SJR 8206 – A constitutional amendment on the budget stabilization account maintained by the state treasury.
This amendment would require the legislature to transfer additional moneys to the budget stabilization account in each fiscal biennium in which the state has receivedextraordinary revenue growth,as defined, with certain limitations.
There are two ways to smooth out revenue fluctuations from year to year. One of them is to borrow from the future, which is what the federal government does. However, the state constitution requires a balanced budget and getting that changed isn’t politically doable. The other way is to put money away, to be drawn down when times are bad. That’s how Washington State currently does it. (Some states don’t do it at all.)
The rainy day fund is currently about $300 million. The revenue shortfall is about $2 billion. In other words, the rainy day fund turned out to not be large enough. Not even close.
This amendment requires that, if the state has growth that is more than 33% above the 10 year growth rate, the amount above that be put into the rainy day fund. In other words, don’t spend as much money when times are really flush and story it away. We currently save 1% of our revenues, and this won’t change that. It only adds additional saving for flush times.
no argument is that we should spend that money on needed services instead. And while that is an attractive argument, we’d have to cut off those programs a few years later during the next recession. I’d rather us have sustainable programs.
And it’s much preferable to save the money than rebate taxes. That doesn’t prepare us at all for the next recession.
I’ll be voting for this amendment.
crossposted from King Rat.