Bloated state savings likely to shrink

While lawmakers in California pull from its core rainy-day fund to cover a shortfall, others are evaluating how to best use the cash.
Kentucky State Senator Jimmy Higdon, left, speaks with Senator Chris McDaniel during the session at the Kentucky State Capitol in Frankfort, Ky., Thursday, March 16, 2023. (AP Photo/Timothy D. Easley)

States expect to spend down some of their staggering savings this fiscal year, with more to come next year as budgets tighten and California confronts a crisis.

States’ total balances — which include both emergency savings held in rainy-day funds and surplus cash — are set to shrink by about 30% to $288.5 billion this fiscal year as states dip into the massive surpluses they built up in recent years, according to the latest survey from the National Association of State Budget Officers.

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