This week’s Q&A is with Sen. Joe Zarelli. I spoke with him about SJR 8206, a Constitutional Amendment that will bolster the Rainy Day Fund by requiring the state to put “extraordinary revenue growth” in the bank.
Q: First, tell me what this would do in your own words.
Zarelli: Well, it builds upon what we put out a couple of years back establishing the Rainy Day Fund. For me, it’s one of those long-term lessons learned from the current revenue scenario we’re in, where we saw revenue grow way outside a typical scenario (earlier in the decade). What this does is this sets up a process in the future where if this ever happens again, we’d be required to capture a percent of extraordinary revenues and move it to the Rainy Day Fund. That does two things: First, it makes us save some of that money and second, we don’t spend it — so it has a double effect of making the budget more sustainable over time.
Q: You mentioned that it saves money in two ways — the second being that you don’t create new programs with extraordinary revenue. Can you say more about that?
Zarelli: Well, the biggest problem is that when you have a spike in revenue that you know isn’t going to continue and then you spend that spike, it creates a bow wave — you have no way to support that spending. When revenue comes back down to its historical growth pattern and then spending is way out of balance, that creates problems like we’re in now. The idea is to harmonize the spending pattern so it stays consistent with what is long-term growth instead of the ebbs and flows.
Q: There hasn’t been much opposition to this Constitutional amendment. Does that reflect bipartisan support across the state?
Zarelli: Well, there are some of those in the social services arena who think that we can’t commit to saving money, we have to spend it because there’s a huge need. There is a small group, but my message to them is that it does us no good if we commit to spending that we then have to withdraw from. (more…)