Please ensure Javascript is enabled for purposes of website accessibility
California's Rainy Day Fund Is Ready For Its Coronavirus Close-Up
Joe-Mathews
By Joe Mathews
Published 5 years ago on
March 14, 2020

Share

By THE RAINY DAY FUND, as told to JOE MATHEWS
I’m ready for my close-up, Ms. Gerwig!
OK, as a budget fund without acting credits, I shouldn’t expect Greta Gerwig to put me in her next film—even if both she and I are Sacramento natives. But the time is coming—quite quickly—when I, California’s humble Rainy Day Fund, will stand at the center of our state’s civic stage, and my fellow Californians will finally have to pay me the attention I deserve.

portrait of columnist Joe Mathews
Joe Mathews
Opinion
I’ve had to stand on the sidelines for the past decade while Californians enjoyed a long economic expansion. Sure, this expansion made me a billionaire many times over—if I were human, I’d rank right between Elon Musk and Laurene Powell Jobs on those billionaire lists. But my real time is the bad times.
Oh, and look, what do we have here? The coronavirus and a monster stock market crash! Do I smell recession and huge drops in state revenues? Because that’s my cue!
My role is to be the adult fund in the room, holding onto my cash instead of spending it constantly. I have to be stable because you Californians are so volatile. Your incomes, your business receipts, and your investment earnings go up like rockets and down like, mmm, bad rockets, which then open up giant holes in the state budget. It’s my job to plug those holes.
But I must confess to being nervous about the hole-plugging, because I’ve never done this before.

Like so Much Else in California, I’m Governed by Formulas

Yes, Prop 58 created me in 2004, but in that decade,  I was so empty that the state couldn’t tap me when the Great Recession hit. In 2014, voters enhanced me via Prop 2, and ever since, I’ve been filling up with money.
But I’ve never had my funds drawn down in an economic downturn. I’ve been sitting on the shelf so long—like an old soup can or a two-term vice president—that no one knows if I can prevent teacher layoffs, shore up Medi-Cal, or fund pandemic response when I’m really needed.
In fact, few people really know how I really work. For one thing, while I’m called the Rainy Day Fund, I actually encompass more than one account. Most of my billions are the Budget Stabilization Account, but I also have a few billion in the Special Fund for Economic Uncertainties, the Safety Net Reserve, and the Public School System Stabilization Account.
Like so much else in California, I’m governed by formulas. The gist: I get 1.5 percent of the state’s general revenues each year, as well as some extra capital gains taxes.
My success at storing money has really surprised the state. The original estimate was that I would be small, gathering maybe $1 billion a year. But I’ve grown at three times that rate, making me as swole and buff as Schwarzenegger was before he went into politics. Today I’m worth around $20 billion.

I Am Not Going to Be Ignored

How’d I get so big? Governor Brown and Governor Newsom put more money into me than required. They had their reasons. First, when you make a deposit into me, it’s easier to balance the budget, because of the way the budget formulas are written. Second, governors love the fact that the legislature has little power to access my funds. For the state to get my money, the governor has to declare an emergency. So the bigger I am, the more leverage a governor has over the legislature!

One reason I’m writing this is to manage expectations, and warn you that I can’t handle an economic crisis alone. I need the help of Californians, who should start making recession plans right now right now. 
In recent years, the biggest controversy about me has been whether I’m too big—and whether I should be tapped to handle urgent needs like homelessness. But, as the economy takes a bad turn, I’m steeling myself for fights. I fear that, as huge as I am, I won’t be able to handle a bigger recession, which could cost $100 billion-plus in revenue over four years.
Even if the recession is tiny, the rules for tapping my dollars are arcane and untested. If revenues collapse $20 billion over a coronavirus cliff this year, my rules suggest that only half my money—$10 billion maybe—could be tapped to fill the hole right away.
One reason I’m writing this is to manage expectations, and warn you that I can’t handle an economic crisis alone. I need the help of Californians, who should start making recession plans right now right now. My presence, I hope, will remind you of obligations from which California can’t run.
To quote my favorite movie, Fatal Attraction, I am not going to be ignored.
About the Author 
Joe Mathews writes the Connecting California column for Zócalo Public Square.

DON'T MISS

Fresno Police Arrest Suspect in Fatal NW Apartment Shooting

DON'T MISS

Fresno Murder Suspect Stopped in Las Vegas, Others Wanted

DON'T MISS

Trump’s Crowds Are Dwindling as His Campaign Winds Down

DON'T MISS

Trump Threatens 25% Tariff on Mexico to Curb Immigration

DON'T MISS

Big Pharma Backs Harris 6-to-1 Over Trump in Presidential Campaign Contributions

DON'T MISS

Sanger Men Arrested in Connection with Slingshot Vandalism Spree at Businesses

DON'T MISS

What Is Sierra Unified’s Plan to Boost Lagging Student Achievement?

DON'T MISS

Musk PAC Tells Philadelphia Judge the $1 Million Sweepstakes Winners Are Not Chosen by Chance

DON'T MISS

Bass’ Record 61-Yard Field Goal Lifts Bills Over Dolphins in Thriller

DON'T MISS

Big Spenders: These Companies Are Giving the Most to California Legislative Candidates

UP NEXT

Let’s Keep Innovative Partnerships Crucial to Combating Climate Change: Fresno Dairy Manager

UP NEXT

No Matter the Outcome, We Are the True Losers of This Election

UP NEXT

Guns, Marijuana, Gambling: Fresno’s Smoke Shop Enforcement Issues $5M in Citations

UP NEXT

California’s Transition Off Carbon Fuels Could Be a Monumental Disaster

UP NEXT

Don’t Let Liberal Purity Elect Trump

UP NEXT

Newsom Provides Welfare to the Wealthy, Skimps on Anti-Homelessness Programs

UP NEXT

Fresno County to Open New West Annex Jail, Replacing Aging Facility

UP NEXT

Independent Gen Zers Will Decide Elections From Now On

UP NEXT

America’s Political Divide Shifts from Economics to Education: Fareed Zakaria

UP NEXT

Fresno Unified Reform Is a Must. Force It With a ‘No’ on Measure H.

Trump Threatens 25% Tariff on Mexico to Curb Immigration

1 hour ago

Big Pharma Backs Harris 6-to-1 Over Trump in Presidential Campaign Contributions

2 hours ago

Sanger Men Arrested in Connection with Slingshot Vandalism Spree at Businesses

2 hours ago

What Is Sierra Unified’s Plan to Boost Lagging Student Achievement?

2 hours ago

Musk PAC Tells Philadelphia Judge the $1 Million Sweepstakes Winners Are Not Chosen by Chance

3 hours ago

Bass’ Record 61-Yard Field Goal Lifts Bills Over Dolphins in Thriller

3 hours ago

Big Spenders: These Companies Are Giving the Most to California Legislative Candidates

4 hours ago

Stock Market Today: Wall Street Drifts Ahead of Election Day, While Oil Rises and Yields Sink

4 hours ago

Saints Fire Head Coach Dennis Allen After Seven-Game Losing Streak

4 hours ago

Raiders Fire Offensive Coordinator Luke Getsy and 2 Other Offensive Coaches

4 hours ago

Fresno Police Arrest Suspect in Fatal NW Apartment Shooting

A man has been arrested in connection with the shooting death of a Fresno resident at an apartment complex early Friday, the Fresno Police D...

20 mins ago

Gerrick Franklin (pictured), 34, was taken into custody Sunday in Madera County on suspicion of killing Tyler Hamon, 33. (Fresno PD)
20 mins ago

Fresno Police Arrest Suspect in Fatal NW Apartment Shooting

33 mins ago

Fresno Murder Suspect Stopped in Las Vegas, Others Wanted

Former President Donald Trump, the Republican presidential nominee, on stage during a campaign rally in Lititz, Pa., on Sunday, Nov. 3, 2024. Trump told supporters on Sunday that he “shouldn’t have left” the White House at the end of his term during an end-of-campaign rally where he vented angrily about a spate of new public polls showing him losing ground to Vice President Kamala Harris and joked about reporters being shot at. (Doug Mills/The New York Times)
59 mins ago

Trump’s Crowds Are Dwindling as His Campaign Winds Down

1 hour ago

Trump Threatens 25% Tariff on Mexico to Curb Immigration

2 hours ago

Big Pharma Backs Harris 6-to-1 Over Trump in Presidential Campaign Contributions

2 hours ago

Sanger Men Arrested in Connection with Slingshot Vandalism Spree at Businesses

2 hours ago

What Is Sierra Unified’s Plan to Boost Lagging Student Achievement?

3 hours ago

Musk PAC Tells Philadelphia Judge the $1 Million Sweepstakes Winners Are Not Chosen by Chance

Search

Send this to a friend