Thursday, October 9, 2014

Yes on California Rainy Day Fund, Proposition 2

Californians have suffered from fundamental budget problems that will be at least alleviated, if not fixed, by Proposition 2.

Currently the state budget amplifies the pain of recessions while adding to the joys of boom times. Amplifying swings in the economy does long-term damage to the economy. Since we are at a point of upswing in the economy, now is a good time to fix this junky-mentality.

In good times the government is flooded with tax revenue. Everybody wants to spend it. It is hard for legislators to say No to teachers and other state employees, welfare recipients, rich friends, pork projects or raises for themselves when the economy is booming. Despite the long series of booms and busts in the economy, they can't plan for the inevitable slowdown, which sometimes becomes a bust.

In bad times, when lots of newly unemployed people need help, suddenly there is not enough money to cover even the old crowd sucking on the tit of government. Teachers won't give back raises, so their youngest, most vulnerable members are laid off. New road construction grinds to a halt. All along the line there are cutbacks even as the state runs an illegal deficit (California is supposed to balance its budget each year, but it does not, especially during recessions).

As a result California has among the highest taxes in the nation, but it no longer has the best schools or roads. Too much money goes to paying interest on debt.

You can argue with the details of Proposition 2, but it represents a fix that is urgently needed. When the state has a surplus it will be used partly to pay off debt and create a Rainy Day Fund that can be used in times of recession.

My main argument with Proposition 2 is that it does not go far enough, but we are not likely to be offered a chance to vote on a better version of this idea.

So please vote Yes on 2 in the November 4, 2014 election. Help California steady its budget, so that government can do the job it is supposed to do both in boom and bust economies.

Summary and Text of California Proposition 2 (at California Secretary of State site)

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