Rainy Day Fund

Senate Democrats unveiled a budget plan Tuesday that would stave off the deepest proposed cuts to California's health, welfare and student-aid programs by dipping heavily into the rainy-day fund that Gov. Arnold Schwarzenegger wants set aside in case the economy continues to sour. The governor declared the Democrats' approach to dealing with the state's projected $24-billion deficit "hallucinatory."

SACRAMENTO - Speaker John Pérez wants voters to know something: Cash may be cascading into state coffers as it hasn't for years. Democrats may totally control the Assembly with a new supermajority. But they're not going to be drunken sailors. They're going to be disciplined and conservative, at least by Democratic standards. Pérez, 43, a Los Angeles Democrat and former labor leader, invited me into his ornate Capitol office last week to get the word out. "It shouldn't - but it may - surprise folks that Democrats with our supermajority will be looking to build on the fiscal responsibility that we've shown the last couple of years," the speaker said right off. Actually, the Legislature whacked programs for five years because of the recession.

Gov. Bob Holden on Monday declared an economic emergency in Missouri, the first step toward drawing from a state savings fund to finance government services facing likely cuts. Holden's declaration seeks to use $135 million from the state reserve fund to pay for mental health services, public transit and other government functions in his budget for fiscal 2003, which starts July 1. Two-thirds of the 163-member House and the 34-member Senate must approve the request for it to take effect.

Last summer, it was reported that the California Department of Parks and Recreation had been hiding more than $50 million even as the governor and Legislature were desperately slashing spending to address a multibillion-dollar budget gap. Today, the public knows a few more things about what happened and how. Yet what we still don't know is galling, particularly because the woman who was in charge refuses to speak about it. A report released last...

Do you have a big enough financial cushion to withstand the recession that many economists say is coming or is already here? If you lost your job or suffered other financial setbacks, could you make it through the transition? If the answer is no, or you aren't sure, start now to build up your financial reserves. You don't want to be caught without adequate rainy day funds or with retirement savings that you could lose if your employer goes bankrupt.

In 2002, I was running for reelection, and the country had fallen into a deep recession. I met a woman who blamed me for the loss of her husband's job. When I inquired what state agency he worked for, she replied that he worked for General Motors. Understandably, she was hurting. I learned a valuable lesson that day: In good times, governors get more credit than they deserve, and in bad times, they get more blame.

It took Congress only two weeks to pass $8.6 billion in emergency disaster relief after the Northridge earthquake. As with every emergency spending bill in the past, Congress was not required to cut programs that served the whole nation to pay for the catastrophe that occurred in Southern California. Since the congressional district I represent suffered enormous damage in the earthquake, I was one of the leading advocates of the relief bill. I saw victims receive emergency care.

Dear Liz: We just refinanced our $100,000 mortgage into a 15-year fixed-rate loan at 3.75%. We have an extra $500 a month and want to know what we should do with it. Should we use the money to pay off the mortgage early, increase the contribution to my 403(b), or start a rainy day fund and try to save up to three months of my take-home salary? I'm 44, my wife is 35, and we have three kids ages 5, 3 and 9 months. I would like to retire in 16 years. Answer: At least two of your children won't be through college by the time you want to retire, so you may need to rethink your plans unless you have an exceptionally generous pension or a lot of money saved in that 403(b)

SACRAMENTO - Speaker John Pérez wants voters to know something: Cash may be cascading into state coffers as it hasn't for years. Democrats may totally control the Assembly with a new supermajority. But they're not going to be drunken sailors. They're going to be disciplined and conservative, at least by Democratic standards. Pérez, 43, a Los Angeles Democrat and former labor leader, invited me into his ornate Capitol office last week to get the word out. "It shouldn't - but it may - surprise folks that Democrats with our supermajority will be looking to build on the fiscal responsibility that we've shown the last couple of years," the speaker said right off. Actually, the Legislature whacked programs for five years because of the recession.

Today we received a modest tax refund check from the U.S. Treasury. We believe it should have been used instead to help with some of the serious problems that face this country and the world, and that will be shortchanged because of this tax cut. We have decided to donate our refund to Population Communications International, an organization dedicated to solving the problems of rapid population growth. We encourage others to take similar action to benefit a cause of their choice. Dave and Wena Dows Culver City My rainy day fund became $300 fatter today.

The whole point of a state or local government keeping money in reserve for fiscal emergencies is to have it on hand for - well, for fiscal emergencies. What does an emergency look like? It could take the form of an earthquake or other natural disaster that creates a need for immediate rescue expenditures while shutting down revenue-producing businesses for weeks, months or longer. Or it could come in the shape of economic collapse. Or in some form we can't currently imagine. Money socked away in reserve, often called a "rainy-day fund," can help the struggling city, county or state continue to operate during the emergency.

As he leaves office, Arnold Schwarzenegger is emphasizing his successes as governor. But it is his failures that need more public attention, because they may represent his greatest and most lasting contribution to California. To understand this governorship, one must recognize a fundamental dichotomy. On matters in which Schwarzenegger had a healthy amount of control ? orders he could execute with a pen, legislation that could pass with a simple majority of the Legislature, even ballot initiatives he could champion and pay for personally ?

Dear Liz: We just refinanced our $100,000 mortgage into a 15-year fixed-rate loan at 3.75%. We have an extra $500 a month and want to know what we should do with it. Should we use the money to pay off the mortgage early, increase the contribution to my 403(b), or start a rainy day fund and try to save up to three months of my take-home salary? I'm 44, my wife is 35, and we have three kids ages 5, 3 and 9 months. I would like to retire in 16 years. Answer: At least two of your children won't be through college by the time you want to retire, so you may need to rethink your plans unless you have an exceptionally generous pension or a lot of money saved in that 403(b)

Between the disastrous budget years that helped push Gov. Gray Davis from office in 2003 and the disastrous budget years that have plagued the second term of Gov. Arnold Schwarzenegger, there was one year — 2006 — when everything seemed rosy. The mortgage market was booming, the economy was humming, and the governor proposed a budget that continued to pay down Davis-era debt. Democrats in the Legislature instead tried to use some of that money for program expansions. As usual, they and the governor locked horns, but gently, given the comfortable level of revenue expected.

Steve Poizner Political party: Republican Occupation: state insurance commissioner Age: 53, born Corpus Christi, Texas City of residence: Los Gatos, Calif. Personal: wife Carol, one daughter Education: bachelor's degree in electrical engineering, University of Texas; MBA, Stanford University Career highlights: founder, 1983, Strategic Mapping software company; founder, 1995, SnapTrack Inc.; director, Critical Infrastructure Protection, National Security Council, 2001-02; volunteer teacher, Mount Pleasant High School, San Jose, 2002-03; state insurance commissioner, 2007 to present.

Los Angeles is facing an immediate budget gap of $199 million that must be closed by June 30, the end of the fiscal year. It also has a reserve fund of $189 million. Shouldn't the city tap that fund so that it has to find only $10 million in cuts, rather than go through the wrenching process of layoffs and department consolidations to cover the full amount? No, it shouldn't. The city should leave the reserve fund intact and, if anything, should boost it to $220 million to meet its policy target of 5% of the budget.

Steve Poizner Political party: Republican Occupation: state insurance commissioner Age: 53, born Corpus Christi, Texas City of residence: Los Gatos, Calif. Personal: wife Carol, one daughter Education: bachelor's degree in electrical engineering, University of Texas; MBA, Stanford University Career highlights: founder, 1983, Strategic Mapping software company; founder, 1995, SnapTrack Inc.; director, Critical Infrastructure Protection, National Security Council, 2001-02; volunteer teacher, Mount Pleasant High School, San Jose, 2002-03; state insurance commissioner, 2007 to present.

Senate Democrats unveiled a budget plan Tuesday that would stave off the deepest proposed cuts to California's health, welfare and student-aid programs by dipping heavily into the rainy-day fund that Gov. Arnold Schwarzenegger wants set aside in case the economy continues to sour. The governor declared the Democrats' approach to dealing with the state's projected $24-billion deficit "hallucinatory."