State Budget Practice Report Cards and Budget Resource Guide
An improvement in Montana’s rainy day fund policies lifted its grade in reserve funds to an A in 2018 from D in both of the previous two years, although its past deficiencies left it with a three-year average of C for fiscal 2016 through 2018.
In 2017, the state enacted legislation establishing a budget stabilization reserve fund to be tapped in the event of a revenue shortfall. The first deposit of $45.7 million was planned for fiscal 2019. If general fund revenues exceed estimates by at least $15 million in a future fiscal year, half of the excess will be transferred into the rainy day fund on or before August 15 of the following fiscal period.
Before the law, Montana had attempted to maintain a financial cushion with its year-end budgetary balances. That failed to provide enough cash to smooth out the volatile income stream of a state heavily dependent on oil, natural gas, and mineral revenues.
The rainy day fund could be particularly helpful in future years, as Montana has limited budgetary forecasting functions— it lacks consensus estimates, as well as multiyear expenditure and revenue forecasts—and averaged a D in the category.
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 found here contain grades of the state's budgetary practices during the fiscal years of 2016 through 2018. Each state received marks in five critical categories, based on their adherence to best practices in several key budgeting indicators. The five categories covered methods used to achieve budgetary balance as well as how budgets and other financial information are disclosed to the public.
States received grades of A to D-minus (there are no “failed states”) for their procedures in estimating revenues and expenditures; their use of one-time actions to balance budgets; how they oversee and use rainy day funds and other fiscal reserves; the adequacy of their funding of public worker retirement and other postemployment benefits; and the quality of transparency of budget and related financial information. The grades are based on research conducted by public finance and budgeting professors and students at eight US schools of public administration or policy. The universities’ research efforts were augmented by Volcker Alliance staff, data consultants at Municipal Market Analytics, and special project consultants Katherine Barrett and Richard Greene.
State Budget Sources
State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses is a resource published by the Volcker Alliance designed to help public officials, policy advocates, journalists, academics, and concerned citizens fully understand the critical fiscal decisions that governors and legislators must make. The guide includes the links below to budgets for this state as well as legislative analyses of budget bills and treasurers’ or comptrollers’ monthly state cash-flow statements; capital spending plans; reports on public-worker pension funding and returns; and reports by local and national fiscal research organizations, bond rating firms, and associations of state fiscal and finance officials.