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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: West Virginia

      State will raid Medicaid to balance books

      The Charleston Daily Mail | July 1, 2013

      West Virginia cut nearly $18 million from Medicaid reserve funding on Friday in an emergency move to ensure the state would end its budget year Sunday with spending and revenues balanced.

    • HEADLINES: California

      California Pension Pickup: Taxpayers Footing Massive Bill For Obscure Government Employee Perk

      The Huffington Post | by Thomas Peele and Daniel Willis | June 24, 2013

      It's called the "pension pickup" -- and like a rich uncle picking up the tab at a big family dinner, Bay Area taxpayers footed the bill for more than $221 million last year for the employee share of 63,000 public workers' pension contributions.

    • HEADLINES

      Why Those New State Budget Surpluses May Not Last

      CNBC | by Mark Koba | June 21, 2013

      State coffers are building back up—some with record surpluses. But experts warn that reduced tax revenues— along with a return to overspending—could jerk states right back into the red, and quickly.

    • HEADLINES

      State Budget Transparency: A Look Behind the Numbers

      RealClear Markets | by Tracy Gordon | June 19, 2013

      Most states are now wrapping up their 2013-2014 budget cycles, and apparently they're in good shape too. But thanks to the lack of budget transparency, state and local governments are estimated to owe up to $4 trillion more than they have set aside for pensions and retiree health care.

    • HEADLINES: California

      New California State Budget Creates Controversy

      NBC-7 San Diego | by Chris Chan | June 17, 2013

      A new California state budget means more money for schools, but the estimated budget surplus of more than $1 billion is causing some controversy over government accountability.

    • HEADLINES

      Report Says State Budget Surpluses Don't Mean That Much

      Governing | by Ryan Holeywell | June 17, 2013

      A new study shows that many states could end the current fiscal year with surpluses in their general funds. While that may seem like good news, it's probably too early to get excited. That's because those positive numbers are largely the result of one-time influxes of tax revenue that came when investors sold off assets late last calendar year to avoid higher federal tax rates that came in 2013.

    • HEADLINES: California, Nevada, Texas

      Meredith Whitney: The 'Shocking' Details Behind California's Budget Surplus

      Yahoo! News | by Bernice Napach | June 6, 2013

      "Nevada and all across the United States, cities and states that were once flush with cash are running out of money needed to pay for libraries, safe streets, clean drinking water, and yes, schools," writes analyst Meredith Whitney.

    • HEADLINES

      Budget Gimmicks Update, June 2013

      State Budget Solutions | by Joe Luppino-Esposito | June 6, 2013

      State officials have a deep bag of tricks to "solve" budget gaps. In reality, these gimmicks result in state budget that appear at first glance to be balanced, but looking past the smoke and mirrors reveals that they are very unbalanced. This month's updates come from California, Minnesota, New Hampshire and New York.

    • HEADLINES: Connecticut

      Malloy, Democrats Reach Tentative State Budget Deal

      The Hartford Courant | by Christopher Keating | May 26, 2013

      Lawmakers have been working on the details behind closed doors on the plan that calls for spending $21.5 billion in the fiscal year that starts July 1 and about $22.3 billion in the following year.

    • HEADLINES: Texas

      House-Senate deal clears Texas budget logjam

      The Dallas Morning News | by Robert T. Garrett | May 23, 2013

      A logjam on the budget broke swiftly late Wednesday as the House and Senate advanced water and school fund measures each was demanding of the other.


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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.