Factors Affecting State Budget Stabilization Fund Access

Since their inception in the 1980s and early 1990s, budget stabilization funds (BSFs) have been seen as a way to avoid recurring crises like those experienced by states after the 1980-1982 recession. In hindsight, we may wonder if other motivations were not at play. For example, states with tax expenditure limitation laws (TEL) were more likely to adopt BSFs with less stringent deposit and withdrawal requirements. Previous research has suggested that TELs may have motivated some states to adopt BSFs. Although our analysis does not provide evidence of collaboration with these earlier findings, it strongly suggests that there are several other political motivations for adopting BSF. This article concludes by exploring additional ways the BSF can be used to advance policy agendas.