(The Center Square) – A new study shows most state’s rainy day funds have eclipsed pre-pandemic highs, but Illinois remains at the bottom of the heap.
The Pew Charitable Trusts analysis shows that 28 states expected their rainy day fund balances to grow in fiscal 2021 from the previous year, increasing the national total by a net amount of $4.6 billion to a new high of $82.2 billion.
Unprecedented federal aid and smaller-than-anticipated tax revenue shortfalls have allowed the majority of states to avoid tapping into their rainy day funds since the beginning of the recession in early 2020.
“These are really a state’s best line of defense for eliminating budget gaps without harming residents or their economies during a recession or in response to unforeseen emergencies like the coronavirus pandemic,” said Justin Theal, an officer with Pew Charitable Trusts.
Based on fiscal 2021 estimates savings, 21 of the 28 states with projected increases in balances also posted increases in the number of days they could run government operations using rainy day funds alone.
There is a wide variation in how far each state’s rainy day funds could stretch, from enough to run government operations for 301 days in Wyoming to less than one-tenth of a day in Illinois. The median amount at the start of this fiscal year could cover 28.5 days worth of general fund spending.
The Illinois Comptroller says if families do their best to save for financial emergencies, the state should too.
Susana Mendoza has introduced a plan which she says will strengthen Illinois’ rainy day fund which has been next to nothing for years.
The proposal calls for triggering monthly transfers into the Budget Stabilization Fund, or rainy day fund, and also the Pension Stabilization Fund when the state’s bill backlog is less than $3 billion. It would occur at the point her office said the state is paying bills within a 30-day cycle, which is customary in business.