October 12, 2007
It’s Friday again and time for the next review of an upcoming statewide ballot measure which will appear on the November 2007 election ballot.
Today, we will review Engrossed Senate Joint Resolution 8206 — the so-called “Rainy Day Fund” ballot measure. The state constitution currently does not require the state to maintain a budget reserve account although state stautues have established an emergency reserve fund which is based on the voter approved spending limit enacted in 1993. For various reasons, the emergency reserve fund has proven to be a somewhat unreliable savings account for the state. The spending limit has been amended several times over the years and tapping into the account has been accomodated with a simple majority vote. Proponents of strong “rainy day funds” have often argued that a constitutional savings account would insure the savings fund could not be so easily accessed allowing the fund to grow enough to be available in the event of a serious emergency or economic downturn. The idea of establishing such a fund was most recently recommended as part of the Gates Tax Commission report.
SJR 8206 would amend the state constitution to require the establishment of a budget stabilization account in the state treasury. The account would receive 1% of general state revenues each fiscal year and any additional amounts the legislature chose to appropriate into the account. Withdrawing money from the account could only be done under four circumstances:
- If the Governor declares a state of emergency by a majority vote just for costs associated only with the emergency
- If the official forecast for job growth in the state is estimated to be less than 1% in any fiscal year by a majority vote
- If 60% of the members in both chambers vote to use funds from the account (interestingly, Democrats enjoy more than 60% majorities in both the House and Senate).
- If the balance in the account exceeds 10% of estimated general fund state revenues, the amount above 10% could be deposited into the education construction account by majority vote
Supporters of the constitutional amendment include State Senator Lisa Brown (D-Spokane), Rep. Ross Hunter (D-Bellevue), Senator Joe Zarelli (R-Ridgefield) and Rep. Gary Alexander (R-Olympia). They argue passage of SJR 8206 would give the state the discipline to set aside funds during good times to avoid painful budget cuts or tax increases during economic downturns. The measure also has the support of Governor Gregoire.
Opponents of the amendment include Rep. Helen Sommers (D-Seattle), Senator Jeanne Kohl-Welles (D-Seattle), Sen. Ken Jacobsen (D-Seattle), Rep. Sam Hunt (D-Olympia) and others. They argue that the proposal restricts the legislature’s ability to make critical decisions by requiring a “super majority” to make appropriations from the budget stabilization account. This would empower a small minority of legislators to block decisions favored by a majority of the legislature.