas, the District of Columbia, Hawaii, Illinois,
Montana, and Oregon do not have budget reserve funds.
Alabama
Education Proration Prevention Fund (Statutory)
Method for deposit: Automatic appropriation
of $21M in the first year (following the fund's depletion) and
$8M thereafter up to $75M. Automatic appropriation can be waived
via emergency resolution.
Method for withdrawal: Declaration of proration
by governor, or declaration of emergency by legislature with a
2/3 vote.
Alaska
Budget Reserve Fund (Statutory)
Method for deposit: By appropriation.
Method for withdrawal: By appropriation.
Constitutional BudgetReserve Fund (Constitutional)
Method for deposit: Mineral litigation/dispute
settlements.
Method for withdrawal: 1) If the amount available
for appropriation for a fiscal year is less than the amount appropriated
for the previous fiscal year; 2) for any public purpose with a
3/4 vote.
Arizona
Budget Stabilization Fund (Statutory)
Method for deposit: By appropriation (amount
determined by formula comparing real, adjusted Arizona personal
income growth to 7 year trend); fund capped at 5 percent of prior
year GF revenue.
Method for withdrawal: By appropriation (amount
determined by formula); 2/3 vote is required to waive formula-determined
withdrawal.
California
Special Fund for Economic Uncertainties (Statutory)
Method for deposit: Year-end surplus or by appropriation.
Method for withdrawal: 1) Transfer by controller
to cover revenue shortfall or other GF deficiency; 2) Director
of finance can allocate funds for disaster relief (with notification
to the Joint Legislative Budget Committee).
Colorado
Required Reserve (Statutory)
Method for deposit: 4 percent of GF appropriations.
Method for withdrawal: Automatic expenditure
when revenue estimates fall below targets; fund can only be used
to cover appropriations already authorized. (If economic conditions
require expenditures from the fund, the governor must develop
a plan that would maintain the reserve at no less than 2 percent.
The plan is subject to legislative modification.)
Connecticut
Budget Reserve Fund (Statutory)
Method for deposit: Year-end surplus; fund capped
at 5 percent of net GF appropriations for the fiscal year in progress.
Method for withdrawal: Automatic appropriation
to cover budget deficit to the extent that funds are available.
Delaware
Budget Reserve Account (Constitutional)
Method for deposit: Automatic deposit from previous
year's unencumbered funds; fund capped at 5 percent of estimated
GF revenues.
Method for withdrawal: By appropriation to cover
budget deficit or to compensate for revenue reductions; requires
3/5 vote.
Florida
Working Capital Fund (Statutory)
Method for deposit: Year-end surplus until fund
reaches minimum level of 5 percent of net GF revenue for the previous
fiscal year; fund capped at 10 percent.
Method for withdrawal: By appropriation when
governor declares an emergency.
Budget Stabilization Fund (Statutory)
Method for deposit: Automatic deposit beginning
in FY 1995 equal to 1 percent of previous year's GF revenue collections,
increasing each year until the reserve reaches minimum level of
5 percent (in FY 1999); principal fund balance capped at 10 percent
.
Method for withdrawal: By executive transfer
when revenue collections in the general revenue fund will be insufficient
to meet general revenue fund appropriations.
Georgia
Revenue Shortfall Reserve (Statutory)
Method for deposit: Year-end surplus; fund capped
at 3 percent of net revenue collections.
Method for withdrawal: By appropriation.
Idaho
Budget Reserve Account (Statutory)
Method for deposit: By appropriation.
Method for withdrawal: By appropriation.
Indiana
Counter-Cyclical Revenue and Economic Stabilization Fund (Statutory)
Method for deposit: Statutory formula triggered
when the annual growth rate in adjusted personal income exceeds
2 percent; fund capped at 7 percent of state GF revenue.
Method for withdrawal: Statutory formula triggered
when the annual growth rate in adjusted personal income is less
than a negative 2 percent.
Iowa
Cash Reserve Fund (Statutory)
Method for deposit: By appropriation when there
is a year-end GF surplus; fund capped at 5 percent of the adjusted
GF revenue estimate for the current fiscal year.
Method for withdrawal: By appropriation for non-recurring
emergency expenditures; requires 3/5 vote if the fund's balance
drops to less than 3 percent of the adjusted revenue estimate
for the year in which the appropriation is made.
Economic Emergency Fund (Statutory)
Method for deposit: By appropriation when there
is a year-end GF surplus; fund capped at 5 percent of the adjusted
revenue estimate for the current fiscal year.
Method for withdrawal: By appropriation for emergency
expenditures.
Kansas
Budget Stabilization Fund (Statutory)
Method for deposit: Funded by a one-time federal
dispro-portionate share windfall; fund expected to be depleted
by the end of FY 1996.
Method for withdrawal: By appropriation.
Kentucky
Budget Reserve Trust Fund (Statutory)
Method for deposit: By appropriation; fund capped
according to provisions in the biennial budget act.
Method for withdrawal: Allotted by governor to
meet a revenue shortfall; 2 governor must notify legislature.
(Conditions governing the use of the fund are attached to its
appropriation every two years. At the end of the biennium, the
fund lapses and has to be recreated. The state also has created
in the general fund the Surplus Fund Account. No expenditures
may be made from the account unless appropriated by the legislature,
or unless required by the budget reduction provisions of the budget
bill.)
Louisiana
Revenue Stabilization - Mineral Trust Fund (Constitutional)
Method for deposit: Automatic deposit of revenues
exceeding $750M from taxes on the production of, or exploration
for, minerals. With some limitations, the $750M base may be increased
every 10 years, beginning in the year 2000, by a law enacted by
a 2/3 vote.
Method for withdrawal: By appropriation, not
to exceed one-third of the fund and requiring a 2/3 vote when:
1) the official forecast for a fiscal year is less than revenues
received by the state in the preceding fiscal year; 2) if a deficit
for the current fiscal year is projected due to a decrease in
the official forecast.
Maine
Rainy Day Fund (Statutory)
Method for deposit: Transfer from the GF unappropriated
surplus; fund capped at 4 percent of total GF revenues received
in the immediately preceding fiscal year.
Method for withdrawal: Subject to annual legislative
deliberations. (According to statute, appropriations may be made
by a 2/3 vote of the legislature upon recommendation of the governor,
but only for prepayment of outstanding GF bonds or for major construction.
In practice, however, the legislature has enacted exceptions to
the statute to use the funds as needed for emergencies, disasters,
or other expenditures deemed necessary.)
Maryland
Revenue Stabilization Account (Statutory)
Method for deposit: By appropriation. Beginning
in FY 1995, the governor shall include in the budget bill an appropriation
equal to at least the lesser of $50M or the amount necessary for
the fund balance to exceed 5 percent of estimated GF revenues
for the fiscal year.
Method for withdrawal: Transferred by governor
if authorized by an act of the General Assembly or specifically
authorized in the state budget bill as enacted; amount of transfer
is reduced by amount of general fund budget reductions made by
legislature.
Massachusetts
Commonwealth Stabilization Fund (Statutory)
Method for deposit: After the year-end GF consolidated
net surplus is determined, a portion can be used as general revenue
in the current fiscal year. Of the remaining surplus, 60 percent
is transferred to the stabilization fund; fund capped at 5 percent
of current fiscal year revenues.
Method for withdrawal: By appropriation: 1) to
make up any difference between actual state revenues and allowable
state revenues when actual revenues fall below the allowable amount;
2) to replace the state and local loss of federal funds; 3) for
any event that threatens the health, safety or welfare of the
people or the fiscal stability of the state.
Michigan
Countercyclical Budget & Economic Stabilization Fund (Statutory)
Method for deposit: Statute requires appropriation
of an amount equal to (annual growth rate in real personal income
in excess of 2 percent) X (total GF revenues for the fiscal year
ending in the current calendar year).
Method for withdrawal: If annual growth rate
in real personal income is negative, withdrawal equals deficiency
multiplied by the total GF revenues for the fiscal year ending
in the current calendar year, but no more than needed to balance
the budget.
Minnesota
Budget & Economic Stabilization Fund (Statutory)
Method for deposit: By surplus until the total
amount in the account equals 5 percent of total GF appropriations
for the current biennium. Restoration of the reserve should occur
when objective measures, such as increased growth in total wages,
reflect upturns in the state's economy. (Beginning July 1, 1993,
forecast unrestricted budgetary GF balances were first appropriated
to restore the budget reserve and cash flow account to $500M.
As of July 1, 1995, $180M of the account was dedicated to elementary
and secondary education.)
Method for withdrawal: By transfer authorized
by the commissioner of finance, with approval of the governor
and in consultation with the Legislative Advisory Commission,
when: 1) a negative budgetary balance is projected and when objective
measures (such as reduced growth in total wages) reflect downturns
in the state's economy; 2) probable receipts for the GF will be
less than anticipated and the amount available for the rest of
the biennium will be insufficient.
Mississippi
Working Cash Stabilization Reserve Fund (Statutory)
Method for deposit: Year-end surplus until the
fund reaches $40M; thereafter, 50 percent of the unencumbered
GF cash balance until the fund reaches 7.5 percent of GF appropriations.
Method for withdrawal: Transfer by the executive
director of the Department of Finance & Administration: 1)
to meet cash-flow needs (borrowed funds must be repaid within
the same fiscal year); 2) to cover deficits (up to $50M in any
one fiscal year); 3) to provide funds for disaster assistance.
Missouri
Budget Stabilization Fund (Statutory)
Method for deposit: By appropriation; fund is
not to exceed 5 percent of the receipts into the GF for the proceeding
fiscal year.
Method for withdrawal: By appropriation to the
governor to meet budget shortfalls. (The General Assembly may
appropriate to the governor any portion of the existing balance
to cover budget shortfalls. Also, in any year in which the governor
finds it necessary to withhold appropriated funds, the governor
may order the commissioner of administration to make transfers
from the fund to fulfill expenditures authorized by appropriation.
The governor must notify the General Assembly of his intent to
make such an authorization; and, if not disapproved by concurrent
resolution within 30 days of the receipt of such notice by the
General Assembly, the authorization is considered valid. Further,
the General Assembly shall not appropriate money from the fund
without authorization from the governor.)
Nebraska
Cash Reserve Fund (Statutory)
Method for deposit: Transfer by state treasurer
when actual GF net receipts for the preceding 3 months exceed
estimated receipts for the 3-month period.
Method for withdrawal: Transfer is made to the
GF when the cash balance in the GF is inadequate to meet current
obligations.
Nevada
Fund to Stabilize Operation of State Government (Statutory)
Method for deposit: Transfer by controller of
40 percent of revenues in excess of required fund balance, which
is 10 percent of GF appropriations; fund capped at $100M.
Method for withdrawal: By appropriation only
if: 1) the total actual revenue of the state falls short by 5
percent or more of the total anticipated revenue for the biennium
in which the appropriation is made; 2) the legislature and governor
declare a fiscal emergency.
New Hampshire
Revenue Stabilization Reserve Account (Statutory)
Method for deposit: With some limitations, transfer
by comptroller of any surplus at the end of each biennium; fund
capped at 5 percent of actual GF unrestricted revenues for the
most recently completed fiscal year.
Method for withdrawal: Transfer by comptroller
with the approval of fiscal committee and governor when: 1) GF
operating deficit occurred for most recently completed fiscal
year; and 2) unrestricted GF revenues in the most recently completed
fiscal year were less than budget forecast. Fund cannot be used
for any other purpose without a 2/3 vote and governor's approval.
New Jersey
Surplus Revenue Fund (Statutory)
Method for deposit: 50 percent of actual revenue
collections in excess of governor's certification of revenues;
fund capped at 5 percent of anticipated revenues.
Method for withdrawal: By appropriation only:
1) upon certification by the governor that anticipated GF revenues
are estimated to be less that those certified upon approval of
appropriations act; 2) upon findings by the legislature that to
offset anticipated GF revenue declines, an appropriation from
the fund is more prudent than a tax increase; 3) when the governor
declares an emer-gency and notifies the Joint Legislative Budget
Oversight Committee.
New Mexico
Operating Reserve Fund (Statutory)
Method for deposit: Transfer from GF.
Method for withdrawal: By specific authorization
of the legislature only in the event that GF revenues and balances
are insufficient to meet authorized levels of appropriations.
New York
Tax Stabilization Reserve Fund (Statutory)
Method for deposit: Year-end surplus up to 0.2
percent of aggregate GF disbursements; reserve fund cannot exceed
2 percent of GF disbursements for the fiscal year.
Method for withdrawal: By transfer at the end
of a fiscal year when GF receipts fall below the aggregate amount
disbursed from the GF. (Once borrowed, fund must be paid back
within six years in three equal installments. Repayments to the
Tax Stabilization Reserve Fund shall be stipulated in annual budget
bills.) The fund also can be temporarily loaned to the GF to assist
with cash flow .
North Carolina
Savings Reserve Account (Statutory)
Method for deposit: Transfer of one-fourth of
any unreserved credit balance at the end of the fiscal year; fund
capped at 5 percent of previous year's GF appropriations.
Method for withdrawal: The fund cannot be tapped
unless approved by an act of the General Assembly.
North Dakota
Budget Stabilization Fund (Statutory)
Method for deposit: Transfer of GF surplus in
excess of $70M at the end of the biennium.
Method for withdrawal: Governor may transfer
for revenue shortfall in excess of 2-1/2 percent of the estimate
made by the most recently adjourned Assembly.
Ohio
Budget Stabilization Fund (Statutory)
Method for deposit: Transfer from GF by the director
of Budget & Management; a written report on the transfer must
be submitted to the Controlling Board; fund capped at 4 percent
of GF revenues for the preceding fiscal year.
Method for withdrawal: By appropriation.
Oklahoma
Constitutional Reserve Fund (Constitutional)
Method for deposit: Transfer by the state treasurer
of surplus GF revenue; fund is capped at 10 percent of GF revenue
for the preceding fiscal year.
Method for withdrawal: Up to 1/2 of the balance
may be appropriated if: 1) forthcoming fiscal year GF revenue
is certified to be less than that of current fiscal year certification;
or 2) emergency declaration by governor with concurrence by Legislature
with a 2/3 vote; 3) joint emergency declaration by speaker and
president pro tempore with concurrence by Legislature with a 3/4
vote.
Pennsylvania
Tax Stabilization Reserve Fund (Statutory)
Method for deposit: By appropriation; fund capped
at 3 percent of GF revenue estimates.
Method for withdrawal: By appropriation with
2/3 vote when governor declares an emergency or to counterbalance
downturns in the economy that will result in significant unanticipated
revenue shortfalls.
Puerto Rico
Budgetary Fund (Statutory)
Method for deposit: Not less than 1/3 percent
of the Budget Joint Resolution (the governor or director of OMB
may order depositing a larger amount); fund capped at 6 percent
of the appropriated funds of the Budget Joint Resolution in any
year.
Method for withdrawal: OMB director may transfer
funds to cover appropriations when resources are insufficient,
to provide for payment of public debt service, to address any
unexpected situation in the public service, or to honor obligations
of programs funded with contributions or grants from the U.S.
government that have not been received.
Rhode Island
Budget Reserve and Cash Stabilization Account (Statutory)
Method for deposit: By transfer; fund capped
at 3 percent of total fiscal year resources.
Method for withdrawal: By appropriation when
the budget officer declares that actual GF revenue will not equal
the original estimates upon which appropriations were based, (State
statutes call for the fund to be repaid in the second fiscal year
following the fiscal year in which a transfer was made from the
fund and, when necessary, in subsequent fiscal years.)
South Carolina
Capital Reserve Fund (Statutory)
Method for deposit: By appropriation an amount
equal to 2 percent of GF revenue of the latest completed fiscal
year.
Method for withdrawal:By appropriation when revenues
at the end of the fiscal year are projected to be less than expenditures
authorized by appropriation for that year. If the fund is not
tapped for that reason, it can be used for other purposes with
2/3 vote of members present and voting, but not less than 3/5
vote of total membership. (If the Capital Reserve Fund is not
tapped to address a budget deficit, the Legislature--with a 2/3
vote of members present and voting, but not less than 3/5 of the
total membership--can appropriate money from the fund: 1) to finance
in cash previously authorized capital improvement bond projects;
2) to retire interest or principal on bonds previously issued;
or 3) for capital improvements or other non-recurring purposes.
General Reserve Fund (Constitutional)
Method for deposit: Transfer of GF revenues in
excess of annual operating expenditures; fund is capped at 3 percent
of GF revenue of the latest completed fiscal year. (Funds withdrawn
from the General Reserve Fund must be restored annually at a rate
of not less than 1 percent of the general fund revenue of the
latest completed fiscal year until the fund is restored to 3 percent.)
Carnell-Felder Set-Aside Account (Statutory)
Method for deposit: By appropriation for non-recurring
purposes.
Method for withdrawal: By appropriation to prevent
a year-end deficit. (The Carnell-Felder Set-Aside Account was
authorized beginning in FY 1995 to cushion the state's budget
against unforeseen revenue shortfalls stemming from inaccurate
revenue estimates.)
South Dakota
Budget Reserve Fund (Statutory)
Method for deposit: Transfer of prior year unobligated
cash balance; fund capped at 5 percent of GF appropriations for
the prior fiscal year.
Method for withdrawal: By appropriation.
Tennessee
Reserve for Revenue Fluctuations (Statutory)
Method for deposit: By appropriation.
Method for withdrawal: By transfer by the commissioner
of Finance and Administration to offset revenue shortfalls, with
notification to the chairs of the Finance, Ways & Means Committees
of the Senate and House. (The statute declares legislative intent
to be that, to the extent possible, revenue shortfalls will be
offset by reductions in expenditures before using amounts in the
reserve fund.)
Texas
Economic Stabilization Fund (Constitutional)
Method for deposit: Transfer of 1/2 of any unencumbered
general revenue fund balance at end of each biennium plus portions
of oil and natural gas production tax collections. The Legislature
also may appropriate additional funds; fund capped at 10 percent
of general revenue fund deposits (excluding interest and investment
income) during the preceding biennium. (The constitutional amendment
creating the fund mandates the following revenue transfers to
it: 1) one-half of any unencumbered general revenue fund balance
at the end of each fiscal biennium; 2) an amount of general revenue
equal to 75 percent of the amount by which oil production tax
collections in any future fiscal year exceed oil production tax
collections in fiscal year 1987; 3) an amount of general revenue
equal to 75 percent of the amount by which natural gas production
tax collections in any future fiscal year exceed oil production
tax collections in the fiscal year 1987. For purposes of calculating
the transfer, natural gas tax collections would be adjusted to
reflect 12 months of collections in each fiscal year.)
Method for withdrawal: By appropriation with
a 3/5 vote of members present if: 1) the comptroller certifies
that approp-riations from general revenue made by the preceding
legislature for the current bien-nium exceed available general
revenues for the remainder of the biennium; 2) an estimate of
anticipated revenues for a succeeding biennium is less than the
reven-ues estimated to be available for the current biennium;
3) for any purpose with 2/3 vote of members present.
Utah
Budget Reserve Account (Statutory)
Method for deposit: 25 percent of GF surplus;
fund capped at 8 percent of the GF appropriation for the fiscal
year in which the surplus occurred.Method for withdrawal:
By appropriation to cover operating deficits or retroactive
tax refunds.
Vermont
Budget Stabilization Trust Fund (Statutory)
Method for deposit: Undesignated GF surplus;
fund is capped at 5 percent of GF appropriations for the prior
fiscal year; also any additional amounts as may be authorized
by the General Assembly.
Method for withdrawal: Transfer by the commissioner
of Finance and Management to the extent necessary to offset a
GF deficit.
Virginia
Revenue Stabilization Fund (Constitutional)
Method for deposit: By formula as specified in
the state's constitution; fund capped at 10 percent of the average
annual tax revenues for the three fiscal years immediately preceding.
Method for withdrawal: By appropriation (up to
1/2 of the fund's balance) with specific provisions. (The General
Assembly may appropriate an amount for transfer from the fund
to compensate for no more than one-half of the difference between
the total general fund revenues appropriated and a revised general
fund revenue forecast presented to the General Assembly prior
to or during a subsequent regular or special legislative session.
However, no transfer shall be made unless the general fund revenues
appropriated exceed such revised general fund revenue forecast
by more than 2 percent of certified tax revenues collected in
the most recently ended fiscal year.)
Washington
Budget Stabilization Account (Statutory)
Method for deposit: By appropriation based on
statutory formula.
Method for withdrawal: By appropriation, with
60 percent vote, to provide of continuation of agency programs
when revenues fall below forecast, for labor force training, or
for any purpose the Legislature determines would reduce unemployment
caused by the state's economic cycle.
Emergency Reserve Fund (Statutory)
Method for deposit: Beginning in FY 1996, transfer
by state treasurer of all state revenues in excess of the state
expenditure limit for that fiscal year; fund capped at 5 percent
of biennial GF state revenues.
Method for withdrawal: By appropriation, with
2/3 vote required, only if the appropriation does not cause total
expenditures to exceed the state expenditure limit.
The Budget Stabilization Account was repealed effective July 1,
1995, by Laws 1994, ch.2, Sect. 9 (Initiative Measure No. 601,
approved November 2, 1993). The Emergency Reserve Fund was created
(via Initiative 601) effective July 1, 1995.
West Virginia
Revenue Shortfall Reserve Fund (Statutory)
Method for deposit: Beginning in FY 1995, transfer
of the first 50 percent of all surplus revenues accrued during
the fiscal year just ended; fund capped at 5 percent of GF appropriations
for the fiscal year just ended.
Method for withdrawal: By appropriation to meet
any anticipated revenue shortfall.
Wisconsin
Budget Stabilization Fund (Statutory)
Method for deposit: By appropriation.
Method for withdrawal: By appropriation.
Wyoming
Budget Reserve Account (Statutory)
Method for deposit: Year-end surplus plus appropriations.
Method for withdrawal: By appropriation.
The states of Arkansas, Hawaii, Illinois,
Montana and Oregon and the District of Columbia do not have budget reserve funds.
States Broaden the Scope of Rainy Day Funds
Posted August 1997; reviewed March 2004.
Email statebudget-info@ncsl.org for more information.
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