Most states have not replenished their rainy day funds to where they were before the Great Recession, reports the Pew Charitable Trusts. Only 18 states ended fiscal 2016 with enough funds in their rainy day reserves and general fund ending balances to cover more days’ worth of operating costs than before the economic downturn. (Maryland was not one of them.)
However, for the first time since the downtown, more than half of the states ended fiscal 2016 with larger rainy day funds as a share of operating costs than before the recession.
Maryland finished fiscal 2016 with about 19 days’ worth of operating costs in its rainy day fund. Rainy day funds equaled $832 million, which amounts to about 5.2 percent of spending. Our state finished fiscal 2007 with 37 days’ worth of operating costs, with $1.4 billion, or 10.1 percent of spending – but that was a particularly strong year. From fiscal 2002 to fiscal 2005, the fund covered 17-18 days’ worth of operating costs, and amounted to 4.6-5 percent of spending. Visualize the data here.
From Pew’s analysis of data provided by the National Association of State Budget Officers (NASBO):
Reserves in rainy day funds—also called budget stabilization funds—were the largest component of states’ financial cushions in fiscal 2016, accounting for nearly $2 of every $3 of total balances. The importance of rainy day funds in helping to gird against budget uncertainties has grown since the recession. Slow and uneven tax revenue growth has limited most states’ ability to match their large ending balances in the year before the downturn. Rainy day funds typically provide a stable cushion from year to year, while ending balances are more volatile and harder to predict.
New Jersey and Nevada have no money saved, according to the report.