An illusion of prudence?

As blog readers will know, yours truly often cautions about the verbiage attached to state budget accounting. Words such as deficit and surplus are often used in "flexible" ways that obscure what they actually mean.

California has a budget reserve often referred to as the "rainy day" fund. The state legislature is now considering a bill that would allow more money to be deposited into the rainy day fund.* That sounds like a prudent idea. But as we have pointed out in prior budgetary analysis, there are several reserves associated with the state's general fund. What matters is whether total reserves are rising or falling.

Thus, when politicians point to putting money into the rainy day fund as a Good Thing, it is always necessary to find out what is happening to total reserves since the rainy day fund is only a part of the total. If the rainy day fund goes up while the total is going down, that is a deficit.  

Just keep that in mind. And note that it would take a two-thirds vote of both legislative houses to pass the bill and put the issue on the ballot. Voters would then have to approve it.

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*https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260ACA20.