mheslep said:
Why, when 49 states have BB laws?
This is very old (
BALANCED BUDGET REQUIREMENTS - State Experiences and Implications for the Federal Government) and the details are probably wrong by now, but it at least compares all 50 states in one document and illustrates some of the differences between state budgets and federal budgets.
For one thing, most states have requirements to balance their general fund, not the entire budget. Capital projects, such as building projects to improve infrastructure, are still financed via debt and only the debt payments have to be included in the balanced budget requirement (this is a sensible provision - if comparing to households, it's similar to how households buy a car). While each state varied in this report, general funds accounted for about 54% of the overall state budgets.
For another, almost all states have requirements for the proposed budget and/or the enacted budget to be balanced. That's not the same as requiring the budget to balance at the end of the year. In fact, in many states, any end of year deficits are just rolled into the next year's budget - i.e. an end of year deficit hurts what the state can do the next year and ensures budgets balance in the long term, but it doesn't cripple a state when things don't go as planned.
It's a system that can be abused. Proposing an overly optimistic economy and underestimating costs is a perfectly legal way to balance the budget on paper without balancing it at year end. Balancing the budget, but then passing emergency supplemental bills during the year is another perfectly legal way to balance the budget on paper without balancing it at year end (given that the government has to have the flexibility to respond to emergencies, crises, etc, any rational balanced budget amendment would still have to allow emergency supplemental spending bills even if there were a likelihood of abuse).
While many states have no legal requirement to balance the budget at the end of the year, most still do. One method used to do this is to give the state governor authority to impose unilateral spending cuts of some kind. The federal government could also do this - allow the President to make unilateral spending cuts or tax increases - and it couldn't be considered unconstitutional if were authorized by a constitutional amendment. It would be a rather substantial transfer of power over the budget from the legislative branch to the executive branch, however.
Most federal balanced budget amendment proposals have balked at transferring power from the legislative to the executive and have proposed some formula for automatic spending cuts. In my opinion, putting the budget on autopilot and allowing those set formulas to take control are the worst option, but that's purely a subjective opinion.
A better option is to require Congress to make adjustments during the year, as some state legislatures do. Everything is still under human control without transferring legislative authority to the executive branch. They still have to have the flexibility to handle situations where the end of year is not going to be balanced no matter how much we might wish it would.
There's two other reasons state budgets usually balance at the end of year even though they're only legally required to balance when enacted: tradition and credit ratings.
State budget officials told us that in addition to the requirements themselves, the expectation or tradition of balanced budgets as well as concern over bond ratings were important motivating factors in their states' efforts to balance budgets. Without these other factors, balanced budget requirements may not be sufficient to ensure balanced state budgets. While present at the federal level, concerns over long-term budget balance and credit worthiness have not been historically strong enough to maintain a balanced federal budget.
The federal government still has almost no recent history of balanced budgets, but concerns about its credit worthiness may just have gotten a lot stronger. While state budgets usually do balance, it's debatable whether the legal requirements are the reason or if state budgets balance because voters expect state governments to balance their budgets.