SACRAMENTO - Today, the assembly passed a constitutional amendment authored by Assemblyman Mike Gatto (D-Los Angeles) that would implement an enhanced version of the “Rainy Day Fund”, a savings account of sorts for the state, which would protect the state during financial downturns.
“This legislation would force Sacramento decision makers to follow the sound practices that every family in this state understands. You put away some money when times are good, so that we have some money left over when times are bad,” said Assemblyman Gatto.
Specifically Gatto’s bill requires the state to double the amount of money it socks away, to up to 10% of all general fund revenue. It would pay into that “savings account” only after completely fulfilling the state’s obligations to education. And it would require the state to pay off debt in good years, to ease the burden on future generations.
“This legislation would greatly lessen the amount of money the legislature spends on “pork”, and would smooth out some of the wild ups and downs in our state budget, which benefit no one,” said Gatto.
One significant by-product of this legislation is an improved credit rating for the state. Earlier this year, California’s credit rating was 124 basis points above AAA. That translates into hundreds of millions, if not billions, in additional borrowing costs each year. With this legislation, California would get better bond rates because of its reserves and debt pay-downs.
The bill (ACA-4) was co-authored by Republican Assemblyman Roger Niello and passed with near unanimous, bipartisan support. Because this legislation proposes a constitutional amendment, it will go before the voters (by 2012) for approval.
“Not long ago, I sat in an editorial board meeting with a local newspaper, and I’ve sat in countless constituents’ living rooms where I looked folks in the eye and said I would fight for this responsible, common-sense reform. I am very pleased to have been able to keep my promise today,” said Gatto.
CONTACT: Rodney Wilson (916) 296-7387
Website of Assemblyman Mike Gatto: www.asm.ca.gov/gatto
