Rainy day funds (RDFs) are potentially an important countercyclical tool for states to stabilize their budgets and the overall economy during economic downturns. However, U.S. states have often found themselves exhausting their RDFs and having to raise tax rates or reduce expenditure while still...

BSFs seek to force state governments to gather surplus revenues during good times into a fund that can be drawn later during bad times, when revenues slacken and when it is most difficult to borrow the funds needed by the government for recovery. It has been deemed that “strict” funds whose...