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.

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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 Act, 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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