Most states used "rainy day funds" in recession

Almost all U.S. states relied on their "rainy day funds" when the economic recession began to ravage their budgets, showing that the reserves will be critical during the next downturn and states should consider putting even more money away, a think tank said on Thursday.

The Center on Budget and Policy Priorities, which closely tracks states' fiscal situations, found that over 70 percent have used their reserves to address budget gaps.

At the beginning of the recession, 41 states had rainy day funds and reserves that totaled at least 5 percent of their budgets. By 2010, only 22 states had reserves, CBPP said.