The Massachusetts Taxpayers Foundation issued a report earlier this month warning that the rainy day fund had a balance equal to 3 percent of state spending, which was comparable to low points following the 2002 and 2008 recessions. The foundation said credit rating agencies prefer a balance equal to at least 5 percent, which would be about $2.5 billion to $3 billion.
The report recommends that the state increase the stabilization fund balance within five years, to 10 percent of annual state tax revenues, which for fiscal 2016 would be about $2.5 billion — about where the fund was before the Great Recession.
The Massachusetts Taxpayers Foundation, the independent fiscal watchdog group behind the report, says the state’s draining of the fund is eroding financial security necessary to weather a recession. The group is calling for lawmakers on Beacon Hill to work toward doubling the size of the fund.