State Debt Limit

Requirements that states balance their budgets are often said to be a major difference between state and federal budgeting. State officials certainly take an obligation to balance the budget seriously, and in the debate over a federal balanced budget in the early- and mid-1990s, much of the discussion centered on the states’ with balanced budgets. This article is concerned with the nature, definition and enforcement of state balanced-budget requirements.

All the states except Vermont have a legal requirement of a balanced budget. Some are constitutional, some are statutory, and some have been derived by judicial decision from constitutional provisions about state indebtedness that do not, on their face, call for a balanced budget. The General Accounting Office has commented that “some balanced budget requirements are based on interpretations of state constitutions and statutes rather than on an explicit statement that the state must have a balanced budget.”

The requirements vary in stringency from state to state. In some states the requirement is that the introduced budget be balanced, or that the enacted budget be balanced. In other states policymakers are required to ensure that expenditures in a fiscal year stay within the cash available for that fiscal year. Other states may carry unavoidable deficits into the next fiscal year for resolution.
NCSL – State Balanced Budget Requirements

 

Texas constitutional debt limit

  • Limits the authorization of additional state debt if in any fiscal year the resulting annual debt service payable from the unrestricted General Revenue Fund exceeds 5 percent of the average annual unrestricted General Revenue Funds for the previous three years
  • Approved by voters November 4th, 1997

 

Solutions:

  • Create a public bank to reduce our debt limit and dependence on f0r-profit banks to finance healthcare, education and infrastructure

 

 

Texas Constitution
Code – Texas Constitution
Article – 3 Legislative Department
Section – 49 (j) Limit on State Debt Payable from General Revenue Fund