04/24/2014 by Ed Coghlan
VIDEO: California Rainy Day Fund—an idea whose time has come
UPDATED 4/24: The California Legislature has convened the special session called by Governor Brown to consider a revised Rainy Day Fund.
The action signals the beginning of what many believe is a long overdue public discussion of a new requirement for setting aside spikes in revenue that can be saved for times when tax revenues decline because of an economic downtown.
California Forward has been talking about this issue as part of a budget discipline since it was founded in 2007, warning then as it does now about the pitfalls of boom and bust budgeting. The last recession--one of the deepest in memory-resulted in severe budget cuts which hit hard those who depend on state funding the most--like students, the poor, the elderly, and the sick.
CA Fwd believes on whatever the Legislature and the Governor agree, it should contain three basic tenets:
- It should capture spikes in capital gains revenue that will set the money aside for economic down turns.
- It should make sure that the reserve grows to help support important education and health and social services when there is an economic down turn
- It should guarantee that the requirements are transparent and understandable to the public and to the legislature.
When you think back to 2007, a time when the state was managing by crisis and the legislature was gridlocked by hyper partisanship, it was hard to envision this day. It would have been impossible for the legislature to sit down and successfully grapple with this issue.
But that was then. Now, California has a Governor who is leading (and respected). The Legislature is starting to reflect the impact of the reforms like Citizens Redistricting, Top Two Primaries and Terms Limits that were passed by the people.
The special session is another sign of how much things have changed in the Capitol.
CA Fwd CEO Jim Mayer, who has guided the organization since its founding, has some thoughts on why the time is right for the Rainy Day Fund discussion.