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Wednesday, May 12, 2010

It's all about 5%

It is funny how much the state budget is working out like it does for a household. Just like when you go to get a loan for a car or a credit card, when you have a crappy spending history and no money in the bank then the only loans you will get are high interest.

The Republican budget is going to come down to that one issue.

5%

That number is what the big rating players (Moody's, Standard and Poor's) all say a state should have in reserves for a good rating. We currently have a little over that. If we go much below the 5% then there is a good chance they will drop our AAA bond rating.


If we lose the AAA rating, the interest rates on a lot of our loans will go up, costing the taxpayers big money down the line.

Democrats are trying to put the entire budget on Republicans if we don't pass their tax increases. Right now the Republicans have a budget that is balanced with no tax increases and no serious cuts (other then to previously planned government expansion and raises). We will be spending part of the rainy day funds for disaster relief but not so much as to go below the magical 5%.

It is looking like the technical corrections bill (The bill with all the governor's tax increases in it) is about die in the senate. If it does that will only leave one immediate area for people to jump in and try and raid money from for their special pet projects.

The 5% rainy day fund.

If Republicans ALL hold onto the budget as it sits, it will all work out. If we don't. Katie bar the door. It will be a long, wild and expensive ride for our state.

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