State-By-State

Alabama

The Alabama Constitution of 1901 has a number of amendments that call for a balanced budget. Amendment No. 26, which was ratified in 1993, calls for the proration of state funds when the revenues actually received are less than the obligations appropriated by the legislature and approved by the governor. This law also calls for the fine and the imprisonment of anyone who violates this provision. Alabama forbids the carrying over of a deficit from one year to the next, and is required to pass a “balanced budget.”

Alaska

Section 37.07.020 of the Alaska state law mandates proposed expenditures may not exceed estimated revenue for the succeeding fiscal year. Alaska law forbids the run-over of a deficit from one year to the next, and the state must pass a “balanced budget” from year to year. Alaska limits appropriations from the previous year, adjusted for inflation and the change in population plus an additional 5%. This is commonly called “budgeting for fiscal discipline,” and is a way to keep the growth of appropriations from outpacing the growth in revenues from year to year within the state.

Arizona

Article IX, Section 3 of the 1912 Constitution requires the legislature to initiate an annual tax to pay for any state debt within twenty-five years of the passage of the law creating that debt. Section 5 sets the debt limit at $350,000, and Section 17 sets a spending cap for appropriations at 7% of the total state personal income. It also authorizes the legislature to override the cap by 2/3 vote. Unlike states like Alabama and Alaska, Arizona law does not forbid the carrying over of a deficit from one year to the next.

Arkansas

Arkansas state law mandates that proposed expenditures shall not exceed estimated available resources. Amendment 20 to 1874 the Constitution permits the State to incur indebtedness with the consent of a majority of the electorate. As there are no statutory requirements to govern what kinds of assumptions can be made about revenue or expenses, the Arkansas budget will be “unbalanced” in different ways in different years. Arkansas law forbids the carrying over of a deficit from one year to the next.

California

The California Constitution limits appropriations from the previous year, adjusted for inflation and the change in population. This is commonly called “budgeting for fiscal discipline,” and is a way to keep the growth of appropriations from outpacing the growth in revenues each year. California Code Section 13337.5 of state law prohibits the annual budget act from authorizing expenditures in excess of revenues. California law forbids the carrying over of a deficit from one year to the next. The State only budgets for expenditures, not revenues.

Colorado

Colorado is required to pass a “balanced budget.” Article X, Section 16 of the 1876 Constitution prevents appropriations from being passed which would exceed tax revenue. Colorado law forbids the carrying over of a deficit from one year to the next.

Connecticut

Connecticut is required to pass a “balanced budget.” Article XXVIII to amend the 1965 Constitution states that the “amount of general budget expenditures authorized for any fiscal year shall not exceed the estimated amount of revenue for such fiscal year.” Moreover, Section 2-35 of state law requires an estimate of the revenue for each fund from which money is appropriated. The statute then requires that the estimated revenue going into the fund cannot be less than the moneys being appropriated out of the fund. Section 4-72 charges the governor to match revenues with expenditures. Connecticut law allows the carrying over of a deficit from one year to the next. Connecticut budgets for two years at a time, and then evaluating and adjusting the budget midway through. Connecticut has an Office of Policy and Management, which is responsible for keeping an eye on the State’s fiscal health.

Delaware

Delaware is required to pass a “balanced budget.” Delaware law forbids the carrying over of a deficit from one year to the next. While preparing for revenue shortfalls by leaving some revenues unappropriated has had varying degrees of success, there are no statutory requirements that govern what kinds of assumptions can be made about revenue or expenses. Therefore, the Delaware budget could be “unbalanced” in different ways in different years.

Florida

Florida has one of the most aggressive policies for maintaining a balanced budget in the country, requiring that when the budget isn’t balanced, it is to be made balanced. Florida law forbids the carrying over of a deficit from one year to the next. Florida’s governor is required to monitor revenues to ensure that all the necessary revenues are being raised. If a deficit is developing, then the governor, house speaker, senate president and chief justice are to reduce costs to eliminate the deficit.

Georgia

Georgia is required to pass a “balanced budget.” Article III, Section 9 of the Constitution ratified in 1982 prohibits the general assembly from appropriating funds that, in aggregate, exceed the previous year’s surplus funds added to the current year’s estimated revenue. Any appropriation that violates the balanced budget requirement is supposed to be voided. State law forbids the carrying over of a deficit from one year to the next.

Hawaii

Article VII, Section 5 of the Constitution states no expenditures of public money shall exceed the general fund revenues, except when the governor declares an emergency. Moreover, Title 5, Section 37-74(c) of the State law requires the director of finance to reduce appropriated disbursements when collected revenues are less than allotted revenues. Section 37-92 also caps total proposed expenditures to the appropriations from the previous year plus the state growth. This is commonly referred to as “budgeting for fiscal discipline.” Hawaii law forbids the carrying over of a deficit from one year to the next.

Idaho

Idaho law forbids the carrying over of a deficit from one year to the next. Article 7, Section 11 of the 1890 Constitution, entitled “Expenditure Not Exceed Appropriation,” states no appropriation shall be made that exceeds the total revenue, unless the legislature causes for that expenditure to be paid within the fiscal year. As with most states, an exception is given for the need to suppress insurrection, defend the state or assist the nation in time of war.

Illinois

Article VIII, Section 2 of the 1970 Constitution requires the general assembly to make appropriations for all expenditures of public funds, with appropriations for a fiscal year not exceeding funds estimated by the general assembly to be available for that fiscal year. Illinois law does not forbid the carrying over of a deficit from one year to the next. Illinois must have a ‘balanced budget.’

Indiana

Indiana is required to pass a balanced budget in that according to statue “no law shall authorize any debt to be contracted”, except for “casual deficits” which must be covered by loans “as may be necessary to meet the demands of the state.” Section 4-10-21-2 of the State law does create a state spending cap, but Section 4-10-21-7 allows the general assembly to exempt an appropriation from the State spending cap. Indiana law forbids the carrying over of a deficit from one year to the next.

Iowa

Section 8.22 of the Iowa Code states the governor must ensure all expenditures equal revenues. Iowa law forbids the carrying over of a deficit from one year to the next. The state of Iowa must pass a balanced budget from year-to-year.

Kansas

Kansas is required to pass a “balanced budget.” Section 75-3722 of the state law requires the “secretary of administration, on advice of the director of the budget, must assure that expenditures for any particular fiscal year will not exceed the available resources of the general fund or any special revenue fund for that fiscal year.” Kansas law forbids the carrying over of a deficit from one year to the next.

Kentucky

Kentucky is required to pass a “balanced budget.” Section 171 of State law mandates that for each fiscal year, the legislature must provide revenue to meet the estimated expenses. Kentucky law forbids the carrying over of a deficit from one year to the next.

Louisiana

Article VII, Section 10 of the Constitution ratified in 1974 states appropriations by the legislature from the State general fund and dedicated funds for any fiscal year shall not exceed the official forecast in effect at the time the appropriations are made. Moreover, the legislature must “establish a procedure to determine if appropriations will exceed the official forecast and an adequate method for adjusting appropriations in order to eliminate a projected deficit.” Finally, if a deficit exists at the end of the fiscal year, the legislature has until the end of the next fiscal year to eliminate the deficit. Accordingly, law forbids the carrying over of a deficit from one year to the next. The Louisiana Constitution limits appropriations to the appropriations limit from the previous year, adjusted for inflation and the change in population. This is commonly called “budgeting for fiscal discipline,” and is a way to keep the growth of appropriations from outpacing the growth in revenues from year to year.

Maine

Maine is required to pass a “balanced budget.” Title 5, Chapter 149, Section 1664 of the State law requires the governor must present a general budget summary that shows the “balanced relations between the total proposed expenditures and the total anticipated revenues.” Maine law forbids the carrying over of a deficit from one year to the next.

Maryland

According Article III, Section 52 of the 1867 Constitution, in the budget the governor submits, the balance for total appropriations shall not exceed the balance of total revenues. Neither the governor nor the general assembly shall cause the total appropriations to exceed total revenues. Maryland law forbids the carrying over of a deficit from one year to the next.

Massachusetts

Massachusetts law does not forbid the carrying over of a deficit from one year to the next, requiring them to balance the budget each year. Article 63, Section 2 of the 1780 Constitution addresses the need for the governor to set forth all expenditures and all revenues and other means “by which such expenditures shall be defrayed.” More importantly, Chapter 29, Section 6E of the State law requires the governor to submit, and the general assembly to pass, a general appropriations bill which constitutes a balanced budget. If a deficiency in revenue exists, Chapter 29, Section 9C requires the governor to reduce spending or propose ways to generate additional revenue.

Michigan

According Article III, Section 52 of the 1867 Constitution, in the budget the governor submits, the balance for total appropriations shall not exceed the balance of total revenues. Neither the governor nor the general assembly shall cause the total appropriations to exceed total revenues. Michigan law forbids the carrying over of a deficit from one year to the next.

Minnesota

Minnesota is required to pass a “balanced budget.” Section 16A.11, Subdivision 2 of the State law requires the governor to present the biennial budget summary, setting forth the “balanced relation between the total proposed expenditures and the total anticipated income”. Section 16A.156 provides the governor and relevant commissioner(s) must reduce expenditures if probable receipts for the general fund will be less than anticipated. Minnesota law forbids the carrying over of a deficit from one year to the next.

Mississippi

Title 27-103-113 of the State law requires the Legislative Budget Office to prepare an overall balanced budget of the entire expenses and income of the state for each fiscal year. Section 125 states the total proposed expenditures shall not exceed the amount of estimated revenues. The governor and the Joint Legislative Budget Committee adopt the estimate of the general fund revenue. Mississippi law forbids the carrying over of a deficit from one year to the next. Mississippi has set an expenditures cap, which allows appropriations only up to 98% of the estimated revenue.

Missouri

Article IV, Section 24 of the revised 1974 Constitution requires the governor to submit the estimated available revenues of the State and a complete plan of proposed expenditures. Section 27 allows the governor to reduce expenditures when the actual revenues are less than the revenue estimates. Missouri law forbids the carrying over of a deficit from one year to the next, requiring the state to maintain a balanced budget from year to year.

Montana

Montana is required to pass a “balanced budget.” The governor of Montana is required by statute to reduce spending if a deficit begins to develop. Article VIII, Section 9 of the 1972 Constitution states that appropriations by the legislature shall not exceed anticipated revenue. Montana law forbids the carrying over of a deficit from one year to the next.

Nebraska

Nebraska’s “balanced budget” requirement comes in the form of a limit the issuance of debt. Article 13, Section 1 of the 1875 Constitution says the State may not contract debts greater than $100,000. Nebraska law forbids the carrying over of a deficit from one year to the next.

Nevada

Section 353.205 of the State law requires the budget document to start with a general summary of the proposed budget setting forth the “aggregate figures of that budget to show the balanced relations between the total proposed expenditures and the total anticipated revenues, together with the other means of financing the proposed budget for the next 2 fiscal years, contrasted with the corresponding figures for the last completed fiscal year and the fiscal year in progress.” Nevada law forbids the carrying over of a deficit from one year to the next. Nevada also caps the total appropriations to the total appropriations from 1974, adjusted for inflation and population growth, commonly referred to as budgeting for fiscal discipline.

New Hampshire

New Hampshire is required to pass a “balanced budget.” Section 9:3 of the State law requires the governor to provide estimated revenue for all recommended appropriations. New Hampshire law forbids the carrying over of a deficit from one year to the next.

New Jersey

Article VIII, Section II, paragraph 2 of the 1947 Constitution states “no general appropriation law or other law appropriating money for any State purpose shall be enacted if the appropriation contained therein, together with all prior appropriations made for the same fiscal period, shall exceed the total amount of revenue on hand and anticipated which will be available to meet such appropriations during such fiscal period, as certified by the Governor”. New Jersey’s Budgetary Comparison Schedules within its annual reports showed budget deficits (negative net transactions) for each of the years studied. The governor is allowed to block the distribution of appropriations to State agencies when the distribution is not in the State’s best interest. New Jersey law also permits deficits to be carried over from one year to the next.

New Mexico

New Mexico is required to pass a “balanced budget.” Section 6-3-10 of the State law defines the budget as an estimate of State expenditures and proposals for funding them. New Mexico law forbids the carrying over of a deficit from one year to the next.

New York

Article 7, Section 2 of the Constitution states the governor must present a budget of all expenditures, and the revenue sources, including new taxes, to meet those expenditures. Section 54 of the State law then charges the legislature to demonstrate its changes to the proposed budget follow Article 7. Under New York law, deficits can be carried over from one year to the next, but the state must pass a balanced budget.

North Carolina

North Carolina is required to pass a “balanced budget.” Article III, Section 5 of the 1971 Constitution states that the total expenditures of the State for the fiscal period covered by the budget shall not exceed the total of receipts during that fiscal period and the surplus remaining in the State Treasury at the beginning of the period. Section 143c-4-1 of the State law further declares that the budget recommended by the Governor and the budget enacted by the General Assembly shall be balanced and shall include two fiscal years beginning on July 1 of each odd-numbered year. Each fiscal year and each fund shall be balanced separately. The budget for a fund is balanced when the beginning unreserved fund balance for the fiscal year, together with the projected receipts to the fund during the fiscal year, is equal to or greater than the sum of appropriations from the fund for that fiscal year. North Carolina law forbids the carrying over of a deficit from one year to the next. North Carolina law requires the Governor to keep a watchful eye on the budget, and to make necessary corrections when deficits begin to develop.

North Dakota

North Dakota is required to pass a “balanced budget.” Article X, Section 13 of the Constitution as amended in 1973 restricts any indebtedness that is “not evidenced by a bond issue.” North Dakota law forbids the carrying over of a deficit from one year to the next.

Ohio

Ohio’s “balanced budget” requirements come in the forms of a limit the issuance of debt and an appropriations cap that is tied to the actual revenue raised during previous years. Section 107.33 of the State law creates a cap on appropriations that is the previous year’s revenue, adjusted for inflation and population growth, or the previous year’s revenue plus 3.5%, whichever is greater. Article 8, Sections 1 and 2 of the 1851 Constitution permit the state to contract debts, to supply casual deficits or failures in revenues, or to meet expenses not otherwise provided for as long as those costs do not exceed $750,000. Title 1, Section 126.05 of the State law requires the director of the budget to notify the governor each month on the status of available revenue receipts and balances. The governor must then prevent expenses of state agencies from exceeding those revenue receipts. Ohio law forbids the carrying over of a deficit from one year to the next.

Oklahoma

The Oklahoma Budgetary Comparison Schedules within its annual report indicated the State ran budget deficits (negative net transactions) for each of the years studied. State law forbids the carrying over of a deficit from one year to the next. 62 Okl. St. § 41.33 requires a budget message outlining the fiscal policy of the State for the biennium and describing the important features of the budget plan. This plan provides a summary of the budget setting forth aggregate figures of proposed revenues and expenditures and the balanced relations between the proposed revenues and expenditures and the total expected income and other means of financing the budget compared with the corresponding figures for the preceding biennium. Additionally, Article 10, Section 23 of the Constitution sets regulations “to ensure a balanced annual budget.” The Oklahoma Constitution limits appropriations to the appropriations limit from the previous year, adjusted for inflation and the change in population. This is commonly called “budgeting for fiscal discipline,” and is a way to keep the growth of appropriations from outpacing the growth in revenues from year to year.

Oregon

Section 291.216(2) of the State law requires a budget report to set forth the aggregate figures to show a “balanced relation between the total proposed expenditures and the total anticipated income.” Section 291.254 then requires State agencies to reduce their expenditures should probable receipts be less than what was anticipated. Article IX, Sections 2 and 6 of the 1859 Constitution allow a tax, for the ensuing year, to pay for a deficiency from the previous fiscal year. Oregon law forbids the carrying over of a deficit from one year to the next.

Pennsylvania

Article 8, Section 12 of the 1968 Constitution requires the governor to submit to the general assembly a balanced operating budget, and a financial plan for the next 5 years. Section 13 prohibits the general assembly from passing an operating budget that exceeds actual and estimated revenue. The operating budget is limited to estimated expenses for the executive branch, legislative branch, judicial branch and public schools. Pennsylvania law permits the carrying over of a deficit from one year to the next, but is required to pass a balanced budget.

Rhode Island

35-3-13 of the State law mandates that no action on the part of the legislature shall be taken which will cause an excess of appropriations for revenue expenditures over estimated revenue receipts. Section 35-3-16 then requires the governor to maintain a balanced budget when actual revenue receipts will not equal actual expenditures. Rhode Island law forbids the carrying over of a deficit from one year to the next. To facilitate fiscal discipline, Rhode Island law permits appropriations only up to 98% of estimated revenues. In addition, expenditures can only grow by 5.5% from year to year.

South Carolina

South Carolina is required to pass a “balanced budget.” Article 10, Section 7(a) of the 1895 Constitution requires a “budget process to insure that annual expenditures of state government may not exceed annual state revenue.” In addition, Section 11-11-345 of the State law requires that if the year-end GAAP audit shows a deficit, any appropriation of surplus funds is suspended, and is used to offset the deficit. South Carolina law forbids the carrying over of a deficit from one year to the next.

South Dakota

South Dakota is required to pass a “balanced budget.” Section 4-7-10 of the State law requires the budget report to include ways expenditures are supported by revenues. Section 4-8-23 requires the governor to keep expenditures in proportion to revenues throughout the fiscal year, so as not to result in state debt. South Dakota law forbids the carrying over of a deficit from one year to the next. It is difficult to determine if this law is followed, because the State does not budget revenues.

Tennessee

Article II, Section 24 of the 1870 Constitution states that for any fiscal year State’s expenditures shall not exceed the State’s revenues and reserves, including the proceeds of any debt obligation, for that year. Tennessee law forbids the carrying over of a deficit from one year to the next. The Tennessee Constitution also provides that in no year shall the rate of growth of appropriations from State tax revenues exceed the estimated rate of growth of the State’s economy as determined by law. No appropriation in excess of this limitation shall be made unless the General Assembly shall, by law containing no other subject matter, set forth the dollar amount and the rate by which the limit will be exceeded.

Texas

Article II, Section 49 of the 1876 Texas Constitution invalidates an appropriations bill which exceeds the money available in the fund. Article VIII, Section 22(c) states that in “no case shall appropriations exceed revenues.” Additionally, the state comptroller is required to provide a report in advance of each regular session detailing the state of the treasury at the close of the last fiscal period, and an itemized list of revenue based on the laws then in effect. Texas law allows the carrying over of a deficit from one year to the next. Texas caps the rate of appropriations growth. The current state constitution uses the growth of the state’s economy, which is determined by the Legislative Budget Board (run by the Governor, Lt Governor, Speaker and Comptroller).

Utah

Utah is required to pass a “balanced budget.” Article 13, Section 9 of the 1895 Constitution states that expenditures shall not exceed total revenues. Section 63-38-10(3) requires the governor to reduce the budgetary allotments and transfer of funds by the amount of the revenue deficiency. Utah law also forbids the carrying over of a deficit from one year to the next.

Vermont

No “balanced budget” requirement was found for the state of Vermont. However, Chapter 5, Section 308 of the State law creates a “budget stabilization trust fund” to offset any fund deficits for that fiscal year. Vermont law permits the carrying over of a deficit from one year to the next.

Virginia

Article 10, Section 7 of the 1971 Constitution requires the governor to ensure that no expenses exceed the total revenues during the fiscal period. Virginia law forbids the carrying over of a deficit from one year to the next, requiring the state to pass a “balanced budget.”

Washington

Washington is engaged in a practice called budgeting for fiscal discipline. Instead of the varying assumptions inherent in other states’ budgets, Washington estimates revenue to grow at a fixed rate, and caps spending accordingly. While this system has varying degrees of success, keeping any shortfalls in revenue from getting out of hand, Washington also requires the budget document to conform to generally accepted accounting principles, as applicable to states. Washington is required to pass a “balanced budget.” Section 43.88.033 of the State law mandates the budget shall not propose expenditures in excess of the statutory limit. Section 43.88.050 requires the governor to ensure anticipated revenues match estimated expenditures. Section 43.88.110(5) requires the governor to make an “across-the-board” reduction in allotments to funds to prevent any cash deficits due to projected cash deficits. Section 43.135.025 limits state expenditures to the previous year’s appropriations limit plus the fiscal growth factor, which is the average growth in state personal income for the preceding ten years. Washington law forbids the carrying over of a deficit from one year to the next.

West Virginia

West Virginia is required to pass a “balanced budget.” Article VI, Section 51 of the 1872 Constitution states the “legislature shall not amend the budget bill so as to create a deficit”. West Virginia law forbids the carrying over of a deficit from one year to the next.

Wisconsin

Article VII, Section 5 of the 1848 Constitution requires the legislature to “provide an annual tax sufficient to defray the estimated expenses of the State for each year.” Wisconsin law allows the carrying over of a deficit from one year to the next.

Wyoming

Wyoming’s “balanced budget” requirement comes in a limit the issuance of debt. Article 16 of the 1869 Constitution states that no debt in excess of taxes can be created. Wyoming law forbids the carrying over of a deficit from one year to the next.

*Information gathered from State Budget Solutions at statebudgetsolutions.org