Tuesday, August 07, 2012

Life in "Progress" State - California edition

They called it Paradise
The Place to be
They watched the hazy sun
Sinking in the sea

The biggest threat to special state accounts is budgetary raids, not sloppy accounting or hidden surpluses. Legislators have grabbed billions of dollars from these independent funds to plug fiscal holes elsewhere. But the Legislature should start crafting honest budgets instead of running up debts and imperiling supposedly self-supporting programs.

The state’s special funds have drawn public attention since the state’s announcement last month of a nearly $54 million hidden surplus in the Department of Parks and Recreation. That news emerged after the state had threatened to close state parks to save money.

Californians fill these special funds, which are separate from the state’s general fund, through fees dedicated to specific programs. The fee on bottled drinks, for example, goes toward the cost of recycling bottles and cans. These special funds account for a sizable share of state spending: $39.4 billion this fiscal year, compared to the $91.3 billion general fund budget.

A hidden stash of special fund money does signal a disturbing fiscal carelessness. But a report issued last week by the Department of Finance also suggests recklessness in the handling of this money. The document shows that the state’s general fund owes $4.3 billion to hundreds of special funds across state government. Four years ago, the general fund owed only $749 million to the special funds, but the borrowing snowballed as the economy melted.


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