When you have a good economic year, it makes sense to save some of that extra cash for the next time you have economic troubles. According to the recent article in the Washington Post, only five states in the United States actually do this. In addition, Virginia has one of the most effective rainy-day funds!
When the recession hit a few years ago, Virginia was about to use almost $2 billion from reserve to close budget gaps. Here in the Commonwealth, lawmakers are able to use the reserve funds can help make up for half of a year’s budget deficit (the other half must be covered by tax increases or spending cuts). It’s clear that Virginia’s rainy-day fund is a great proactive approach for economic struggles!
You can read the entire article on the Washington Post here.