Why States Save: Using Evidence to Inform How Large Rainy Day Funds
Should Growexamines budget stabilization funds-often called rainy day funds
-and offers recommendations to determine optimal savings goals and create enhanced budgetary flexibility over the course of the ups and downs of economic activity.
The Rainy Day Fund
, which consists largely of revenue from oil and gas taxes, was created in 1988 as a piggy bank to be used in case of state funding emergencies.
Senate Bill 415, a bill that would deposit the entire $15 million surplus into the Rainy Day Fund
, will likely be voted on by the entire House in the coming weeks.
Given the boom-and-bust nature of state finances, a case can be made that putting money into a rainy day fund
is the most prudent course of action.
But having established a rainy day fund
is not the most significant difference between Oregon and California.
The size of a state's rainy day fund
would also be expected to have a negative association with fiscal stress.
However, at the end of the day, if we don't have that excess revenue, we can't raid the rainy day fund
to adopt her legislation," Mr.
Under current law, the Rainy Day Fund
has never reached its cap.
As state budgets have stabilized, rainy day fund
balances have grown, even when accounting for Alaska and Texas.
With $89 million in the rainy day fund
to protect against future economic downturns, we had a chance to make a strong case for pushing for the state to have a AAA bond rating, the highest around.
The political obstacles confronting both proposals show why it was so hard for the state to establish a rainy day fund
in the first place.
And he also favors setting part of it aside for a rainy day fund