Arkansas has a “Balanced Budget” Requirement Law. In theory it requires the state's politicians to not spend more than the state collects in revenue. The state just announced the end of fiscal year 2011 as of June 30 results.
Arkansas ended its last fiscal year with a budget surplus of $94 million!
Why? How did that happen, you ask? Well the law requires that each and every year the state spend no more than it receives. Since that requires 'crystal balling' the future revenue stream, seems the legislature and governor play it a little conservatively. What do they do? They under-forecast June revenue. This allows for upside surprises, like this year. And hopefully prohibits downside problems. Most of this last year's surplus of $93.9 million came in June.
As Governor Beebe told the Downtown Rotary Club, “under-forecast every June because that's your last month, and if you mess up in the last month, there's no place, there's no leeway, there's no flexibility to get it back.”
So the balanced budget law works; the politician try to meet its strict requirement. I bet that even in Washington it would work. Especially if in any year when it isn't met, all elected officials lose 100% of their pay through a 'claw-back' law.
What's say, let's give it a try on the national level!
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