The Rainy Day Fund -- a better way?By Tim Redmond
I get the concerns about Sup. Chris Daly’s proposal to amend the city’s Rainy Day Fund. But in the end, there’s probably a way to make it work that’s better than a lot of unpleasant alternatives.
The Rainy Day Fund was Tom Ammiano’s gift to San Francisco, a brilliant piece of legislation that has saved the public schools and will save hundreds of jobs and critical public services this year. The bill ensures that the city sets aside some of its money in good years, so there’s something to draw on in really bad times.
And these are really bad times.
Last year, money from the Rainy Day Fund saved the school district from laying off hundreds of teachers. In the wake of the governor’s assault on public education, the local schools will need another allocation to prevent this year’s disaster.
The way the bill works, the city can take up to half the money in the fund in dire times, and the schools can get up to 25%. That means there’s no temptation to raid all the money at one time.
If we hadn’t had the fund – and there were plenty of people who didn’t think it was a good idea when Ammiano introduced it – we’d be in way worse shape now.
What Daly wants to do – with the support of city employee unions – is amend the legislation to allow the supervisors, by majority vote, to take as much of the money as they need to preserve health and human services if the city’s deficit exceeds $250 million.
Ammiano is against that; he sees it as an attack on the idea of the fund, which is supposed to ease budget problems not just in one year but for the future as well. Sup. David Campos, who I respect and trust, is also against the Daly measure. “This year is bad, but next year is going to be bad, too,” he said.
And I get that, and I get that labor wants to preserve services (and jobs) right now, because once those jobs and services go away, it’s really hard to get them back.
So let’s recognize that both sides have a point, neither side is bad or evil, there are good progressives who disagree on this – and take a look at the numbers.
There’s $92 million in the fund right now. If the schools get a full 25 percent, that’s $23 million. As much as $45 million can go into the General Fund. So the board could draw down $68 million this year anyway, leaving just $24 million for next year.
That would mean $6 million for the schools next year and $12 for the General Fund -- which, considering how bad things are likely to be, isn’t a whole lot of money.
If the supes could essentially empty the fund this year, they’d have that $24 million to save health and human services, which are going to face brutal budget cuts.
So the questions are:
Is $24 million this year worth giving up the cushion of $12 million next year? Is saving public health today worth risking a loss of a $6 million education safety net next year?
Should the district elected supervisors have the ability to make that call?
And is there a way to access that money without undermining the whole concept of a Rainy Day Fund?
I think the answer to the first question is pretty clear. In times like these, you have to save crucial services, and people’s lives, and if we can pass some revenue measures this year, maybe we won’t need the money as much in another 12 months.
The other two questions are a bit tougher – not because I don’t think six of the current supervisors are qualified to make that call, but because the entire idea of a Rainy Day Fund is to make sure some is always left over for the future. Elected officials are always going to look for money today and worry about tomorrow later; that’s one of the reasons we’re in this fix. And it’s why Ammiano set the rules this way in the first place.
But Daly has a point – if the budget deficit is more than $250 million, then things are pretty damn dire. I’d rather the legislation set the deficit as a percentage of the general fund, since we have no idea how government spending will look ten years from now, but whatever. The idea is that if it’s really, really bad, you can make an exception to the rules.
That’s how Sup. Eric Mar, a former school board president, feels. “At first I was skeptical,” he told me. “But I support the Daly amendment. Right now is the time when the safety net is being shredded.”
And there’s no question: There are lives in the balance here. The cuts the mayor is proposing will literally mean San Franciscans dying for a lack of health care. It’s horrible.
What makes me nervous is the idea that the supes would be able to drain the entire fund anytime the budget is really bad. Suppose the economy turns around and ten years from now, the Rainy Day Fund has, say, $400 million in it. Then there’s a bad year, and the budget deficit is $400 million, and the board wants to take it all, right away, to avoid having to raise taxes or make cuts.
That’s not a good idea. If your budget deficit is that bad, you need to look at structural issues; you can’t just rely on your savings account to bail you out.
So how about this: If the budget gap is more than $250 million (or, say, 35 percent of the un-earmarked General Fund), then the supes can take out what they need to save crucial Health and Human Services programs – up to, say, $75 million. Or $100 million. Whatever seems like a reasonable number. Give the board the ability to recognize that there are really, truly horrible circumstances – like now -- when you have to dig deep into all available resources. But still put a cap on withdrawals so that you can’t just drain the fund all at once.
That would also recognize Ammiano’s vision – that this fund should be around for more than one rainy day.
This has to go on the ballot, which means it needs six votes. Maybe folks like Campos would accept a (modest) safety net for the Rainy Day Fund. It’s going to be hard to pass a ballot measure without broad progressive support; I think this is worth a try.
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Comments (6)
The economy has yet to stop falling.
The need now is for shock absorbers to provide stability to city function as we hit bottom and confront the new reality.
-marc
Posted by marcos | March 2, 2009 10:14 PM
My proposal to amend the rainy day fund would limit the total taken from the fund to 20% of the projected budget deficit.
Posted by Chris Daly | March 2, 2009 10:53 PM
Hi Tim,
Well given what Daly is saying, does that mean the Bay Guardian will support it as written?
Thanks,
Robert Haaland
Posted by Robert Haaland | March 2, 2009 11:20 PM
Timid,
I notice that you deleted the article posted earlier on the Rainy Day Fund to which I was the only respondent.
That's because, as in this article, you are totally ignoring the fact that your main obstacle to getting Daly's legislation passed is David Campos!!
Admit it. He made Dufty the head of the Transportation Authority and he's blocked money for the poor that Daly is seeking.
You backed an Astro-Turf Progressive. He's just like Louise Renne who taught him everything he knows.
h.
Posted by h. brown | March 3, 2009 01:34 PM
H, I don't know what you're talking about -- we never take down anything. And I said very clearly that David Campos opposes this. So does Tom Ammiano. Both are good progressives, and they disagree with Daly on this.
Posted by Tim Redmond | March 3, 2009 01:50 PM
If Daly is correct and his plan is to limit the amount taken from the fund to 20% of the "projected budget deficit," and our projected budget deficit next year is $460 million, and the fund is now $92 million, that means if the measure passes Daly will have the ability to take exactly $92 million from the fund - effectively wiping it out.
Wonderful - the actions of a madman. Daly wants to completely obliterate the fund before he leaves office. A giant "fuck you" to the citizens of San Francisco no doubt motivated by his anger at his unpopularity and inability to win any citywide office.
Posted by Shane | March 4, 2009 10:33 PM