States' Rainy Day Funds Shrinking for First Time Since Recession

States rainy day funds are dwindling nationwide, marking the first decline since the Great Recession. A new Pew Charitable Trusts analysis reveals that the median state can now only cover operations for forty-seven point eight days using reserves, down from a high of fifty-four point five days last fiscal year. Higher costs, slumping tax revenue, and federal budget cuts are the main factors contributing to this decrease. While some states like Wyoming have substantial reserves, others like New Jersey can barely cover a days operations. With twenty-six states seeing their reserve power shrink, budget squeezes are ramping up due to federal shifts cutting aid for Medicaid and food programs while adding administrative costs. States must address deeper spending-revenue mismatches to avoid long-term pain and maintain services.

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