U.S. states' post-recession reserves shrink: Pew report

Reuters News
Posted: Apr 13, 2017 2:16 PM

(Reuters) - U.S. states are putting less money aside for a financial emergency than they had before the 2007-2009 economic recession, according to a report on Thursday by the Pew Charitable Trusts.

At the end of fiscal 2016, states had enough surplus money to keep operating for a median of 34.9 days, down from 40.7 days in fiscal 2007, Pew reported.

It noted that states need these balances to deal with unexpected revenue shortfalls or emergencies.

"Because reserves and balances are vital to managing unexpected changes and maintaining fiscal health, their levels are tracked closely by bond rating agencies," Pew said.

Only 15 states had bigger financial cushions in terms of rainy day funds or budget balances than before the recession.

Wyoming had enough money to keep operating for the most days, 397.5, followed by Alaska at 171.1 days, according to the report, which was based on data from the National Association of State Budget Officers. Connecticut, Kansas, New Jersey and Pennsylvania could cover less than a week of operations.

For fiscal 2017, which began on July 1 for most states, at least 37 states expect their reserves to shrink from fiscal 2016 levels, the report said, adding that balance projections routinely change significantly by the end of the fiscal year.

(Reporting by Karen Pierog; Editing by Matthew Lewis)