ABSTRACT
Most state governments have constitutional or statutory requirements to balance their budgets, known as balanced budget requirements (BBRs). Governors are supposed to submit; legislatures are supposed to pass and are supposed to sign balanced budgets. However, the experience with state BBRs does not necessarily imply that BBRs can function as a fiscal constraint. In contrast, most state and local governments have BBRs although their impact as a fiscal constraint. The 2008 financial crisis has aggravated fiscal conditions of various levels of government in the United States. In particular, the federal government has been faced with a record-high deficit due to the multiple rounds of stimulus spending and borrowing through quantitative easing to recover from the economic disaster. The federal budget process and institutions are full of potential for such budgetary gimmickry around BBRs, although the requirements have been recently revived as a budget control mechanism. Economic, political, institutional, or cultural factors were more decisive factors in states achieving balanced budgets.
