Only 14 states have financial reserves that top their prerecession levels, leaving 36 states—or 72 percent—with less financial cushion than before the recession, according to data from Pew Charitable Trusts.
A state’s "financial cushion" size is determined by their reserves and balances, which can be used in case of budgetary uncertainty or an unforeseen emergency. According to Pew, the greater the financial reserve a state has, the greater the sign that the state has positive fiscal recovery.
"States have made halting progress in rebuilding their financial cushions since the Great Recession," states Pew. "Overall, states had enough money in general fund budget reserves in fiscal year 2007—just before the economic downturn—to run government operations for a median of 41.3 days."
But according to Pew, the median number of days provided by these monetary cushions has dropped to 25.9 days in fiscal 2014 and even lower to 20.5 days in fiscal 2015.
The number of states that had higher reserves than before the recession also dropped from fiscal 2014 to 2015.
"Just 17 states in fiscal 2014 could cover more days’ worth of operating expenses with their reserves—counting both rainy day funds and end-of-year balances—than they could before the recession," states Pew. By the middle of fiscal 2015, that number dropped to 14.
The states that have the lowest reserves—less than five days of operating costs—were Illinois, New Jersey, Arkansas, and Pennsylvania.
The states with the largest reserves—more than 100 days of operating costs—were Alaska, Texas, West Virginia, Wyoming, North Dakota, and Nebraska.