State Budget Practice Report Cards and Budget Resource Guide

Idaho won top A averages in budget maneuvers, reserve funds, and legacy costs for fiscal 2017 through 2019, enhancing its reputation for conservative budgeting practices. The state fell far short in one area, however, with a D average in budget forecasting. Only four states fared worse in the category.

Idaho’s low forecasting grade began with its failure to use consensus revenue estimates. Instead of estimates assembled jointly by the executive and legislative branches, revenue projections are based on the Idaho Economic Forecast, published quarterly by the Division of Financial Management, a unit of the governor’s office. The state also lacks multiyear forecasts of revenues or expenditures.

Idaho’s strong reserves afford it some protection against the fiscal risks of a short-term estimate. Its reserve policies parallel best practices cited in the recent Volcker Alliance working paper, Rainy Day Fund Strategies: A Call to Action. In addition to its Budget Stabilization Fund, which is supported by laws detailing appropriate times for deposits and withdrawals, Idaho carries large year-end general fund balances. As a result, its $530 million in rainy day fund assets—equivalent to about 14 percent of general fund revenues—were augmented by an estimated general fund balance of $121.9 million at the end of fiscal 2019. The state also ties rainy day fund deposits to historical revenue volatility and ensures that revenue growth in excess of 4 percent annually goes into the rainy day fund. 

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To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.

The report cards presented here are taken from the 2020 Volcker Alliance report, Truth and Integrity in State Budgeting: The Balancing Actwhich proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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