Director of Finance Mike Genest’s latest volley back in the great Zycher-Genest Spending Cap debate. Genest is responding to a back and forth that can be seen here. No doubt will hear from Zycher soon. Genest and Zycher and their significant others are more victims of pushing through this plan on Valentine’s Day evening…
From Genest:
I have the actual bill, which is in print, ACA 1 in the 3rd extraordinary session. Look on page 4, lines 25 through 28: "For fiscal years commencing on July 1, 2011, this subdivision shall be operative only if a transfer of moneys from the budget stabilization fund to the general fund is authorized pursuant to subparagraph (A) of paragraph (2) of subdivision (f)."
That means, after 2010-11, there will be no more transfers from the rainy-day fund unless needed to put just enough back in the general fund to cover a current services level budget. That’s not interpretation, it’s the language of the constitutional amendment.
On the variability question, I will use a better term to be more clear. “Variance,” of course is a statistical term and I did not mean to get technical. What I should have said is “volatility.” As the statistics I cited prove, this would substantially reduce the volatility of state revenues available for spending. That is the entire point of budget reform, along with establishing a strong rainy-day fund.
On the entire issue of Dr. Zycher’s tax increase bullet – I’m sorry, I just don’t see his point. This budget reform measure smoothes out revenue available for spending. The two-thirds vote requirement that already exists – thank heaven it does – if our protection against frivolous tax increases.
On the issue of whether the measure inhibits future tax cuts by understating the positive economic impact of tax cuts in future years… Let’s hope we get to have that discussion soon. In the mean time, this measure focuses on reducing volatility so we don’t over-commit. That’s an important goal and it will keep us from this binge and purge cycle of budgeting in the future. Once we’re stabilized, I hope that gives the tax cut argument a real shot, something it really can’t hope to get with these massive, cyclical budget deficits we have now.
On the final point regarding a spending constraint, I’ll let Dr. Zycher re-read the section above. There will be no withdrawals at the governor’s discretion – only when revenues are in a major slump as clearly outlined within the language of the bill. THAT is what will prevent momentum for future tax increases from ever building.