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To: Jim McMannis who wrote (177996)	1/19/2009 2:34:34 PM
From: patron_anejo_por_favor	Respond to of 306849

Some states made token efforts. AZ stashed some dough in a rainy day fund, but stoopid policies (first the Alt fuels debacle, then Napolitano raiding the rainy day fund to mask deficit spending) undermined it. Now both the state and city of Phoenix are way underwater. If only they'd bet all the tax receipts in Vegas on the Cardinals yesterday, we'd be sabed!<G>

To: Jim McMannis who wrote (177996)	1/19/2009 2:47:37 PM
From: GraceZ	Respond to of 306849

You must be dreaming about a rainy day fund. Government doesn't work like that. I might have dreamed it, but there is a lot of evidence it exists. Of course, it is burning a hole in their pockets right now. mlis.state.md.us Department of Legislative Services Maryland General Assembly 2006 Session FISCAL AND POLICY NOTE Senate Bill 542 (Senator Currie, et al.) Budget and Taxation Appropriations Operating Budget - Revenue Stabilization Account - Use and Minimum Appropriation This bill increases the minimum account balance of the Revenue Stabilization Account (Rainy Day Fund) from 5% to 7.5% of the estimated general fund revenues. The bill also modifies the circumstances by which the Governor can transfer funds from the Rainy Day Fund to the State’s general fund. If any transfer results in an account balance below 5% of the estimated general fund revenues, the transfer must be authorized by an Act of the General Assembly other than the State budget bill. The bill takes effect July 1, 2006. Fiscal Summary State Effect: To reach the 7.5% target, the Rainy Day Fund account balance would have to increase by approximately $319.3 million in FY 2007. State revenues and expenditures would not be directly affected in FY 2007, however, absent action on the FY 2007 budget to retain a balance of at least 7.5% in the Rainy Day Fund, State expenditures in FY 2008 could be affected. Local Effect: None. Small Business Effect: None. Analysis Current Law: An annual appropriation must be made to the Rainy Day Fund whenever the account balance is less than 5% of the estimated general fund revenues for that fiscal year. If the account balance is between 3% and 5%, the annual appropriation must total at least $50 million or the amount necessary to reach the 5% target. If the account balance is below 3%, the annual appropriation must total at least $100 million. The Governor may transfer funds from the Rainy Day Fund to the State’s general fund if authorized by an act of the General Assembly or if specific authorization is provided in the budget bill. The General Assembly, through the amendment to the budget bill, can reduce the amount of funds that are transferred from the Rainy Day Fund. In the budget for the second subsequent fiscal year, the Governor must appropriate into the Rainy Day Fund an amount equal to the unappropriated general fund balance at closeout in excess of $10 million. For example, fiscal 2005 closed with an unappropriated surplus totaling $603.3 million, thus the Governor’s fiscal 2007 allowance includes a $593.3 million appropriation to the Rainy Day Fund. However, beginning in fiscal 2012, an amount equal to any unappropriated surplus between $11 million and $60 million must be appropriated to the transfer tax special fund until such time as a specified amount has been repaid to the transfer tax special fund. Background: The Rainy Day Fund was established in 1986 to retain State revenues to meet future needs and to reduce the need for future tax increases by moderating revenue growth. The account consists of direct appropriations in the budget bill and interest earned from all reserve fund accounts except for the Joseph Fund Account. Exhibit 1 shows the status of the Rainy Day Fund for fiscal 2003 through 2007.Appropriations into the Rainy Day Fund were made each year except fiscal 2004. The appropriations are attributable to unappropriated general funds being swept into the Rainy Day Fund, as required by law. Funds were transferred out of the Rainy Day Fund and into the general fund in fiscal 2003 and 2005. In fiscal 2006, funds were transferred out to support specific capital projects. In fiscal 2007, the Governor proposes transferring $770 million from the Rainy Day Fund into the Dedicated Purpose Account. This provides $670 million for fiscal 2008 expenditures and $100 million for the State’s unfunded retiree health care liability. From fiscal 2003 to 2005, the Rainy Day Fund balance remained at around 5% of general fund revenues. Each year, the General Assembly appropriated sufficient funds to provide a 5% end-of-year fund balance. The balance did not end the year at 5% in fiscal 2004 and 2005 because actual revenues exceeded estimated revenues. Beginning in fiscal 2006, the law was changed so that only the Board of Revenue Estimates’ December (immediately prior to the legislative session) general fund estimate is used. The ratio will no longer drop below 5% when revenues exceed expectations. In fiscal 2006, the Rainy Day Fund balance is $190 million over the 5% targeted minimum fund balance. The Governor proposes to reduce the fund balance back down to 5% at the end of fiscal 2007.