Arizona Rainy Day Fund Inconsistently Funded
Many states have so-called rainy day funds to help them get through tough economic times. A study by the Pew Charitable Trusts found that 12 states have rules that tie fund contributions to economic conditions.
Arizona is one of the states with these guidelines, but doesn’t always follow its own rules.
The original formula in Arizona was to contribute 15 percent of the yearly budget to its the rainy day fund. ASU Economist Dennis Hoffman said lawmakers have used it as a fallback even when the economy wasn’t hurting.
“It’s been funded unevenly, the formula has been changed and of course its been treated kind of as an emergency fund," Hoffman said.
He said the purpose is to have the fund to fall back on during downturns. Years of not contributing enough money became problematic during the 2009 recession when Arizona had to sell state land and buildings.
Arizona state Rep. John Kavanagh is on the appropriations committee. He said there aren’t restrictions about what the legislature can use the money in the fund for.
“Unfortunately there is a temptation to use it when it isn’t really raining, just a little bit of a drizzle," Kavanagh said.
The current rainy day fund has more than $450 million. A recent court decision could force the state to use more than $300 million of that money to fund public schools.
“We are going to have to drain our rainy day fund completely to get through the next year and a half and we will not have excess revenues to refill that rainy day fund for the next five, six, seven years," Kavanagh said.
Kavanagh said setting rules about what circumstances the legislature can draw from the fund would require a constitutional amendment, and that isn’t in the works.
Updated 7/24/2014 at 12: 31 p.m.