Political Elites Plan Raid of Taxpayers' Savings

By Scott Wilk
Friday, July 22, 2016

[This opinion editorial was originally published in the SCV Gazette - click here to read it on the SCV Gazette's website.]

California families still acutely remember the hardships caused by the 2008 Great Recession: the slashing of funding to schools, an escalation of tuition to our colleges and universities, and a redirection of road money into the general fund. Not to mention a $7 billion tax increase that Governor Jerry Brown promised would all go to education, but didn't.

Back then, years of reckless spending had left California ill-equipped to compensate for the massive loss of tax revenue the economic downturn created.

We all learned firsthand that a cash-poor state government can have a rippling effect on the economy, as well as negatively affect our quality our life.

Subsequently, Californians took to the polls in November 2014 and voted overwhelmingly to approve Proposition 2, the Rainy Day Fund, to ensure this never happened again. Proposition 2 – which I co-authored – was a monumental achievement aimed at preserving our state's financial health moving forward and was explained to voters as a fund that would only be used in times of economic downturn.

Now, just two years after Prop 2 was approved, majority party leadership is openly discussing raiding the Rainy Day Fund. This would leave California, once again, without the proper capacity to weather an economic storm that may well be on the horizon.

In the aftermath of The Great Recession, it's clear that the intent of the voters in passing Prop 2 was not to establish a slush fund for political elites to tap, on a whim, to fund their pet projects. It was designed for the opposite: a fund only available in the case of a true economic emergency.

Despite record revenue of the past two budget cycles, top legislative leaders have expressed a desire to begin siphoning money from the Rainy Day Fund to compensate for a projected budget deficit. This “deficit” was created not by an outside, uncontrollable economic downturn, but rather by the frivolous spending of the party that controls both legislative houses and the governor's office.

To recoup losses born from irresponsible spending is a breach of theses elected officials' fiduciary duty and clearly not what Californians had in mind when they approved a rainy day fund. This is just another egregious example of legislators acting out of self-interest, then sticking the taxpayers with the tab.

Simply put, this is a self-induced deficit. The political elites and their special interest allies spend on their pet projects, creating a deficit large enough to qualify for accessing Prop 2 funds. This budgetary maneuver is not the intent of its authors (me being one) nor how it was sold to voters.

It's the people's hard work and entrepreneurial efforts that created the wealth that produced the revenue to create the Rainy Day Fund in the first place. We must stand up to the political elites who want to pillage our savings for their irresponsible overspending.

Spending at the current level will bring our state to an estimated $4 billion deficit by 2019, and that's without an economic downturn of any kind.

Meanwhile, major economists – even the governor – have stated an economic downturn is probable by 2020, let alone that poor economic cycles are inevitable.

These projections may represent the makings of a perfect storm for California's financial stability. A growing deficit caused by overspending, a tapped out Rainy Day Fund used to compensate for immature financial behavior, and a true economic downturn cutting state revenue streams, may all combine to create a crippling scenario.

To stop this storm from flooding our state budget with red ink, we must demand that Sacramento build up our defenses with sandbags full of fiscal responsibility and a respect for the real intent of voters in passing Prop 2.

I urge all Californians to join me in demanding the Rainy Day Fund remain untouched. This is the only way to soften the landing when the next economic downturn inevitably returns.