Caught Off-Balance: How Implementing Structural Changes to State Balanced Budget Requirements Can Foster Fiscal Responsibility and Promote Long-Term Economic Health

Abstract

Although forty-nine states have balanced budget requirements, states still consistently face massive budgetary shortfalls. Many states face serious enforcement issues, leaving the states vulnerable to violations of their balanced budget requirements through budgetary manipulation and gimmicks. Although not easily resolved, these problems could be mitigated or settled entirely through the use of alternative balanced budget systems. This Note explores the problems and gimmicks that cripple the effectiveness of state balanced budget requirements. This Note then proposes alternative balanced budget requirement structures that could alleviate many of these problems. In particular, this Note argues that cyclical-based budgets, reality-based budgeting, and alternative enforcement mechanisms could lead states toward sustained economic success.