Opinions

Yes on Prop. 2 for state rainy day fund

When the 2008 recession ravaged the American economy, state budgets tanked, prompting dramatic cuts in vital public services such as education.

The state budget was in such disarray at the outset of the recession that in 2009, tuition increased by 32 percent alone in a single year for students within the UC system, according to TIME. In the same year, the CSU system saw a $564 million budget cut, according to the CSU website. Classes at Cal State University Long Beach were cut left and right. For many upperclassmen here CSULB, the impact of this on our own campus is seared into our collective memory: dozens of students would pack into classrooms, some sitting on the floor, in the desperate hopes that professors would add them to their class.

By 2012, the entire public education system in California was about to face a $6 billion cut; however, voters passed Prop 30 by a 10 percent majority that year, which raised taxes and prevented what could have an absolutely devastating blow to the state’s education system.

Today, the fiscal situation of the state has improved significantly. This year was the first time since the recession that the state had a significant budget surplus, which equated to roughly $1.9 billion in the state general fund. Such a surplus in a growing economy is a good thing, since this allows California to place the money into what is known as a rainy day budget. Essentially, the rainy day budget (in California known as the budget stabilization account, or BSA) allows us to prepare for extreme cuts to state services such as education, healthcare and state-operated beaches when tax revenues plummet.

Proposition 2, titled the “Rainy Day Budget Stabilization Act,” would ensure the long term reliability of the fund so that state services will not be hit as hard as they were during the most recent recession.

The Rainy Day Budget Stabilization Act would provide a safety valve for rough economic conditions in the future. It would do so by requiring 1.5 percent of the state’s general fund revenue (approximately 1.6 billion) to go straight into the BSA. The measure would direct revenue from capital gains taxes (the tax on profits from the sale of stocks, bonds and property) towards the BSA. It would place limits on the use of such funds in times of a state emergency as to not empty out the account. Finally, the proposition would require half of the BSA funds to be used to pay off the state’s current debts and financial liabilities as a means of avoiding the debt crisis that California experienced a decade ago.

Proposition 2 would also provide a new reserve for local schools and community colleges; when revenue from capital gains are strong, the capital gains revenue would be allocated towards this new reserve. However, it would also set maximum reserves that local school districts could keep for themselves, forcing them to spend more per year. The main critics of this proposition, known as 2 Bad for Kids, argue that taking away the decision-making about reserves from local school districts and giving it to legislators in Sacramento could leave students at risk in the case of another economic downturn.

Although this bill might not sound like the most glamorous, voting “Yes” on it is vital to ensure that future generations will not have to endure the aftermath of brutal state budget cuts as was experienced by many over the past five years. As students who go to a school primarily funded by the state, we cannot afford to go through another round of class cuts, faculty lay-offs and tuition increases if and when a recession happens again.

Prop 2 would prevent cuts to public services such as education, which plagued CSULB just a few years ago. As for the state as a whole, Prop 2 ensures that the state continues its path of financial pragmatism while not sacrificing the state services that make California a great place to live.

As such, I urge a Yes vote on Prop. 2.

One Comment

  1. Avatar

    I think it is naive to believe politicians when they tell you they will set aside funds for a specific purpose.

    There are many ways around that, and they will always find the way to spend the money on other things. We’ve seen that over, and over, and over again.

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