State Budget Practice Report Cards and Budget Resource Guide

Massachusetts earned an average grade of D in budget maneuvers for fiscal 2016 through 2018, the second-lowest mark possible. It has relied heavily on one-time actions to close a long-term gap between revenues and expenditures after passing tax cuts in 2000 without either sufficiently reducing spending or growing its economy to cover shortfalls. As a result, Massachusetts has chronically deferred recurring expenditures to future years.

The state relies by statute on consensus revenue estimates, yet it received only a C average in budget forecasting. Its budgetary revenue and expenditure projections do not extend beyond the current fiscal year, thus providing leaders with incomplete information about potential budget stresses.

Massachusetts was one of just six states to receive the lowest possible average of D-minus in legacy costs. It failed to make the full contribution recommended by actuaries for public employee pension funds and other postemployment benefits, principally health care, in all three years studied. Its pension funded ratio in 2017 was 59.9 percent, about nine percentage points below the US total.

The state’s lone A average was in the reserve funds category: Massachusetts’s rainy day fund contributions are tied to revenue volatility, and the state has clear policies for replenishing and disbursing money it has set aside.

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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 2018 Volcker Alliance report, Truth and Integrity in State Budgeting: Preventing the Next Fiscal Crisis 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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