Wyoming, New Mexico, Colorado flex strong rainy day funds amid economic anxieties
A new report shows rainy day funds in most states are reaching new highs, but the strength of those funds varies widely in the Mountain West.
Rainy day funds are accounts states draw from during unexpected economic downturns – like the COVID-19 pandemic. Many states could run government operations on those funds alone longer than ever before due to higher-than-expected tax revenue growth and historic federal aid over the past two years, according to an analysis from Pew Charitable Trusts.
In all, states estimated their combined savings would reach a record $136.5 billion by the close of fiscal 2022, according to Pew, citing preliminary figures reported to the National Association of State Budget Officers between March and May of this year.
Those savings alone could allow states to run government operations for a national median of 42.5 days, which is also a new high, according to the analysis.
Wyoming leads the nation by a wide margin. The Cowboy State has nearly one year’s worth – 350 days – of money in reserve. Fourth-ranked New Mexico is one of four other states with more than 100 days’ worth of operating costs at 100.8.
The remaining Mountain West states above the national median are seventh-ranked Colorado (81.7) and ninth-ranked Idaho (76.3). Rounding out the region are Utah (36.5), Arizona (27.2), Nevada (26.7), and Montana (16.0).
Pew’s Justin Theal, who co-authored the report, said policymakers now face mounting challenges that will tighten budgets.
“Like a weakening economy, particularly as the [federal government] tries to get control over historically high inflation,” Theal said. “But also more knowable concerns for state budgets, like the expiration of a lot of federal COVID aid.”
Theal said that means states with strong rainy day funds are better prepared to weather a looming recession.
This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Boise State Public Radio in Idaho, KUNR in Nevada, the O'Connor Center for the Rocky Mountain West in Montana, KUNC in Colorado, KUNM in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.