States' Use of Surplus Funds

Abstract : Nearly all of the states, as well as the federal government, are enjoying the benefits of a prosperous economy. With revenues exceeding estimates in most states, general fund and reserve balances have grown to their highest levels in over 20 years.' Those excess funds present states with the choice of reducing taxes, increasing program spending, reducing debt, or banking the unexpected resources for later use. Meanwhile, the federal government has realized a surplus for the first time in decades.