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Postman on Politics

Chief political reporter David Postman explores state, regional and national politics.

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December 27, 2007 10:56 AM

Rossi idea man doesn't like rainy day fund

Posted by David Postman

Lou Guzzo the man behind Dino Rossi’s Idea Bank, criticizes Gov. Christine Gregoire for proposing a deposit in the state’s new rainy day fund. He writes from that whacky place where he resides:

Some of the media people are saying that she has borrowed a favorite Republican formula for running a government. That’s a lot of hooey. If there are any Republicans around who favor the “rainy-day fund” conundrum, they have been sadly misinformed and don’t follow Conservative thinking.

For the record, Republicans who favor the rainy day fund include your patron Rossi, who has complained that Gregoire stole the idea from him, as well as every Republican in the state House and Senate, where the GOP remains proud of the idea.

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Posted by Hinton

1:32 PM, Dec 27, 2007

Thanks, David. Comrade Pelz has already put your check in the mail.

Posted by J.R.

1:52 PM, Dec 27, 2007

Lou's an "idea man," not a "good idea man."

Posted by Jim Guthrie

1:56 PM, Dec 27, 2007

Yes, given the choice of spending the money or saving it for a 'rainy day', Republicans have traditionally supported keeping a reserve.


However, you'll find if government has that much 'excess' money sitting around, it means it's collecting too much. And you'll find historical, consistent Republican support at the state level for 'returning' that money via rebates, tax cuts and reduced spending.


Regarding Mr. Guzzo - I'd rather he pick other items - of which there are many - to criticize the current governor. To do it on this subject not only doesn't gain any traction, it's dumb politics.

Posted by Aaron

2:41 PM, Dec 27, 2007

Guthrie:
The problem with the republican concept of "returning" money is that it is rarely returned to where it came from.

When I pay too much in taxes, it somehow seems to be the big oil companies that get the refund.

If the surplus goes into a rainy-day fund, there is the hope that I might be the one to benefit when it starts "raining" on me.

Posted by Jim Guthrie

4:11 PM, Dec 27, 2007

When I pay too much in taxes, it somehow seems to be the big oil companies that get the refund. - Aaron

I have no idea how you come to that conclusion when talking about the state's general fund.

Posted by Turbine

6:19 PM, Dec 27, 2007

Mock Guzzo all you want, but the Governor is making a mockery of the budget with her rainy day fund. The State of Washington is 6 BILLION dollars in the hole on it's pension fund according to the Pew Center on the States study of all 50 states pension funds which can be found at www.pewcenteronthestates.org. what is she going to do about this? Well for starters it appears she is going hire thousands more FTE's into State Government. Smart

Posted by JimD

6:36 PM, Dec 27, 2007

Why would those who want to gut government services to bare-bones levels want ANY savings?
It seems to fly in the face of forcing cuts to accomodate strategic revenue downsizing - which republicans would never do with their personal finances, but seems good enough for the state.
Putting away some un-spent money to balance-out some debt?
Gosh, what a concept!

Posted by shoephone

9:13 PM, Dec 27, 2007

How interesting. Resoultion 8206 -- for the creation of a "Rainy Day Fund" -- overwhelmingly passes, by a vote of 67% of the electorate. But Lou Guzzo blames the governor.

I thought conservatives WANTED those kinds of issues to be offered as a vote to the people. But when it is, and when it passes, some folks still want to blame the governor.

Oh well, since the television shows are all in reruns, Lou Guzzo's outrage is good entertainment, I guess.

Posted by Daniel k

1:37 AM, Dec 28, 2007

Hinton - You disagree with the information Postman posted?

Posted by Turbine

7:20 AM, Dec 28, 2007

I think the rainy day fund is a good idea since the Governors own budget is projecting a deficit of 613 Million Dollars in a couple of years without an economic downturn. With the courts finding for school districts on funding equity, DSHS being told they are understaffed by 1,250 and funding bridges for votes, how many believe the fund will be there very long?

Posted by J.A.

7:42 AM, Dec 28, 2007

The first sentence of this post is incorrect. The governor has not proposed a deposit in the state's new rainy day fund. Her proposed supplemental budget just reflects the fact that money is deposited in the account during the next two years under the law approved by voters in November. She proposes no additional deposit.

As for Mr. Guzzo, he's entitled to his opinions, and referring to him as "Rossi idea man" gives him rather too much credit. The fact he doesn't like the Budget Stabilization Account seems to me of little interest or consequence.

Posted by Particle Man

10:51 AM, Dec 28, 2007

The GOP is the party of spend and build debt. This idea of reserve is still hard for many of them to grasp. Rossi talks often about taking his family to Disney Land/World and clearly likes roller coaster. These rides are fun on vacation but state budgets serve the people better when budget managers set money aside to smooth out possible bumps in out years. It's just good policy. Guzzo is a quack.

Posted by Memorygal

2:54 PM, Dec 28, 2007

In his prime, Lou Guzzo was a terrific theater and movie critic. That was a long time ago.

Posted by YIKES

4:44 PM, Dec 28, 2007

Turbine-
You are spot on regarding the Gregoire "Shell-game". The State Pension is underfunded folks. Someday someone is going to have to pay unless we get hit with a Plague or something.
There is ZERO political capital to be gained by funding the underfunded State Pension Fund. ZERO.
So instead, the Gregoire braintrust dream up this Rainy Day Fund "shell-game".

Let me give you a simple analogy.
You fail to make your car payment and instead put your $300/month payment in the bank for 2 months.
Now you have a $600 RAINY DAY FUND....
and more debt on your car.
C'mon David Postman...where is your fiscal common sense. How can you give Gregoire credit for a Rainy Day Fund when she has huge unfunded liabilities?
Perhaps Comrade Pelz does have his check in the mail to David.
How about a post on the State Pension Fund David??

Posted by JimD

8:23 AM, Dec 29, 2007

Yikes,
Poor analogy - the state hasn't missed any pension fund "payments" to retirees.
Are you suggesting every forecasted future liability should be made whole before a portion of revenue is put aside for unforeseen expenditures?
In your own financial management, have you decided not to create any savings because you're not sure how to put the kids through college?
Hand-to-mouth cash flow management creates fiscal dysfunction, including and a higher probability that spending decisions will be precipitously driven by the crisis of the moment.
The solution to unfunded liabilities is to fund them separate from the rainy day fund - which should be saved for a "rainy day", not regular expenditures.

Posted by Turbine

2:57 PM, Dec 29, 2007

Here's a great quote from the report.

"In recent years, Washington raised it's required contribution levels significantly, but the State has postponed making most of the payments. In fact, in the aggregate, Washington hasn't paid more than 30% of the payments required by actuaries since 2002." Sound like prudent planning right? So let's add a couple thousand more FTE's to the mix and see what happens to the bill.

Posted by JimD

11:23 AM, Dec 30, 2007

So let's pay that out and keep it up to date.
What does that have to do with the rainy day fund?
Again - are you suggesting there should be no savings fund until all existing mandates are fully satisfied?

Posted by Tubine

12:02 PM, Dec 30, 2007

The only way to address the pension short fall is to raise taxes or cut current programs and personnel. Remember Adam Cline in the special session said there is "NO FAT IN THE BUDGET, NOTHING TO CUT". so I guess that means raising taxes to make up for funding pensions obligations that the Governor and the legislature chose not to fund while increasing spending 33%. That will go over really well in this election cycle. Rainy day funds are fine if you have met your legally incurred obligations first with a dedicated source of funding, not some wished for anticipated surplus.

Posted by JimD

1:38 PM, Dec 30, 2007

Thank you. I wanted to make sure you were saying we should not create a rainy day fund until all other fiscal liabilities are permanently resolved - which of course insures it's perpetual impossibility.

Posted by Turbine

2:29 PM, Dec 30, 2007

So if it came down to funding your employees pension fund (which you haven't funded in 6 years) and creating a rainy day account, you would go with the rainy day account? Wow. You would not cut any programs or people, but you would raise taxes rather than take existing surplus funds and apply them to your pension obligations. Let's run that one by the Teachers and other public school employees and see how they feel about that. Maybe all of those Law Enforcement personel, State Patrolmen and Judges might want to weigh-in on prioritization.

Posted by JimD

2:46 PM, Dec 30, 2007

"So if it came down to funding your employees pension fund (which you haven't funded in 6 years) and creating a rainy day account, you would go with the rainy day account? "
-
No. You're imposing an either/or between savings or funding mandates, as if that choice is a given.
Says who?
We should fund both of course, and let the method of reaching that sensible fiscal responsibility - cutting other spending and/or raising tax revenue - remain the separate issue it is.

Posted by Turbine

3:11 PM, Dec 30, 2007

It is exactly the issue of how to fund the pension, where does the money come from? 6 Billion is not a drop in the bucket. The Taxpayers have sent in the money to cover what is owed to the employees of the State of Washington and our fiduciary agents The Governor and the Legislature directed those funds to other purposes. This is a problem that borders on fiscal malfeasance. How does the Governor justify not funding the pension for 6 years when the State is running a surplus in revenues? Is she waiting for an economic downturn to raise taxes?

Posted by JimD

5:46 PM, Dec 30, 2007

I do not know how to address possible (let's say highly questionable allegation of) malfeasance related to an unfunded pension account.
But the pension fund has NOTHING to do with the relative merits of a "rainy day fund".
No personal offense intended - you're making your point very logically - but this is what I find amusing about this typical Eymanesque logic:
Certain mandates sit unfunded, so let's throw gasoline on that fire by making sure we don't have a fiscal cushion to bridge cash flow shortfalls as we navigate to a solution.
Of course, the strategy is to increase the chance that a short-term cash flow crisis will force some precipitous spending cuts - it doesn't matter what or where. Any means to gut existing spending is justified, which apparently includes shortening the gap between income and expenditures by eliminating cushions in the middle.
Brilliant, NOT!

Posted by Turbine

6:51 PM, Dec 30, 2007

Show me how you are going to navigate a 6 Billion Dollar solution while increasing spending 33% over the last biennium...Please. How is it anything but malfeasance to short the Pension fund during times of surplus revenues? How responsible is it? I can be swayed, just tell all of those State employees out there what new spending was more important than their Pensions.

The Rainy Day fund is fine, but the majority of it needs to be applied to the Pension short-falls. Do the right thing Governor.

Posted by JimD

10:30 PM, Dec 30, 2007

"The Rainy Day fund is fine, but the majority of it needs to be applied to the Pension short-falls..."

Ahh...now we're getting somewhere. ;-)
THAT is part of what a rainy day fund is all about - creating a savings cushion over which we can argue what it might be used for, but most importantly - putting some money away now while we can instead of spending it right off the bat.
I was beginning to think you were right of Rossi on this one - and there ain't much farther right one can go when it comes to fiscal management.

Posted by Turbine

1:35 AM, Dec 31, 2007

Great Jim, call the account whatever your heart desires. Now take 6 Billion Dollars (approximately 10% of the entire Budget)from the General Fund, Transfer it to the Rainy Day Account and then write a check to the State Workers Pension Fund that our representatives have been shorting for the last 6 years. We have solved the problem.

Now once again I ask you, where is the money coming from? You have 1.2 Billion proposed to be sent to the "Rainy Day Fund". Will you spend any of it to fund the Pension Deficit? The Governor has forecast an overall BUDGET DEFICIT in 2 years (no more surplus), you are at least 5 Billion short.

Posted by Bothsides

11:56 AM, Jan 02, 2008

Turbine,

JimD doesn't seem to understand how government works, he doesn't think we should have a balanced budget. We should always have the gov take more of our taxes than necessary, way more, that way Chris can raise spending all she wants and still be able to put money in the savings account. Oops, sorry, forgot about the pension fund. This thread is insane, of course the state gov should fully fund that pension fund, and after that, if there is a surplus, put it in the bank, and if it's there too long, SEND IT BACK TO THE PEOPLE WHO PAID IT! BTW JimD, would gutting government services to bare-bones levels include the Port of Seattle wasting $100M of our money?? You asked for waste, now you have it!

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