Rainy Day Fund Measure a Test of “Fiscal Restraint”

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

Let’s take the governor’s prediction on the budget at face value ignoring the what-ifs and skullduggery in Washington and conclude that the state of California will have a $1 billion surplus at the end of 2013–14. How do you make sure that the surplus is around for a rainy day and not spent by a supermajority that is being hammered to make up for paste budget cuts?

The governor and legislative leaders have told us over and over that they plan to observe fiscal restraint when it comes to the budget. One way to show good faith in that declaration of fiscal restraint is to support a rainy day fund plan that should have already been presented to the voters.

When the 2009 budget deal was done, a compromise proposal (ACA 4) to set aside surplus funds in good years to be used in lean years was set for the November 2012 ballot.

Something funny happened on the way to the ballot.

The majority party decided it did not want the rainy day proposal on the 2012 ballot because it might interfere with spending plans and efforts to raise taxes on the same ballot. Moving the rainy day fund back a couple of years was included in a bill that also moved ballot propositions off the June primary ballot in 2012 to the November general election. While Democrats make a good-government argument for the move, skeptics questioned whether it was a political power play.

The legislature passed the bill and the rainy day measure was pushed back until November 2014.

Some have warned that now that a Democratic supermajority controls the legislature, they might try to dump the rainy day fund all together. The governor is probably not there and the chorus on fiscal restraint would have you believe that the rainy day fund will get its chance with voters. A major argument made by those supporting shifting the measure from 2012 to 2014 was that it made no sense to create the fund to set aside money while services were being cut because the state was moving through a fragile economic recovery.

That argument is no longer valid if the state enjoys a surplus.

One way to reinforce this notion of fiscal restraint is to support Assemblyman Jeff Gorell’s AB 54, which would move the rainy day fund measure up from the November 2014 election to the June 2014 primary election. The June primary election would occur about two weeks before the budget bill is due. Voters expressing a desire at the polls for a rainy day fund should encourage the legislature to keep aside the surplus that the governor now projects and hopefully will be there in 2014.

Passing AB 54 would also test the resolve of those who say they will observe fiscal restraint.

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