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BUDGET GIMMICKS

Budget Gimmicks

Find the SBS update of the latest budget gimmicks here, or click here to review the worst budget gimmicks of 2013. SBS researches and reports on budget gimmicks to inform legislators and citizens and help them combat budget dishonesty within their states. Budget dishonesty can only survive in states that lack transparency and awareness, and that's where SBS comes in.

Though almost all states have so-called "balanced budget" amendments requiring general fund expenditures to stay within state revenue limits, state budgets are often very far from balanced. See why those balanced budget amendments are not enough here. Legislators and governors have developed a deep bag of tricks to "solve" budget gaps: delaying paychecks for a week so that they fall in the next fiscal year; underfunding state budget commitments; borrowing and transferring from designated funds; inflating future revenue projections and estimations. This consistent habit of kicking the can down the road has put states in their current fiscal catastrophe.

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    • HEADLINES: Washington

      Put it on Plastic! – New Approach to Big Budget Problem Emerging in House

      by Erik Smith | February 10, 2012

      House Democrats are thinking of going into debt to help plug the big $1.5 billion hole in the state budget, a scheme that could eliminate the need for the Legislature's much-talked-about plan to go the voters for a tax increase.

    • HEADLINES: California

      Gov. Jerry Brown signs measure to boost state's cash flow

      The Los Angeles Times | by Chris Megerian | February 4, 2012

      Gov. Jerry Brown signed a bill Friday expanding the state's ability to borrow from dedicated funds to cover day-to-day expenses.

    • HEADLINES: New York, California, Texas

      States Continue to Use Dishonest Budget Tactics Making Shortfalls A Mystery

      by Andrew Guevara | January 30, 2012

      Many state legislatures have reconvened for the new legislative season to examine upcoming fiscal year budgets, and inevitably, budget shortfalls. Determining the size of those budget gaps, however, is especially difficult; the accounting maneuvers and budget gimmicks that states traditionally use to "balance" their budgets often serve as temporary façades of fiscal health.

    • HEADLINES: Connecticut

      Connecticut Eyes Pension Overhaul

      The Wall Street Journal | by Shelly Banjo | January 24, 2012

      Connecticut Gov. Dannel Malloy on Monday called for pumping up payments into the State Employees Retirement System, one of the nation's most under-funded public pension funds.

    • HEADLINES: Louisiana

      Part of budget shortfall caused by one-time money

      CBS Money Watch | January 24, 2012

      The $895 million shortfall projected for the upcoming budget year shouldn't come as a total surprise to Louisiana lawmakers or Gov. Bobby Jindal's administration.

    • HEADLINES

      Budget Gimmicks Used by States

      by Bob Williams | January 19, 2012

      Because many states do continue to rely on the gimmicks, SBS tracks what financial games the states are playing.  The gimmicks are many and varied.  This is an overview of many of the gimmicks that states have recently used.

    • RESEARCH

      Budget Gimmicks Used by States

      by Bob Williams | January 19, 2012

      Because many states do continue to rely on the gimmicks, SBS tracks what financial games the states are playing.  The gimmicks are many and varied.  This is an overview of many of the gimmicks that states have recently used.

    • HEADLINES: California

      How big is Jerry Brown's proposed California budget, really?

      The Fresno Bee | January 9, 2012

      Officially, the governor's budget for fiscal year 2012-13 is $137.3 billion, but total state expenditures would be about a quarter-trillion dollars.

    • HEADLINES: California

      Brown Wins Right to Use Redevelopment Funds to Plug Budget

      Businessweek | by Karen Gullo and James Nash | December 30, 2011

      The California Supreme Court handed Governor Jerry Brown a late holiday gift, ruling that more than $1 billion in redevelopment funds can be used to fill a state budget gap.

    • HEADLINES: Missouri

      Missouri's higher education loan fund may be raided again

      The Missourian | by David Lieb (AP) | December 27, 2011

      The proposal calls for five of the state's largest universities to transfer $106 million from their reserves to the state so that Missour could avoid making deep cuts to the core budgets for higher education institutions in the 2013 fiscal year.


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    • POLICY BRIEF: Pennsylvania

      Zogby: Teachers’ union using ‘budget gimmicks’ in calling for rehiring of laid-off teachers

      The Pennsylvania Independent | by Maura Pennington | November 1, 2013

      State Budget Secretary Charles Zogby said, "It's unfair to the students, to the schools, and to the SRC to be hiring people based on one-time savings. These are the kind of budget gimmicks that got the district into trouble in the first place."

    • RESEARCH

      Forecasting the Recovery from the Great Recession: Is This Time Different?

      The National Bureau of Economic Research | by Kathryn Dominguez & Matthew Shapiro | February 4, 2013

      Was the slow recovery of the U.S. economy from the trough of the Great Recession anticipated? 

    • RESEARCH

      On Financing Retirement with an Aging Population

      The National Bureau of Economic Research | by Ellen McGrattan & Edward Prescott | February 4, 2013

      Alternative views on the problem the United States is facing: financing retirement consumption as its population ages.

    • RESEARCH

      State Budget Crisis Task Force Report

      State Budget Crisis Task Force | by Richard Ravitch and Paul Volcker | July 17, 2012

      State finances are not transparent and often include hidden liabilities as well as rapidly growing responsibilities which are difficult to control.  While state revenues are gradually recovering from the drastic decline of the Great Recession, they are not growing sufficiently to keep pace with the spending required by Medicaid costs, pensions, and other responsibilities and obligations.  This has resulted in persistent and growing structural deficits in many states which threaten their fiscal sustainability.

    • RESEARCH

      Budget Gimmicks Used by States

      by Bob Williams | January 19, 2012

      Because many states do continue to rely on the gimmicks, SBS tracks what financial games the states are playing.  The gimmicks are many and varied.  This is an overview of many of the gimmicks that states have recently used.

    • RESEARCH

      Report reveals aggregate state debt exceeds $4 trillion

      State Budget Solutions | by Andrew Guevara | October 24, 2011

      State Budget Solutions' second annual state deficit report reveals aggregate state debt presently exceeds $4 trillion. While states themselves can rely on budget gimmicks to hide the extent of the deficit, SBS takes a straightforward approach to calculating total state debt. See where your state ranks.

    • RESEARCH

      The Fiscal Health of U.S. States

      Mercatus Center | by Jeffrey Miron | August 15, 2011

      This paper examines the fiscal health of the 50 U.S. states. As this paper shows, accounting for implicit pension liabilities provides a significantly more negative picture than does explicit debt information on its own.

    • RESEARCH: Connecticut

      Governor Malloy's Many Tax Hikes

      Gov. Malloy has proposed dozens of tax increases across 25 categories of taxes. This is a conservative count; we aren't counting each separate expansion of the sales tax as a separate tax hike, though of course they are.

    • RESEARCH: Hawaii

      Exposing Hawaii's Special Funds

      The Grassroot Institute of Hawaii | by Danny de Garcia II and Kyle Shiroma | March 8, 2011

      Both the decision to raid special funds and the revelation that several may have excess balances or be obsolete provokes one to ask, "Just how many special funds are there, and what is their total in excess balances?" This paper aims to create a starting point for answering that question and to provoke policymakers and taxpayers alike to support a complete audit and publication of all Hawaii State funds - not just special funds - for the purposes of transparency and accountability in government.

    • RESEARCH: Idaho

      Idaho Pork Report 2010

      There is no government or private sector budget with items labeled "government waste," or "junket" or "fraud and abuse." When the Idaho Freedom Foundation began reviewing state and local government records in search of waste, elected officials and bureaucrats claimed that there is very little to discover--that with the recession and cost-cutting measures at all levels of government, there's no room for frills. As it turns out, that was hardly the case, and no one should be surprised.


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    • SOLUTIONS

      How Reality-Based Budgeting Can Permanently Resolve State Budget Gaps

      State Budget Solutions | by Bob Williams | November 7, 2012

      State Budget Solutions recommends that state legislators take action in 2013 to resolve the serious state financial crises by changing their focus from inputs to outcomes by redesigning budgets from the ground up based on priorities and performance.

    • SOLUTIONS: Nevada

      Responsible budgeting

      The Nevada Policy Research Institute | by Geoffrey Lawrence | November 3, 2011

      States should use the budget solutions of avoiding budget gimmicks and use any additional revenue to first eliminate all the dubious financial devices from budgets and to avoid state debt.

    • SOLUTIONS: Colorado

      The Citizen's Budget

      The Independence Institute | March 8, 2011

      The Citizens' Budget includes legislative, constitutional, and policy recommendations to close the looming state budget gap - without raising taxes - and move Colorado towards sustainable government for good.

    • SOLUTIONS: Florida

      Transparency in Government Spending: Next Steps for Florida

      The James Madison Institute | by Sandra Fabry | March 8, 2011

      While several improvements have been made to bring Florida's tradition of "Government in the Sunshine" into the 21st Century, it seems appropriate that the year that marked the anniversary of the beginning of Florida's tradition of "government in the sunshine" also became the year in which
      Florida took an important leap towards living up to its nickname of the "Sunshine State," particularly in the area of government finance.

    • SOLUTIONS: Illinois

      Budget Solutions 2012

      To reestablish Illinois as an economic powerhouse, the Institute has proposed "Budget Solutions 2012," an alternative that does not rely on the state's recent tax hikes as a revenue source, does not include borrowing and has positive cash flow for fiscal year 2012 - all while funding core services the poor and disadvantaged rely upon.

    • SOLUTIONS: New Jersey

      The Crisis in Public Sector Pension Plans

      Mercatus Center | by Eileen Norcross, Andrew Biggs | February 11, 2011

      Case study of New Jersey's five public pension plans and exploration of possible solutions, including shifting all newly hired employees to a defined contribution pension model based upon the plan already offered to New Jersey's university employees and continuing current reforms lowering pension replacement rates and, if possible, extended to current employees.

    • SOLUTIONS: Washington

      End the Budget Bait and Switch

      April 29, 2010

      Many governors and state legislators are using accounting gimmicks and federal stimulus funds to temporarily balance their budgets. When federal funds run out in a year or two, these states will face a spending cliff, necessitating a significant downsizing of their state budgets.

    • SOLUTIONS: Arizona

      $50 Billion Tidal Wave: How Unfunded Pensions Could Overwhelm Arizona Taxpayers

      The Goldwater Institute | by Andrew G. Biggs | March 31, 2010

      In a period when financial markets and institutions have appeared near collapse, the accounting methods used by public employee pensions effectively ignore risk. These accounting methods, which are used by public pensions in Arizona and around the country, allow pension fund managers to assume that high returns can be earned through stocks and other investments without taking any market risk. As a result, the true market value of Arizona pension shortfalls that must be funded by taxpayers is understated by around half of what the pension funds have reported.

    • SOLUTIONS

      Fiscal Evasion in State Budgeting

      by Eileen Norcross

      This paper establishes a basic framework that can be used to assess long-running fiscal practices in the states against a standard of fiscal prudence.