Balanced Budget Requirements:

State Experiences and Implications for the Federal Government

AFMD-93-58BR: Published: Mar 26, 1993. Publicly Released: Mar 26, 1993.

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Pursuant to a congressional request, GAO provided information on: (1) states' balanced budget requirements; (2) states' experience in meeting those requirements; and (3) implications for a federal balanced budget.

GAO found that: (1) 48 states have balanced budget requirements; (2) states focus primarily on balancing the general fund, which includes general tax receipts and discretionary appropriations; (3) states do not have provisions for automatic spending cuts or other formula-based processes to implement their requirements; (4) many states give governors the authority to enforce balanced budget requirements throughout the fiscal year by unilaterally reducing state spending; (5) state tax and fee increases and spending cuts outweighed budget-balancing measures to use cash reserves and defer current year payments until the following year; (6) although most balanced budget requirements are not explicit regarding year-end balances, 39 states had balanced budgets every year since 1990; (7) factors motivating balanced budget actions include the expectation of balanced budgets and the concern that state bond ratings may decrease if the state does not balance its budget; and (8) the federal budget's unique macroeconomic role could be compromised by a strict balanced budget mandate.

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  • budget icon, source: GAO

    State and Local Governments' Fiscal Outlook:

    2016 Update
    GAO-17-213SP: Published: Dec 8, 2016. Publicly Released: Dec 8, 2016.

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