No State Reserves? – Are you Kidding?
The troubling aspect of that is that Governing magazine reports that many state are likely to see less revenue in 2017 vs 2016. Governing‘s analysis of projected 2017 budget data from the National Association of State Budget Officers shows shows states now have a median 4.9 percent of annual expenditures saved for the fiscal year, down from 5.1 percent the previous year. Illinois, Nevada, New Jersey and North Dakota have no reserves as of 2017. They add to Kansas, Oklahoma, Arkansas, and Montana who had no reserves last year. And Alaska that is burning though theirs. Economic and tax policies are to blame. The Kansas solution to cut taxes to create economic growth has not worked. The state continues to get farther behind and it is becoming harder to pretend all is well. Having no reserves is a crazy bad idea. It is hard to explain just how crazy bad this idea is – it means that if a negative economic issue occurs, these states are in huge trouble unless they start cutting education and other essential services. The best way to get out of a budget hole is not cutting education – the one thing needed to dig out and attract new economic activity. Clearly these officials did not learn from 2008-2011 when there reserves were depleted to address the economic downturn. That makes no sense and dooms their residents to a repeat of 2009/2010, only worse.