State Budget Practice Report Cards and Budget Resource Guide

Maine earned B averages for fiscal 2015 through 2019 in all five budget categories. Its most notable improvement over the period was in legacy costs, which includes public worker pensions and other postemployment benefits (OPEB), primarily health care. Maine started making actuarially determined OPEB contributions in 2017 and exceeded the actuarial sum by $9.4 million in 2018. The actions contrast with the twenty-seven states that failed to provide actuarial OPEB funding. Also helping the grade was Maine’s 84 percent pension funding ratio in 2019, 13 percentage points above the total for all states.

The budget forecasting grade was buoyed by the state’s use of a consensus revenue forecasting process, multiyear revenue forecasts, and detailed explanations of revenue growth projections. It missed a top A mark by failing to provide multiyear expenditure forecasts.

The B average for reserve funds reflected the disbursement and replenishment policies for Maine’s Budget Stabilization Fund. The account grew steadily over the study period and contained $309 million in 2019, equivalent to 8.3 percent of general fund expenditures. The state missed getting an A because it did not tie its reserves to revenue volatility, a practice followed by twenty states.

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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 2021 Volcker Alliance report, Truth and Integrity in State Budgeting: Preparing for the Storm, which 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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