Balancing Acts: The Reality Behind State Balanced Budget Requirements: A Twentieth Century Fund Report.

Richard Briffault contends that state experience with balanced budgets demonstrates that a federal balanced budget requirement would be more harmful than beneficial. Whether or not a reader will agree that the evidence actually leads to that conclusion will depend on the assumptions the reader starts with - whether the reader thinks a constitutional amendment to require a federal balanced budget is desirable. But, leaving its political objectives aside, Briffault's book is a good account of the nature of state balanced budget requirements, their effect on states' budgetary processes, the ways states honor and evade them and their relationship to the fact that almost all states almost always balance their budgets.

The book notes, as NCSL and the National Association of State Budget Officers periodically have done, that state requirements for balanced budgets often lack rigidity, may tolerate counting the proceeds of borrowing as public revenue and do not necessarily take all state revenues and expenditures into account. The proposed federal requirement would be much more rigid. The flexibility that lets states live with balanced budget requirements would not exist for the federal government under the proposed amendment. The book suggests that the rigidity of the federal requirement would induce Washington to use "fiscal gimmicks, special funds, off-budget expenditures and quasi-autonomous entities" to soften formal budget constraints.

That is possibly true. The states have produced precedents for each of those hypothetical federal escape valves (as has existing federal budgetary practice). Where this book is most interesting is in detailing such practices in the states. The author himself seems more interested in state budgeting creativity than in his political argument, summing up with the point that "the 'fiscal discipline' of a constitutional balanced budget does not preclude a certain reliance on 'smoke and mirrors' budgeting." He gives useful examples of state resourcefulness in resolving the tensions between fiscal crises and balanced budget requirements. The chapter on the role of the state judiciary in interpreting and enforcing balanced budget requirements is the only treatment of the subject this reader has seen outside legal journals. And the author correctly and clearly focuses on the way that states' limited ability to borrow forces them to balance budgets.

If you are interested in how states actually balance their budgets, you should read this clear, short (65 pages) and witty book. If you think a federal balanced budget amendment is a great idea, you should still read this book. It won't change your mind, but you'll learn a lot about state budgets. To order call [phone].