Budget Stress Tests Help State Leaders Identify and Assess Risk

In a memo to Colorado’s Office of State Planning and Budgeting, experts from The Pew Charitable Trusts explain how budget stress tests—which examine the impact of various economic scenarios on revenues and expenditures—help states identify their risk from adverse events such as economic downturns. The memo, sent Aug. 20, 2021, outlines how states can design budget stress tests, how such tests can inform policy, and how other states have employed this fiscal tool.