What are municipal bonds and how are they used? Q.What are municipal bonds and how are they used? A.Municipal bonds (a term that encompasses both state and local government debt) are obligations that entitle owners to periodic interest payments plus repayment of principal at a specified date. States and localities (cities, townships, counties, school districts, and special districts) issue bonds primarily to pay for large, expensive, and long-lived capital projects. Read more about What are municipal bonds and how are they used?
What are state rainy day funds and how do they work? Q.What are state rainy day funds and how do they work? A.Rainy day funds, also known as budget stabilization funds, allow states to set aside surplus revenue for use during unexpected deficits. Every state has some type of rainy day fund, though deposit and withdrawal rules vary considerably. Read more about What are state rainy day funds and how do they work?
What are state balanced budget requirements and how do they work? Q.What are state balanced budget requirements and how do they work? A.Balanced budget requirements (BBRs) are constitutional or statutory rules that generally prohibit states from spending more than they collect in revenue in a fiscal year. However, these state rules vary in stringency and design. Research finds that stricter BBRs can produce “tighter” state fiscal outcomes such as reduced spending and smaller deficits, but they also can force states to quickly cut services or raise taxes in the middle of an economic downturn. Read more about What are state balanced budget requirements and how do they work?