Escaping the bounds of financial reality seems to be Sacramento’s favorite magic trick. The official forecast shows Proposition 2:
- adding just $1 billion a year to the state’s savings fund in each of the next three years;
- paying off just $1 billion a year of the state’s ($300 billion) debts;
- putting nothing into the school savings account.
During these relatively stable, prosperous times.
Yet, had it been fully in place in 2008, the state’s director of finance wrote to Loren Kaye, a Proposition 2 supporter, that it would have covered 62 percent of the $15 budget shortfall in 2008-09 and another 23 percent of $39 billion in 2009-10 (avoiding $6 billion in education cuts), as well as eliminating virtually the entire first year of the 2009 tax increases.
The only problem is … reality. Somehow Mr. Cohen has pulled over $25 billion out of air, ascribed it to Proposition 2’s magical powers, and then used it to buffer California against the Great Recession.
Let’s look at his numbers:
• $5.7 billion has appeared in the school savings fund — yet there was no year except 1988-89 that revenue flows would have triggered a deposit in that fund (and six subsequent years that would have drained it)
• $9.8 billion has appeared in the state’s savings fund — yet California’s fiscal crisis from 2000-2004 (dot.com bomb, Enron energy debacle) was as devastating as that in 2008. Following the strictures of Proposition 2, the state would have been able to put a maximum of $4.6 billion into savings from 2004-2008 — and had a hard time explaining why it was pulling an emergency $2.6 billion out of local municipal property taxes to do so. (California actually saved $1.6 billion during this period under Schwarzenegger’s old rainy day fund.)
• $11 billion of Economic Recovery Bonds are disapparated — under Prop 2’s debt reduction clause which would have produced $4.6 billion. $11.0 – 4.6 does not equal $0.0.
This fabulism frightens us. Especially since Proposition 2 will drain $5 billion of reserves out of school districts statewide when the first dollar goes into the schools’ savings fund — leaving California education 100% dependent on Sacramento wishful thinking.
Why the smoke and mirrors? To give us confidence that the state will act rationally moving forward? Or is Sacramento going to assume that, Houdini-esque, Proposition 2 will allow us to save enough money to avoid the pain of our roller-coaster tax structure? (A structure that has only gotten more volatile since Proposition 30.) Remember: four years from now, less than $5 billion is forecast to be sitting the state savings account to buffer a General Fund that’s running over $100 billion a year.
Please, we ask voters, read the text of the proposition. Will it simplify or complicate California budgeting? Read the Legislative Analyst’s analysis — one that does not magically apparate billions out of somewhere else but rather concludes that “some existing state debts would be paid down faster…” Parents across the state have joined to reject an appalling grab of power away from our local schools. Billions cannot be created by providing “factual information” based on fantasy. For the future’s sake, we’re all voting NO on 2.