Connecticut, Maryland, and Tennessee do the best job of factoring long-term issues into their budget decisions, according to our major new report (with state-by-state fact sheets), while New Jersey, Oklahoma, and South Dakota do the worst.
The report ranked states on their use of ten proven, common-sense budget tools, such as regularly estimating revenues and spending for the next five years (not just the budget year) and tracking the cost of individual tax breaks. The results cut across regional and partisan divides. (See table below.)
For example, New York (the prototypical liberal northern state) and Louisiana (a southern state with a much more conservative bent) both do relatively good jobs of planning ahead, while both Massachusetts and Alabama have much room for improvement.
Long-term budget planning doesn’t dictate particular policies, the report explains. Rather, it helps policymakers understand the impact of whatever policy they’re considering, whether expanding help for low-income students or eliminating the income tax.
State budgets are still emerging from the worst recession in seven decades, and states face longer-term issues like an aging population and rising health care costs, both of which will increase the budgets of their health and other programs. So policymakers need the best available information about the consequences of their budget decisions. By laying out a clear roadmap of the longer-term implications of their budget decisions, states can improve their business climate, better cope with economic ups and downs, and make government more effective.