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The Tax Foundation is the nation’s
leading independent tax policy
research organization. Since 1937,
our research, analysis, and experts
have informed smarter tax policy
at the federal, state, and global
levels. We are a 501(c)(3) nonprofit
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State Rainy Day Funds and the
• State revenue stabilization funds, often called rainy day funds, are better
funded now than they were at the start of the Great Recession and can be a
valuable tool as states face a sharp pandemic-linked economic contraction.
• The median rainy day fund balance is 8 percent of state general fund
expenditures, but several states have little or no reserve funding.
• Withdrawal conditions vary, with states differing on whether access to the
rainy day fund is triggered by budget gaps, economic or revenue volatility, or
forecast errors, or whether any specific reason is required at all.
• Governors or agency officials are empowered to make fund withdrawals
without a legislative appropriation in 24 states, while legislatures may
appropriate from rainy day funds in 33 states, with an overlap of seven states
in which there is concurrent authority.
• Twelve states restrict how much can be withdrawn from a rainy day fund in
a given year, capping withdrawals based on a percentage of the prior year’s
general fund appropriations, a percentage of the current balance of the rainy
day fund itself, or a specific dollar amount.
• Eight states impose repayment requirements on their primary rainy day fund,
with four requiring some or all of the money to be repaid in the next fiscal
• Rainy day funds are a valuable tool for state governments as they address the
present crisis, but they are only one tool of many and should not be used as
an excuse to postpone necessary budget decisi