Saving for a Rainy Day

As blog readers will know, Gov. Brown is currently pushing for a rainy day fund proposition to go on the November ballot.  It would replace a proposition that the legislature put on the ballot as part of a Schwarzenegger-era budget deal.  We have noted in a prior post that the state already has a reserve in its General Fund.  That reserve grows if spending is kept below revenue.  So you can accumulate a rainy day fund without the complicated formulas which the Brown proposal or the alternative entail.  The Legislative Analyst has now pointed this simple fact out in a new publication.

One thing about rainy day funds with complicated formulas that are supposed to lock up money.  They leak.  It is doubtful, however, that UC would be the recipient of the leakage.  But we are unlikely to avoid having one of the two rainy day funds on the ballot since, if the legislative does nothing, the original one will appear.  Probably, the best outcome would be that one of the two appears in November and is defeated.  But the more likely outcome is that the governor's proposal will appear (enough Republicans seem favorably inclined to his version to get it on the ballot) and then - because saving for a rainy day is such an appealing idea - it is approved by voters.

You can read the Leg Analyst's report at http://www.lao.ca.gov/handouts/state_admin/2014/Budget-Reserve-Proposals-042814.pdf

And let's hope it doesn't rain anytime soon in the budgetary sense: