The Enterprise
(Brockton, Mass.)
Thursday, July 19, 2001

Rainy day fund is overflowing

House Speaker Thomas Finneran has always been known as a fiscal conservative, but at heart, he is still a politician and can't shake the belief that the government knows best how to spend the public's money. So while it makes good economic sense for the state to have a healthy rainy day fund, it is unfair to taxpayers to keep a reserve that is too high to be justified.

Massachusetts law sets the limit for its emergency fund at 7.5 percent of the state budget. The fund already holds $1.7 billion, just short of the maximum. If it reaches the 7.5 percent -- or $1.8 billion, the money must be returned from whence it came, namely the taxpayers. Perhaps sensing this, Finneran wants to raise the limit to 10 percent. His reasoning -- that the state was unprepared for the economic downturn of the late 1980s because there was not enough money in the rainy day fund -- is sound, but we think $1.7 billion will get Massachusetts through even the rockiest of times.

The state has a budget surplus this year of about a half-billion dollars, meaning that the current economic slump has not had a big impact on revenues for the state. Taxpayers deserve a break and they should get back the money they overpaid. What will happen if Finneran gets his way and the limit is raised to 10 percent? When the rainy day fund nears that level, will he seek to again increase it?

Politicians are loathe to let people keep their hard-earned money. Most of them have a noblesse oblige attitude. They think they are smarter than the private sector and spend money more wisely. That is pure nonsense. It took a ballot referendum to get the state to lower its income tax rate. Sure, some politicians said it should be lower, but none of them did much about it. It took a public uprising to lower the rate.

Now Finneran is trying to ensure that the state keeps even more of our money. To her credit, acting Gov. Jane Swift, agrees with Finneran's basic philosophy, but says the fund is healthy enough. She wants this year's budget surplus to be given back to working people.

The combination of a lower tax rate and refunds of the surplus will cut the amount of money available for the rainy day fund. But it would take a flood of biblical proportions to put any serious dent in that fund and our forecast says sunny skies with occasional clouds.

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