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Optimal Government Budgeting Contingency Reserve Funds
Author(s) -
Vasche Jon David,
Williams Brad
Publication year - 1987
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/1540-5850.00736
Subject(s) - contingency , legislature , revenue , contingency plan , state (computer science) , business , government (linguistics) , finance , economics , state government , public economics , political science , market economy , incentive , philosophy , linguistics , management , algorithm , computer science , law
During recent years, more state and local governments have made provisions in their budgets for establishing and maintaining contingency reserve funds. A recent study by the National Conference of State Legislatures(NCSL) found that over half of all states now have such funds. The basic purpose of these contingency reserve funds, also referred to as “rainy day” funds, is to insulate governmental budgets from unexpected fiscal disruptions brought about by such factors as unanticipated revenue shortfalls and expenditure overruns. What have received less attention, however, are the criteria which governments need to use in deciding whether to establish such contingency reserves in the first place, and if so, how large these reserves should optimally be. This article explores these two issues, using the State of California as an illustrative case study