Gov. Jerry Brown and the Legislature are proposing a rainy day fund to restrain future lawmakers from spending every taxpayer's dime that comes to Sacramento in boom times, and eviscerating important programs in bad times.
It's hard to get too excited about the deal. We've heard it before. But although the final language of the newest version is not yet publicly available, the Department of Finance's description makes it sound promising.
In the latest iteration, probably headed to a statewide vote this coming November, future legislatures and governors would be expected to squirrel away 1.5% of general fund revenue annually, roughly $1.5 billion.
Part of the money would go into an emergency fund for when the next downturn comes, and part of it would be used to pay down the billions the state owes in debt. Both are worthy goals.
Additionally, the state would add to the rainy day fund and pay down debt using tax revenue on capital gains that exceeds 8% of the general fund. The state hit that 8% mark in six of the past 10 years. It occurs when the stock markets are high and people reap profits from stock sales.
Brown and the legislative leaders, including Republicans, deserve credit for fashioning the latest deal. But they shouldn't bruise themselves by patting their backs too hard. This is a sequel to past versions that didn't end well.
In 2004, when voters were enamored with him, Gov. Arnold Schwarzenegger pushed Proposition 58, which promised a rainy day fund. Voters approved it. But the measure was too easy to evade. Legislatures have suspended it each year since 2007.
In 2009, Schwarzenegger tied another version of the rainy day fund to extending a tax increase. Voters rejected that measure overwhelmingly.
In 2010, as Schwarzenegger was leaving office, he promoted another so-called rainy day fund that didn't materialize.
The state should salt away money in good times, because bad times surely will return. It also should pay off debt. But the broader issue is one of California's tax system.
California relies too heavily on income taxes from the richest Californians whose income is most tied to capital gains and, thus, is most volatile. Assuming Brown is re-elected, he and the Legislature should turn their attention to an overhaul of the tax code.
Until that time comes — if it ever does — the rainy day fund offered now seems reasonable. If it works as promised, it would be good for the state and for taxpayers.
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