For Immediate Release:         
February 13, 2023
          
Contact:         
Cassie Nichols
[email protected]

ICYMI: States Are Flush With Cash, Which Could Soften a Possible Recession

KEY QUOTE: "When the economic downturns happen, revenues become more scarce, but the need for services also increases so we want to make sure we have the resources available to provide those services when they’re needed," Adam Proffitt, the state's budget director, said.

States Are Flush With Cash, Which Could Soften a Possible Recession
David Harrison, The Wall Street Journal
February 5, 2023

State governments are entering 2023 with record-high reserves, which could help the overall economy weather a recession this year. The rapid economic recovery from the pandemic combined with an influx of federal stimulus money has filled public coffers, allowing governments to squirrel funds away for emergencies.
Rainy-day funds are designed to maintain state services when revenues drop unexpectedly or to keep money flowing to local governments for services such as public schools. States on average cover almost half of public-education costs.
In Kansas, officials slashed their revenue forecasts in 2020 anticipating the pandemic would trigger a deep recession, said Adam Proffitt, the state’s budget director. Based on those forecasts, the state cut spending by 3.4% in the 2021 fiscal year. “But as we well know, looking back, it was among the quickest recoveries we’ve ever seen,” he said.
Kansas directed $1 billion to its rainy-day fund in 2022 and this year plans another $500 million deposit, Mr. Proffitt said. All told, the fund would then amount to roughly 15% of the state’s annual general-fund revenues, he said.

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