State Budget Practice Report Cards and Budget Resource Guide
Tennessee was one of only four states to post a top A average in transparency for fiscal 2017 through 2019. Like the thirty-eight states that received Bs, it had a consolidated budget website and provided debt tables and comprehensive tax expenditure reports. But Tennessee joined Alaska, California, and Hawaii as the only states providing budgetary information about deferred infrastructure maintenance costs throughout the three years evaluated. The information is compiled by the Tennessee Advisory Commission on Intergovernmental Relations, a panel created by statute in 1978, which estimated the state’s need for public infrastructure improvements at $41.5 billion in 2016. (A fifth state, Illinois, began disclosing data on deferred infrastructure maintenance costs in 2019.)
The state’s A average in budget maneuvers reflected a lack of reliance on one-time revenue measures to achieve balanced budgets. It also averaged an A in reserve funds, with policies that parallel best practices cited in the recent Volcker Alliance working paper, Rainy Day Fund Strategies: A Call to Action. Tennessee maintains limits on the use of assets in its reserve for revenue fluctuations. It also links deposits to historical revenue volatility, adding at least 10 percent of estimated growth over the previous year in general fund and education trust fund revenues. The reserve is capped at 8 percent of those funds’ total revenues.
Tennessee’s weakest mark was a C average in budget forecasting. Its revenue and expenditure projections cover only the current and upcoming budget year, which falls short of the three-year minimum outlook for full forecasting credit.
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 2017 through 2019. 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.