Experts Expound: Spending money
“The LAO says the state is flush with cash and multibillion-dollar reserves loom in coming years. How should we spend the money?”
Clearly the answer is investing in a high speed rail route between Redding and Chico.
We shouldn’t. Put it in a Rainy Day fund, like the Speaker and Governor suggest.
The bulk of the surplus (apart from what must go to the schools under Prop 98) should be spent on one-time measures like infrastructure repairs and retiring general obligation bond debt. Nonetheless, some will no doubt go to rebuilding Medi-Cal programs that have been whacked the last few years.
The state is not flush with cash. It is badly in debt. This discussion of how to spend money is ludicrous. The state should think about covering its terribly underfunded pension and retiree medical funds.
“Flush” overstates it. How about “quasi-solvent?”
This statement is only true if you ignore hundreds of billions in pension and retiree healthcare debt, which the LAO and Administration conveniently have chosen to do. The LAO’s rosy forecast is more than devoured by the additional money needed to fund past promises to CalSTRS and retiree healthcare alone.
A chunk of it will have to be saved right off the top, before you can start restoring some of the more desperate cuts made during the recession. Think families, students and infrastructure.
As much of the surplus as possible should be put back into the habitually-ignored emergency reserve fund and kept far far away from shiny objects like high-speed rail or the grasping clutches of public employee unions.
Maybe we could learn a few lessons from history and counsel prudence for all. Time to take out the Gray Davis playbook to learn how not to spend money generated by a bubble.
What goes up must come down. The economy is getting better, but it still has a long way to go. Tax equity reform is long overdue, and until we get that we won’t have stable revenue year to year. Too early to talk about being “flush.”
We should use it to shore up our public works infrastructure to better serve us all. High speed rail, for example. If we’ve learned anything from the past, we should definitely not blow it on tax cuts that benefit the rich.
Build up a meaningful reserve (finally) and restore some of the cuts over the last few years that have damaged the social safety net and continued the erosion of the state’s infrastructure.
The state is not flush with cash due to job growth or household incomes going up but rather due (to) temporary tax increases. A significant portion of the new revenues will be spent on education and the issues not being fully addressed that would significantly reduce the “surplus” is the unfunded liability at CalSTRS and the repayment of funds borrowed from special funds to backfill general fund programs. The Legislature should be prudent and increase the reserve, pay down debt and begin making payments towards the Unemployment Insurance fund obligation over the next two budget cycles. If there is real growth in jobs and wages that would offset the reduction in the temporary taxes then look at growth in social programs.
Prop 30 taxes are set to expire – the focus should be on extending the upper income tax increases to make sure our schools and essential services continue to get the funding they need. We can’t afford to go backwards and return to the days of massive budget cuts.
Ed’s Note: Those from whom we sought opinions include Andrew Acosta, Elizabeth Ashford, Hector Barajas, A.G. Block, Mark Bogetich, Barry Brokaw, Richard Costigan, Dale Debber, Peter DeMarco, Mike Donovan, Jim Evans, Jeff Fuller, Rex Frazier, Tom Gede, Ken Gibson, Evan Goldberg, Deborah Gonzalez, Sandy Harrison, Bob Hertzberg, Gale Kaufman, Jason Kinney, Dave Lesher, Elizabeth Leslie, Chris Lehane, Greg Lucas, Donna Lucas, Mike Madrid, Aaron McLear, Nicole Mahrt, Steve Maviglio, Adam Mendelsohn, Jacob Mejia, Beth Miller, Paul Mitchell , Barbara O’Connor, Kassy Perry, Jack Pitney, Matt Rexroad, Roger Salazar, Dan Schnur, Will Shuck, Ray Sotero, Garry South, Kevin Spillane, Robin Swanson, Ben Tulchin, Angie Wei, Scott Wetch.
Want to see more stories like this? Sign up for The Roundup, the free daily newsletter about California politics from the editors of Capitol Weekly. Stay up to date on the news you need to know.
Sign up below, then look for a confirmation email in your inbox.