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California's 'Rainy Day' Fund is Dry

It's time for the governor to refill the financial reserves, our columnist says.

The 4.0 earthquake that woke up San Francisco on Monday morning should wake up the governor’s office as well.

California’s “rainy day” funds are drying up.

The rosy predictions for the current fiscal year’s budget have already withered on the vine.

According to a January financial statement from the State Controller's Office, California “ended last fiscal year with a cash deficit of $8.2 billion. The combined current-year cash deficit stands at $21 billion."

Only emergency legislation providing for increased borrowing prevented the state from breaching the minimum safety level of $2.5 billion.

This was only accomplished through huge “temporary” borrowing from any state fund with ready cash—including the University of California and California State University systems.

The “rainy day” fund has already been drained.

On Saturday, the state controller will again issue findings on the state’s income. All bets are for more revenue shortfalls. Thus, more borrowing. Thus more cash drought.

Enter the San Francisco earthquake, the Midwest tornadoes, and the non-stop calamities facing every state. Bad omens for any state hoping to avoid costly calamities.

Last year, 14 natural disasters—each costing more than $1 billion—prompted the national insurance industry to ask for more federal aid and to announce that global warming is real.

Add to these realities, municipal bankruptcy problems.

The city of Stockton is preparing for bankruptcy. And Bloomberg News recently asked, “If Stockton is Broke, Then Why Isn’t San Diego?”

Can California’s “rainy day fund” cover Stockton’s needs? San Diego’s? Better still, ask why San Diego is looking to build an expensive new football stadium—with taxpayer funds—when its pensions are underfunded?

San Francisco has already trimmed the sails for the August America Cup’s races by scrapping the renovation of the dilapidated Piers 30-32—once a selling point for more taxpayer funding.

Add it all up. The “rainy day” funds are not only in jeopardy, but drying up.

This is a drought that no “Miracle March” nor above average rainfall will fix.

Time for the governor to refill the reservoirs.

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