Dan Walters

By Dan Walters
Published: Friday, May. 9, 2014 – 12:00 am

State Controller John Chiang reported Thursday that after counting April’s income tax payments, revenue is running $2.2 billion above assumptions in the current state budget.

The windfall continues a boom-and-bust pattern that has marked state finances for decades – big increases in revenue when the economy is in an up-cycle and big drops when it fades. The swings have gotten wider because the state has become more dependent on volatile personal income taxes, especially capital gains from the state’s most affluent taxpayers.

A big chunk of the extra money will automatically be set aside for schools under a mind-numbingly complex constitutional provision.

However, Gov. Jerry Brown and the Legislature have options on the remainder: spend it on more government programs, pay down the state’s debts ($340.7 billion according to a report this week), leave it in the bank to cushion the impact of a future down-cycle, or even reduce taxes.

In years past, the tendency of the Capitol’s politicians has been to squander windfalls, then face deficits when the inevitable economic downturn comes.

However, the current political crop, from the governor down, is claiming to have learned a lesson and now wants to create a rainy-day fund to capture some windfall money.

As Chiang was reporting the newest windfall, Brown and legislative leaders were finalizing a proposal for such a fund that would go on the November ballot, replacing one that predecessor Arnold Schwarzenegger had pried from a reluctant Legislature.

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