by Todd Haggerty
Question: In 1842, what state became the first to adopt a balanced budget requirement (answer is at the end of this post)?
Balancing the budget is widely considered to be the foundation of state fiscal practices. Keeping a budget balanced in times of fiscal stress, however, can be an overwhelming challenge for policymakers. What is meant by a balanced budget is not as clear as it may seem intuitively. Even the number of states whose laws require a balanced budget can be disputed, depending on the way the requirements are defined. The NCSL has traditionally reported that 49 states must balance their budgets, with Vermont being the exception. Other authorities add Wyoming and North Dakota as exceptions, and some authorities in Alaska contend that it does not have an explicit requirement for a balanced budget. Two points can be made with certainty, however: Most states have formal balanced budget requirements with some degree of stringency, and state political cultures reinforce the requirements (for more information on balanced budget requirements click here).
The history of state balanced budget requirements is as rich and varied as the provisions themselves. James D. Savage noted in his 1988 book, Balanced Budgets and American Politics, the Panic of 1837 was the spark that pushed states to impose balanced budget requirements. Savage notes that “nineteen states adopted these amendments between 1842 and 1860.”
Whatever the requirement or procedure, for the majority of states, however, the most important factor contributing to balanced budgets is not an enforcement mechanism or a provision specifying how a shortfall will be resolved. Rather, it is the tradition of balancing the budget that has created a forceful political rule to do so. Although states with enforcement provisions emphasize their importance, the expectation that state budgets will be balanced is the most important force in maintaining a balanced budget.
Question: In 1842, what state became the first to adopt a balanced budget requirement?
Answer: Rhode Island