Long-Term Budget Forecasts and Contingency Plans Help States Prepare for Fiscal Challenges (PDF)
Budget Forecasts and Contingency Plans Help States Prepare
In a memo sent Aug. 20, 2021, to Colorado’s Office of State Planning and Budgeting, experts from The Pew Charitable Trusts discuss how two fiscal management tools—long-term budget projections and contingency plans—help states prepare for fiscal challenges. Specifically, long-term (or multiyear) budget projections help leaders identify problems that can build over time, while contingency plans help officials prepare for acute, short-term crises.
In particularly challenging times, when revenue is volatile and priorities may need to be reassessed, it is important that lawmakers manage budgets effectively to mitigate fiscal stress.
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.
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