CA Rainy Day Fund will protect taxpayers and vital services

This Constitutional Amendment will protect taxpayers and vital services from the chaotic ups and downs of revenues and state budgets that have plagued Sacramento for decades.

[The bill was authored by Assemblyman John Perez, D-Los Angeles before stepping down as speaker It places a proposed constitutional amendment before the voters that will create a budget reserve, funded primarily from excess capital gains revenue during boom years as well as an annual contribution equal to 1.5 percent of the state's general fund.]

ACA 1 was the result of bipartisan negotiations with the Governor's office. This spending cap and surplus fund truly has teeth and cannot easily be raided.

[Typically, when Republicans deal with the progressive socialist democrats in the legislature and the Governor’s Office, they traditionally are co-opted into rubber-stamping tax and spend policies that only appear to be bi-partisan in the fact that the Republicans have little or no say about the eventual use of the funds. How many people can remember when the GOP, spearheaded by Abel Maldonado, sold out the taxpayers and gave us the largest tax increase in the State’s history. Maldonado himself was rewarded by being appointed to the Lieutenant Governorship by Arnold Schwarzenegger, a RINO with a lesbian, long-term democrat operative as his Chief of Staff.] 

Having just passed out of the legislature, this Constitutional Amendment will now be placed on the November 2014 ballot to be approved by the state's voters.  Once approved, this will substantially change the way the state saves money and budgets for the future.

Even before this has been passed by the voters, the new Rainy Day fund is already having an effect.  The Sacramento Bee is reporting that Moody's Investor Service considers the legislation to be a "credit positive development".

[Of course Moody’s would regard this as a “credit positive development” because it essentially pays down debt; not the traditional function of a rainy day bill.]

A few things that you should know about the new Rainy Day proposal:

• The fund will capture 1.5% of general revenue funds every year, along with Capital Gains revenue that exceeds 8% of General Fund receipts.
• Requires that 50% of fund revenue be used to pay down current debt.
• Prevents the fund from being used to pay bond debt, such as High Speed Rail.
• Creates objective criteria for when payments into the fund can be suspended, additionally requiring the governor to declare a fiscal emergency.
• Limits the amount that can be drawn out of the fund in the first year of a recession, and ensures that money saved in the fund cannot be siphoned off to fund new government programs.
• Having an effective Rainy Day Fund will protect vital programs like education, transportation and public safety from devastating cuts in tough budget times.

[One, you do not dissipate a rainy day fund by using it to pay down current debt. Current debt should be paid from current revenues.

A problem when you have tax-and-spend progressive socialist democrats in charge of all phases of the government’s operations – including the incredibly dishonest budgeting process, the manuevering to fund union pension fund and healthcare obligations and various and sundry costs.

If you believe that these funds are can not be touched by borrowing, you are naïve. The State of California is steeped in financial trickery, borrowing money from designated funds and leaving moldy IOUs in the drawer. Or even worse, engaging in the sale and leaseback of assets purchased with restricted funds to create unrestricted funds for use elsewhere.

And, when someone speaks about protecting vital programs, one would assume that public safety comes first, and the heavily unionized transportation and education comes last. This appears to be a UNION RAINY DAY program that will ensure that unionized public employees never have to face a fiscal downturn as the private sector suffers.]

Responsible budgeting means saving money when there is a surplus to protect our priorities when we have a deficit.  This past recession has been a trying time for California, but by adopting this strong rainy day fund we can demonstrate that we have finally learned from those mistakes.

[California has never adequately prioritized expenditures under the progressive socialist democrats who see any surplus being fed into social programs to benefit non-Californians who happen to be illegal aliens.]

History has taught us that it is absolutely imperative that California maintains a healthy rainy day fund to mitigate the boom and bust cycle of revenues. With our current system, legislators spend every dime brought in during good years, and have nothing saved for those years when the economy drops and revenues decrease.  When that happens we are left with the false choice of either cutting services, increasing debt, or raising taxes, and none of those options represents a responsible solution during tight budgets.

[Decades of progressive socialist democrat rule has brought nothing but more spending, higher taxes, outrageous public employee union demands, and spending on illegal aliens. There is never a false choice between cutting services, increasing debt, or raising taxes – because they are all simultaneous actions of an out-of-control state that panders to the special interests in return for campaign financing, voter support, and media attention.]

Source: My local Assemblyman