State Budget Practice Report Cards and Budget Resource Guide

Arkansas placed among the states with the weakest grades in the Volcker Alliance’s study of budgetary practices. It received an average mark of D for fiscal 2015 through 2017 in two categories—forecasting and transparency—while faring better in the budget maneuvers category. The state’s D grades in budget forecasting reflected, among other things, its failure to use consensus revenue estimates. Consensus estimates—used by twenty-nine states in 2017—are intended to ensure that multiple contributors, usually including at least the governor and legislature, agree on a single number on which to build a budget. Instead, Arkansas’s forecasts were created in the executive branch, with no input from legislators.

In budget maneuvers, Arkansas typically paid current obligations with revenues generated in the same period over the three years studied. One exception: The state transferred money from special funds into the general fund in all three years. That use of one-time revenues played a part in limiting Arkansas’s overall average grade in the category to a B.

Arkansas was also one of three states to get straight D’s for transparency. (The others were Alabama and New Mexico.) Arkansas offers minimal explanatory information in its budget documents. The state budget is presented as spreadsheets, and even its revenue forecasts lack useful detail.

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To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.

The report cards presented here are taken from the 2017 Volcker Alliance report, Truth and Integrity in State Budgeting: What Is the Reality? which proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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