The prosperity of the past few years has all but erased from our minds the inherently cyclical nature of the economy. But cyclical it is, and a general slowing of the economy will eventually, certainly follow the recent demise of never-profitable Internet companies and the widespread cutbacks in other technology-oriented fields.
Recognizing the inevitability of these fiscal ups and downs, Ohio is one of 45 states that squirrel away money when the economy is chugging along. State law mandates the budget-stabilization fund, more popularly know as the rainy-day fund, must equal 5 percent of the prior year1s general revenue. Each year in which a budget surplus exists, money is transferred into the rainy-day fund to bring its balances up to this statutory level. But the Center on Budget and Policy Priorities (CBPP), a nonpartisan public-policy research organization, thinks most states, including Ohio, are not saving enough to weather even a mild recession, such as the one that started in July 1990. Although that recession officially lasted only nine months, the effects of the economic slowdown that preceded it, along with the recession1s lingering effects, hammered state governments from 1989 to early 1992. In 1989, the 48 states studied by CBPP