NASBO Recommends Better Budgeting Practices for States

Knowing when to implement budget cuts or reserve measures and how to reduce expenditures while minimizing service disruption are valuable best practices that can be shared as a result of the recession’s impact to state fiscal conditions. These messages are among several recommendations from the National Association of State Budget Officers (NASBO) outlined in a new report. Modifying the timing of temporary tax increases is one such example. For many states that enacted tax increases on a temporary basis, the result was continued fiscal stress as the national economy followed a trajectory of slow growth. However, states could better ensure that revenues will recover and budget stability is reached before revenue actions sunset or expire if they were to tie the tax increases to economic conditions or revenue collections rather than the fiscal or calendar year, the report concludes. Examples of state actions are coupled with commentary from budget officers to highlight both the severity of the fiscal crisis across states and the different paths to recovery taken by state leaders. Read the report…