By Bethany Blankley - The Center Square
Texas is among state governments whose rainy day funds are at their highest levels since before the Great Recession, according to analyses by the National Association of State Budget Officers (NASBO) and The Pew Charitable Trusts.
Texas modified its investment rules to get a greater earnings return from its Rainy Day Fund balance, Pew notes, which sets its financial position slightly better than other states that are still recovering from the Great Recession.
“States are being more deliberate about their savings, often harnessing the ebbs and flows of the business cycle to guide their strategy,” according to a recent report on recession readiness.
“Overall rainy day fund balances have never been higher,” according to NASBO. The association evaluated data from the spring survey of state fiscal conditions, which notes that states’ fiscal conditions may be better than the survey conclusion because the survey was finalized before some states budgeted additional deposits.
Higher-than-expected revenue growth left several states with budget surpluses at the end of fiscal 2018 stemming from the 2017 Tax Cuts and Jobs Act.
“Anticipating some of those gains may be temporary or one-time in nature, some invested a portion of the extra cash in their rainy day funds; a few added to their savings accounts for the first time in years,” the Pew Charitable Trusts states.
“Texas finds itself in relatively strong position in terms of recession preparedness," Steve Bailey, manager on the state fiscal health project at The Pew Charitable Trusts, told The Center Square. "Its rainy day fund is one of the largest in the nation relative to state spending, driven in large part by a volatility-based saving rule, which sets aside a portion of oil and gas production tax revenue that exceed 1987 levels to the Economic Stabilization Fund.”
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