Fiscal Management Tools

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A multi-year perspective on revenue and expenditures can help policymakers avoid crisis-driven decisions and unsustainable budget practices. 

States can use a variety of fiscal management tools to attain this longer-term view of their budgets and to manage uncertainty, including multiyear revenue and expenditure projections, budget stress tests, and contingency plans.

These tools help states evaluate their fiscal outlook over the long run, assess how much they should set aside in their rainy day fund to weather economic downturns, and sustainably fund vital programs and services, among other things.

Pew research provides policymakers with best practices—such as the implementation of these tools—to help them pursue long-term budget objectives that benefit their state. 

School buses line and parked at DPS- Hilltop Terminal in Denver, Colorado on Tuesday. November 10, 2020.
School buses line and parked at DPS- Hilltop Terminal in Denver, Colorado on Tuesday. November 10, 2020.
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How States Can Use Federal Stimulus Money Effectively

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Just months ago, many states feared their budgets might face shortfalls for years because of the COVID-19 pandemic. But now most could have temporary surpluses after President Joe Biden signed the American Rescue Plan Act (ARPA) into law in March.

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States Should Avoid Unsustainable Budgeting

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States need to maintain a focus on long-term fiscal health even when they enjoy budget surpluses. Unless states’ decisions are sustainable throughout the economic cycle, they risk making the pain even worse during downturns.

What is Budget Stress Testing?
What is Budget Stress Testing?
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What is Budget Stress Testing?

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How can lawmakers manage budget uncertainty while still meeting residents' needs? Our Kil Huh explains what budget stress testing is and how it works—and how states can use it in the months ahead.

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Empty airport lines
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COVID-19 Reinforces Need for Long-Term State Budgeting

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The coronavirus outbreak, recent market swings, and the drop in oil prices have introduced a high level of uncertainty into state budget development in recent weeks. Policymakers are scrambling to assess the potential risk and the available options for addressing it.

Additional REsources

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Agenda for America

Resources for federal, state, and local decision-makers

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Data-driven policymaking is not just a tool for finding new solutions for emerging challenges, it makes government more effective and better able to serve the public interest.