Nasheed to Nixon: Tap Rainy Day Fund to help Missouri economy
Jamilah Nasheed
Use the Rainy Day Fund, she says.
In the campaign, Hulshof suggested using the Rainy Day Fund to give loans to small businesses who add employees. At the time, Democrat Jay Nixon, now the governor elect, didn’t particularly criticize the proposal. But at his first news conference after the election, incoming House speaker Ron Richard, a Republican, pretty much said no way.
It takes a two-thirds majority of the General Assembly to use the Rainy Day fund, and lawmakers have traditionally resisted the idea. Gov. Bob Holden, the last Democrat to hold the state’s top seat, suggested it and was roundly criticized. Holden then withheld funds from the state’s public schools to balance the budget.
Nixon has proposed an idea that, like Hulshof’s, would pump some money into small businesses, but he hopes to use money from the Missouri Development Finance Board.
In a news release, Nasheed urges Nixon to also consider tapping the $555 million Rainy Day Fund.
Nasheed suggested that utilizing the reserve, commonly known as the Rainy Day Fund, provides a better budgetary solution than freezing current contracts and capital projects or failing to follow through on the Governor-elect’s promise to restore Medicaid cuts. Last week, former state Sen. Wayne Goode, co-chair of the Governor-elect’s transition team, announced the belt-tightening measures in response to a $342 budget shortfall.
“While I understand the need to ensure that our government is as efficient and organized as possible, I strongly urge you to reconsider freezing or cutting back state services and projects.,” Nasheed wrote in a letter to the governor. “The Budget Reserve Fund offers a clear and effective path out of our current economic slowdown. Providing relief in times like these is the reason why the fund was initially created. Drawing on it now will help stabilize our revenues, improve state infrastructure and get our economy back on track.”
Nasheed, who sits on the House Budget Committee, sent a letter to the Governor-elect urging him to begin the process of releasing the Budget Reserve Funds and promising her partnership in garnering the necessary support of her fellow legislators. Last used to finance reconstruction efforts after the floods of 1993, the fund can only be used with the support of the governor and two-thirds of both of Missouri’s legislative bodies. Currently, the fund has a balance of $555.6 million, half of which can be used in any one year.
Looks like trouble in paradise. It does seem legitimate to use the rainy day fund for certain state expenses during a severe economic downturn - really, more legitimate than rebuilding from a flood. But given the widespread fear that this downturn may be long and deep, using the money this year seems imprudent. Better to freeze spending today than run out of money to keep the state running a year from now. Jay Nixon, fiscal conservative?
Hey Representative Nasheed and Senator Smith, learn now what Bob Holden never did, when you find yourself in a hole, put down the shovel.
The proposal shows a total lack of understanding fiscal policies.
And I an sure she came up with this idea while helping Mike Gibbons. What a joke. You think someone on the budget committee would understand things better than she does.
Jeff Smith is also involved in this. Both of them have some ability but they need to think before they act. Especially Smith.
You have to pay the money back to soon to make the proposal work.
I don’t get the objections of “Jackson” and “reality” to this - if anything, the proposal underscores Jamilah’s understanding of the state’s fiscal reality and shows why she’s such a strong voice on the budget committee.
As the Center on Budget Policy and Priorities (http://www.cbpp.org/2-21-08sfp2.htm) points out:
1. It’s good for the state’s economy.
2. It gives the state time to respond sensibly to its budget problems.
3. It can help a state avoid cutting its “automatic economic stabilizers.” (like healthcare and unemployment assistance)
4. Never using the state’s rainy day fund is tantamount to not having one at all.
The concern that money must be paid back too soon to have an effect does have merit. That’s why Nasheed has also proposed pushing back the repayment schedule for two years. Real solutions to our problems - now that’s good government.