This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

New Report Shows States Use Gimmicks When Balancing Budgets

Balanced Budget Requirements Overlooked

ALEXANDRIA, Va., April 4, 2013 /PRNewswire-USNewswire/ -- Today, State Budget Solutions (SBS), a nonprofit organization advocating for fundamental reform of state budgets and pensions, released a new report "Unbalanced: Why State Balanced Budget Requirements Are Not Enough," revealing that balanced budget requirements in most states are easily manipulated and allow gimmicks to give the illusion of a balanced budget.  SBS' report, which takes into account that state governments are saddled with over $4 trillion in debt, finds a flawed shared understanding of state balanced budget requirements, cites state specific examples of budget gimmicks and offers solutions for states to truthfully balance their budget.

"From coast-to-coast, states claim a balanced budget, even if a gimmick is used. It is currently understood that 49 out of 50 states are required by law to balance their budgets, but when researchers at State Budget Solutions delved into the fine print, we saw gimmick after gimmick," said Bob Williams, President of State Budget Solutions.

The report found that balanced budget requirements are riddled with holes that lead to manipulation. It describes some of the easiest ways that officials can deliberately work around their state's legal requirements; yet still declare their budgets balanced. These include shifting money between funds, toying with the fiscal calendar, issuing debt and underfunding required pension payments.

"Current balanced budget requirements are in desperate need of greater understanding," Williams continued. "In many cases, reforms must be made where the discipline of legislators is not enough to keep the budget in check."

The SBS report not only highlights shortcomings but also provides solutions to balancing state budgets including:
  • Review specific constitutional and statutory provisions that make up a state's balanced budget requirement system.
  • Publicly acknowledge gimmicks and refuse to lend credibility to the budgets that rely on them to achieve balance.
  • Learn how much state spending exists outside of the general fund budget, and routinely examine capital and other budgets for overspending and gimmicks.

"Lawmakers and citizens alike should not rely on the supposed existence of strong balanced budget requirements and hold leaders in check," said Williams.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.65 -0.39%
FB $99.96 -3.90%
GOOG $671.11 -1.80%
TSLA $153.20 -5.80%
YHOO $27.38 -2.10%


Chart of I:DJI
DOW 15,948.57 -256.40 -1.58%
S&P 500 1,851.08 -28.97 -1.54%
NASDAQ 4,270.9040 -92.24 -2.11%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs