SAVE FOR A RAINY DAY
Reading Ned Barnett, the N&O Opinion man’s attempt to give a little credit to a retired legislator for past legislation that could help our state in this COVID-19 crisis brought to mind an old beach music song from college days.
The song was Rainy Day Bells by The Globetrotters. The legislator was former State Senator Bob Rucho, who served as a chair of the Senate Finance Committee during his long tenure in the state legislature. The legislation is the Rainy Day Fund – which has been around for a while but is in the best shape it’s been in years thanks to the discipline of the reform majority that has saved money to help later in economic downturns.
In his Opinion piece, Barnett gives credit to the reform majority’s efforts, saying, “The state has $1.2 billion in its rainy day fund and nearly $2 billion that went unspent because of the budget impasse between Democratic Gov. Roy Cooper and the legislature’s Republican leadership. Those funds could cover a major shortfall in tax revenue that the General Assembly’s chief economist estimates could be between $1.5 billion and $2.5 billion for the two-year budget cycle ending in June 2021.”
What galled Senator Rucho, and the reason he was the subject of an article on the wisdom of government saving for a rainy day, is he had called and chastised Barnett for an earlier article that had not given enough credit for the hard work and determination of the reform majority when Barnett flippantly stated, “Whatever the reasons, North Carolina is fortunate to come to this hour with reserve funds at hand.”
Those reserve funds didn’t just happen by luck, Rucho countered, saying the saved money was a result of “the fiscal prudence exercised by Republicans.” He went on to explain, “They took control of the legislature in 2011 and have built funding reserves by resisting Democratic calls to increase state spending. No one expected this, but it is exactly what we planned for, to make sure government would be ready for something in the future, and unfortunately now is the future.”
With the economic forecast of an indefinitely long budget shortfall, many thanks go to Senator Rucho not only for the major tax cut legislation he shepherded through the legislature in 2013, but for the drive he and reform majority leaders made to rebuild the Rainy Day Fund.
“Then: Even in June 2008, before the Great Recession put pressure on the legislature to dip into reserves, the Rainy Day fund was only $786 million. By June of 2010, at the close of the 2009-10 fiscal year, the state’s Savings Reserve Account (i.e., “Rainy Day fund”) sat at a paltry $150 million.
“Now: Prudent spending restraint allowed the legislature to build up the state’s Rainy Day fund to a record $1.9 billion before Hurricane Florence in 2018, a fund that still stands at $1.2 billion today.”
The money that’s there now is what legislators can tap into as we weather whatever economic downturn our state must deal with in the coming months. And in the middle of the current gloom, that’s one bit of hopeful news as we work through the impact of COVID-19.