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Saturday, January 3, 2015

Hate to Rain on Your Parade But...

As blog readers will know, the California budget process is complicated by various voter-approved propositions, most notably Prop 98 (as amended by another proposition) which earmarks money for K-14 (but not UC or CSU) according to three formulas.  In the last general election, at the governor's behest, voters added Prop 2, a formula-driven "rainy-day" fund.  As we have noted, the state's general fund has a reserve built into it and "all" the legislature has to do to fill it up is spend less than it takes in. In fact, Gov. Earl Warren (1943-53) used to refer to building up the regular reserve as his "rainy-day" fund.

Despite notions to the contrary, that regular reserve can be negative and on a seasonal basis often is.  It can be negative at the end of the fiscal year as well.  So money can go into the new rainy-day fund and be offset by negativity in the regular reserve.  What voters really were endorsing was the uncontroversial concept that it is nice to save when things are good to cushion the effects of future Hard Times.  But in fact, ballot propositions being what they are, they actually approved more complicated formulas. 

The Sacramento Bee is carrying a piece on what those complications entail.  See http://www.sacbee.com/news/politics-government/article5369607.html.  Note in particular that with UC engaged in a budget conflict with the governor, it is hard to see how those complications can help the UC side.

Still, cheer up.  The problems won't start until next week when the governor makes his budget proposals.  So enjoy your weekend:

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