Reference no: EM131701453

Question: Your state legislature is considering a balanced budget amendment. One proposed approach defines balanced budgets as ones in which estimated revenues for the year equal that year's appropriations. A second defines balanced budgets as ones in which expected resources available at the beginning of a fiscal year (beginning fund balance plus estimated revenues) equal that year's appropriations. A third defines balanced budgets similarly to the second, but would require that the beginning fund balance be maintained at a particular level (e.g., 5 percent of revenues) except in specifically defined circumstances, such as a recession that lasts more than 18 months. Which approach would you prefer and why?