Thursday, December 11, 2008

Because the real tragedy is when government is out of money 

My friend Sue Jeffers sends a link to a "progressive idea" -- having more money set aside in case government runs short.
One of the most obvious ways to avoid this situation in the future is by building up a strong budget reserve fund which could make similar situations in the future much less painful to deal with. There are a number of steps I would propose to build a strong reserve fund.
The cash flow fund and the budget reserve fund are set at $350 million and $653 million by law. If the government has more money than that it can either send back rebates or pass a law to spend the extra. Send the money back? Liberals think this is a terrible idea.

So their answer is, while the budget is in bad shape, to increase the cap so that when the Minnesota economy turns around you don't get any more Jesse checks?
I would propose increasing the cap to 15 percent of projected FY revenues, for the 2010-11 year that would be $5,141,896. If we had that kind of reserve fund built up we simply would not have to make dramatic changes in services depending on the economic conditions which is not something that is healthy for our state.
That is, the next $4 billion or so -- I don't know if the writer is counting the cash flow account in her calculation of the cap -- won't go back to you, and won't be spent on anything that might give you some benefit (like, God forbid, an extra lane on I-94 past Rogers!) It would just sit there in an account waiting so that when the next revenue shortfall hits AF$CME and Education Minne$ota don't quake in its boots worried about their salary steps. And just in case that's not enough, this 'progressive' will make sure the beatings continue to at least 2.5% of revenues:
In addition I think we should set a floor for the minimum we should aim to have in our reserve fund. I would propose setting that at 2.5 percent of FY revenues ($856,982 for FY 2010-11). We would not be required to keep it above that but if it fell below that and we had a projected surplus of more then 2.5 of FY revenues then half of that surplus must go into the reserve fund until the floor is reached. It should also be a non-binding policy goal to keep it at the minimum but not legally required.
So get that? It would be just a suggestion. If our 'progressive' wants to spend a few more dollars that drops you below that amount they could do that, but if they give you tax money back? Oh no, you don't!

On top of all that, our 'progressive' thinks if they ask pretty please you would vote a constitutional amendment for a rainy day fund. She thinks you would would be "overwhelmingly in favor of smart budgetary practices," but with the government's budget, not yours.

Labels: , ,