State Budget Practice Report Cards and Budget Resources Guide
While most states cut back on budget maneuvers as the economy expanded in fiscal 2015 through 2019, Texas stepped up its use of such one-time measures to cover recurring expenditures in the later years of the study period. The increase in maneuvers limited Texas’s average grade in the category to a B. Actions included the legislature’s authorizing a transfer of $668 million from special funds to the general fund to close a shortfall before the passage of the fiscal 2018–19 budget.
Texas had an even weaker performance in legacy costs, with an average of D-minus, the lowest possible grade. Just six other states fared that poorly. Its annual contributions for public worker pensions and other postemployment benefits (OPEB), primarily health care, consistently fell short of actuarially determined amounts. Its pension fund ratio dropped from 76 percent in 2017 to 69 percent in 2019, 2 percentage points below the total for all states.
As befits a state with vast oil and gas production, Texas scored an A average in reserve funds. It deposits a large portion of severance tax collections into the Economic Stabilization Fund in years when receipts exceed 1987 levels. This brought the fund to $10.1 billion in fiscal 2019, an amount equivalent to 19.3 percent of general fund expenditures.
Texas’s average of C in budget forecasting was buoyed by measures requiring the Legislative Budget Board to prepare analyses of the impact of economic and demographic growth on the state’s finances. The initial report, released in 2017, covered fiscal 2018–27, and a subsequent analysis covered fiscal 2020–29. Whether similar long-term projections continue will depend on the legislature’s evaluation of the new process.
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 2015 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.