March 1, 2022

Sharon Kioko Examines Effectiveness of Balanced Budget Laws 

Nearly all states have adopted balanced budget laws that limit spending and borrowing to ensure budgeting processes rely on currently available resources. However, despite their salience in statehouses, there isn’t clear evidence of how balanced budget requirements affect state budgets.

Using a unique mix of budgeting and accounting data, Evans School Associate Professor Sharon Kioko, and University of Georgia Assistant Professor Michelle L. Lofton examine how different types of balanced budget laws affect the health of state budgets. Their study finds evidence that most balanced budget requirements don’t dramatically increase the likelihood a state will report a balanced budget or higher balances in the General Fund. The authors largely attribute these findings to the fact that balanced budget requirements are from the late 1800s and are not well-suited for the complexities in state budgets today. Kioko and Lofton conclude, “without reforms to their structure and operation, [balanced budget requirements] BBRs will likely continue to be ineffective instruments of budget constraints.” Professors Kioko and Lofton published their findings in a recent Public Finance Review article entitled, “Balanced Budget Requirements Revisited.”