Tuesday, June 28, 2016
No-Veto Budget Signed
As we have noted in past postings, under current budget arrangements, we have a rainy day fund and a regular reserve. To determine what's happening in terms of de facto surpluses or deficits in the general fund, you have to sum the two. If reserves rise, we have a surplus. If they fall, we have a deficit. In the enacted budget, the regular reserve in the rainy day fund is estimated to fall from $4.874 billion to $2.158 billion by the end of 2016-17 for a deficit of -$2.158 billion. The rainy day fund reserve, on the other hand, rises from $3.420 billion to $6.714 billion for a surplus of +$3.294 billion. The sum of the two is a net surplus of $1.136 billion.
Note that Brown insisted on having an extra $2 billion tucked into the rainy day fund beyond what the automatic formulas for that fund would have accumulated. But as the arithmetic above shows, he got the extra $2 billion by moving it from the regular reserve to the rainy day fund, which can be viewed as a cosmetic action. Nonetheless, the total reserve (regular + rainy day) rises from an estimated 7.2% of total general fund spending as of June 30 of this year to 7.7% of total spending as of June 30, 2017. In case of a recession, that might give the legislature something like a year to make budgetary corrections - maybe.