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Political Landscape: Gatto's measure would help Rainy Day Fund

October 14, 2010

In the rush of last-minute activity leading to the passage of the state budget, Assemblyman Mike Gatto (D-Silver Lake) won approval of a measure he co-sponsored to boost the state's Rainy Day Fund.

The fund sets aside money in years when there is a budget surplus and guarantees that it be used first to fully fund public schools, then to pay down the state's bond debt and then to cover costs in years when the state operates at a deficit.

The bill Gatto co-authored with Assemblyman Roger Niello (R-Fair Oaks) would place a constitutional amendment before voters to increase the amount of money state leaders set aside in good years — up to 10% of general fund revenue — and guarantee it be used only for those three purposes.

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The ballot measure would likely appear in 2012, Gatto said, unless the next governor calls for a special statewide election in 2011 to gain voter approval of other fiscal reforms.

Gatto noted this year's $19.1-billion deficit comes only four years after the state was taking in huge surpluses. The idea of putting away money in good times for use in bad times is essential in a state with a volatile, boom-and-bust economy, he said.

"Every family in California gets this common-sense concept, but for whatever reason Sacramento hasn't grasped it for a long time," Gatto said. "It's very important for the state to learn its lessons from the current budget malaise."

This year's budget process is being viewed as a disaster, as lawmakers and the governor missed their deadline by 100 days and used a combination of cuts, borrowing and accounting tricks to close the $19.1-billion budget gap.

"It was definitely a complex process in a very tough year," Gatto said.

But he said it was important to restore funding to the state university systems and preserve other programs that protect jobs.

As in recent years, nearly all of the budget work was done behind closed doors by the so-called Big 5 — the governor and Democratic and Republican party leaders in both houses — before details were revealed to the members of both houses.

"The budget process is clearly broken," Gatto said. But, "there are always some components of the negotiations that make it difficult or impossible to do with 120 people in the room."

Gatto's rival on the Nov. 2 ballot, Republican Sunder Ramani, hammered the budget deal in an Oct. 13 statement.

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