Rainy day funds: Running for cover. (Statestats).During the economic boom of the 1990s, most states bolstered budget reserves, especially their rainy rain·y adj. rain·i·er, rain·i·est Characterized by, full of, or bringing rain. rain  i·ness n.Adj. day funds. States increased these funds from $2.7 billion in 1991 to $25.3 billion in 2001. Rainy day funds are money saved when state finances are healthy for use when the economy takes a downturn. Now the recession is here and states are eyeing these funds and other reserves to deal with budget shortfalls. Nearly all states are facing budget deficits that must be addressed before the end of FY 2002. By mid-February, 15 states and the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). already had tapped reserve funds to help balance FY 2002 budgets. Another 10 states were considering doing so. New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of has used $1.1 billion of its rainy day fund. Massachusetts has used $722 million. Kentucky used half of its rainy day fund and some tobacco settlement money. RELATED ARTICLE: TAPPING TOBACCO FUNDS At least eight states have or will consider using tobacco settlement funds to balance their budgets: Idaho Indiana Kentucky Mississippi Missouri Ohio Tennessee Wisconsin RAINY DAY PROS AND CONS pros and cons Noun, pl the advantages and disadvantages of a situation [Latin pro for + con(tra) against] * Promotes stability by allowing state officials temporarily to avoid ad hoc For this purpose. Meaning "to this" in Latin, it refers to dealing with special situations as they occur rather than functions that are repeated on a regular basis. See ad hoc query and ad hoc mode. cuts or tax increases to avoid a budget shortfall. ON THE POSITIVE SIDE, A RAINY DAY FUND: * Buys time for state officials to make informed decisions about longer term solutions to budget problems so that decisions are not made in a crisis atmosphere. * Serves as the repository of excess money, thereby reducing the use of one-time revenues to fund ongoing expenditures. * Weighs in the state's favor with bond rating agencies. * Contains excess money that could be returned to taxpayers. ON THE NEGATIVE SIDE, A RAINY DAY FUND: * Serves as a temporary crutch crutch (kruch) a staff, ordinarily extending from the armpit to the ground, with a support for the hand and usually also for the arm or axilla; used to support the body in walking. crutch n. to address budget problems, thereby delaying permanent solutions, such as budget cuts or tax increases. * Serves as a tempting source of revenue to fund a variety of state programs before a shortfall occurs. * May be inaccessible inaccessible Surgery adjective Unreachable; referring to a lesion that unmanageable by standard surgical techniques–eg, lesions deep in the brain or adjacent to vital structures–ie, not accessible. See Accessible. if bond-rating agencies threaten to lower the state's bond rating if the fund is touched. |
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