Sunday, January 5, 2014
The First (and Only?) Budget Leak
Gov. Jerry Brown will join the push for a new ballot measure to help California stockpile cash as a buffer against future recessions, according to two Capitol officials. The proposed measure, which would need approval from two-thirds of the Legislature before it could be presented to voters in November, would siphon off some tax revenue and channel it into a special savings account. If successful, the account could mitigate the need for deep spending cuts during economic downturns and help California shed its reputation as a financial roller coaster.The plan, put forward by Assembly Speaker John A. Pérez (D-Los Angeles) last May, will be included in Brown’s upcoming budget proposal, the officials said. They declined to speak publicly before the governor’s announcement, scheduled for Friday... The measure proposed by Pérez would replace a plan supported by Republicans and passed by the Legislature in 2010 but delayed until next November’s ballot. Although that plan passed with bipartisan support three years ago, Democrats now say it is flawed because it would function as a spending cap, something they have opposed.
Full story at http://www.latimes.com/local/political/la-me-pc-california-jerry-brown-budget-rainy-day-20140104,0,4066322.story
Note that as long as the Dems can hold on to their two-thirds representation in the legislature, they can put anything on the ballot they want. Republicans might be annoyed that a plan they agreed to in 2010 was being overridden. But they couldn't prevent it. However, crafting a rainy day fund that can't be evaded is trickier than it might seem. There have been various attempts over the years. Formulas are easy to propose, and easy to circumvent. Without any formula in place, Brown in his first iteration as governor had a huge reserve. But it was so big that it is often seen as a catalyst for Prop 13 of 1978. Property tax bills were shooting up and voters were angry about the state having a huge reserve at the same time (even though property taxes were local, not state, affairs). So inadvertent consequences can occur.
In any event, we now have a pre-budget leak. Will there be others?
UPDATE: Here is a second leak. (Cap-and-trade funds for high-speed rail)