Not since 2009, or perhaps sometime in the 1930’s, have state and municipal budgets been looking at a drop off like what they are currently facing. With the budgets in a crunch, new attention is being paid to states’ rainy day funds. Most states have one of these funds, where money is set aside should an unforeseen shortfall come along – such as a virus no one knew existed six months ago.
In addition to falling revenues, unforeseen expenses like skyrocketing unemployment claims are making these margins even more difficult. The federal government will be able to help out partially but budgets will be in a crunch for the near future.
There are some states that do not have a rainy day fund at all, such as Illinois or Kansas or Montana. All states are looking at some very difficult choices over the next year but those states maybe more so. Fortunately for most InsiderAdvantage readers, Georgia is not one of those states.
Georgia actually ranks very highly in the study from financial technology company SmartAsset. Georgia ranks as the state with the 17th largest rainy day fund in 2019. The report broke down the rainy day funds into percent of general fund expenditures and into the number of days that the rainy day fund would be able to cover. Georgia has not actually released its numbers for the 2019 rainy day fund but the Pew Charitable Trusts was able to make an estimate. Former Governor Nathan Deal doubled the rainy day fund from when he took office and Governor Brian Kemp largely kept up this practice until this year.
The 2018 data did come from the state and showed that the fund would be able to cover 38 days worth of the year’s budget, representing nearly 11 percent of general fund expenditures. The estimate numbers for 2019 are similar but slightly less, with only 36 days and just over 10 percent.
Unlike many of these budget-related studies, there does not seem to be a political or economic correlation for states that have the largest funds. Small budgets to huge budgets, Democrat states to Republican states, the list is surprising. Wyoming was at the top of list, being able to cover just over a year’s budget with its fund – 397 days. Wyoming’s total budget though is less than $2 billion, compared to Georgia’s roughly $25 billion. But it is all relative. Just because the numbers are lower does not mean that it is any easier for Wyoming to forego spending in favor of a savings fund.
Thanks to strong oil revenues from the past few years, Alaska was able to sock away a eight months’ worth of budget. Alaska’s budget is heavily dependent on oil prices so the recent drop, combined with the Covid issues, will be especially difficult. Recent Department of Revenue projections predict a more than $500 million shortfall.
Besides these two relatively low budget states, California – with one of the biggest budgets in the country – is seventh on the list. Texas, with another relatively large budget, is fifth on the list. The top ten is roughly split even between Republican and Democratic run governments.
To see the full report and where all states rank:
https://smartasset.com/checking-account/states-with-the-largest-rainy-day-funds-2020
