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Zarelli proposes constitutional amendment to require
savings of exceptional revenue January 21, 2009
OLYMPIA…
Sen. Joseph
Zarelli today proposed an amendment to the state
constitution that would route more money into the state’s
rainy-day fund when revenue collections are exceptionally large,
as they were from 2005 to 2007.
“State government is better prepared now to handle ‘rainy days,’ thanks
to the voters, but there’s more we can do to bring stability to the
budgeting process. This amendment would treat an exceptional revenue
collection as one-time money and put it out of easy reach of the
Legislature,” said Zarelli, R-Ridgefield.
Senate Joint Resolution 8209 already has gained bipartisan support,
with Sen. Lisa Brown, Senate Democrat leader, at the top of the list of
co-sponsors. She worked with Zarelli in 2007 to get the rainy-day fund
amendment put on that year’s ballot, where it passed overwhelmingly.
Last week Zarelli suggested the projected gap lawmakers must close when
writing the 2009-11 state operating budget could reach $7.5 billion. Had
the change represented by SJR 8209 been made prior to 2005, Zarelli
estimates that difference would be nearly $5 billion smaller.
“The extraordinary amount of revenue taken in during the 2005-07
biennium, when revenues grew by 21.4 percent, is already gone. There was
nothing to force the Legislature to save that money, so it was spent,”
Zarelli said. “My goal is to make sure, should that kind of growth
resume, some of the revenue is automatically set aside. It can only help
spare future legislatures from the kinds of decisions we will have to
make in the coming months.”
SJR 8209 would automatically move, into the rainy-day fund, revenue
collected in excess of 133 percent of the state’s 10-year revenue growth
average. Had the formula in Zarelli’s
proposal been applied to the revenue collected in 2005-07, $2.4 billion
would have been termed “exceptional” and deposited into the rainy day
fund.
Because that $2.4 billion also would have been unavailable for
legislators to spend – as they did to launch and expand state services –
the combined net benefit would be $4.8 billion today.
“Sending this proposal to the ballot will show that Olympia has learned
one of the important lessons resulting from the state’s budget
situation,” said Zarelli, who thoroughly explained the concept in a
budget brief last week. “If we see more of those exceptionally sunny
days, when revenue collections really take off, state government will be
in a position to make the most of it.”
SJR 8209 is one of three measures Zarelli has proposed, in what will be
a budget-oriented 2009 legislative session, to help bring stability,
transparency and efficiency to state spending practices.
Another measure introduced today,
Senate Bill 5409, would create a competition council within the
Office of Financial Management. A group comprising lawmakers,
executive-branch experts and private-sector representatives would
examine "commercial activities" being performed by state employees to
ensure they are performed in the most cost-efficient and effective
manner.
“We know competitive contracting is a great way to save money, but it
has yet to receive the emphasis that should have come as part of the
2002 collective bargaining law,” said Zarelli.
When the council proposed in SB 5409 determines that outsourcing a
commercial activity may result in reduced costs, the governor will
direct the appropriate agency to pursue a contract using the competitive
bidding process.
“This shouldn’t be met with alarm by state employees, because their work
units will be able to compete for contracts as well,” Zarelli said.
His third budget-related bill, introduced on the session’s opening day,
is
Senate Bill 5073. This measure would fold the separate accounts that
have proliferated in recent years into the state’s general fund.
“The operating budget is the general fund and a set of other funds
which, for reasons that aren’t completely clear, were created outside
but ‘near’ the general fund. That makes it unnecessarily difficult for
taxpayers to follow how their dollars are being spent. We need to go
back to having just one fund, the general fund, from which money is
spent,” Zarelli said.
“Considering how some major spending reductions will be needed to
produce a balanced operating budget for 2009-11, it’s important for that
budget to be transparent,” Zarelli said. “This will help taxpayers to
see how spending and revenue relate.”
The accounts which are apart from the general fund are designated for
public safety education; health services; violence reduction and drug
enforcement; K-12 education (the student achievement fund and education
legacy account); pension funding stabilization; and water quality, plus
an equal justice sub-account. The education legacy trust account and the pension funding stabilization account have not been counted against the state’s spending limit; Zarelli’s legislation would change that. And because the general fund would be larger, the deposit to the rainy-day fund would grow, and the state’s bonding capacity would increase.
“This bill doesn’t take away revenue sources, so people who supported
certain state programs don’t have to worry that it will jeopardize
funding. My legislation simply takes the position that all dollars are
green, and so all of the dollars the state spends on programs and
services should be in the general fund, not scattered around,” Zarelli
said.
Zarelli is Republican leader on the
Senate Ways
and Means Committee, which addresses tax and spending matters
that include development of the biennial operating budget.
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For more information contact
Eric Campbell |