By Bob Katzen
The Senate 4-35, rejected an amendment that would retain a current law that requires any excess revenue in capital gains revenue over $1 billion to annually automatically be transferred as follows: 90 percent to the Rainy Day Fund; 5 percent to the State Retiree Benefits Trust Fund; and 5 percent to the State Pension Liability Fund. The $1 billion would remain in the General Fund and be spent by the Legislature with no restrictions.
The proposed Senate budget changes that for only fiscal 2025 by raising the threshold by $375 million so that any excess over $1.375 billion would automatically go to those three funds if the secretary of administration and finance makes a determination that the funds are needed to achieve balance for fiscal year 2025. The $1.375 billion would remain in the General Fund to be spent on by the Legislature with no restrictions.
“This amendment would have restored the original language of the capital gains law that allows transfers of excess gains collections over $1 billion in one fiscal year,” said Sen. Ryan Fattman (R-Sutton). “Changing this language for one year … would create a precedent that would mean less transparency year after year by allowing a greater amount of taxpayer money to be used outside of the intended purpose of the capital gains tax.”
Opponents said the additional $375 million is needed in the General Fund this fiscal year to fund many useful new programs in the budget including the new free community college program. They noted that the state estimates that there will be $513 million in excess capital gains this fiscal year which means that a total of $138 million will still be deposited in the Rainy Day Fund and the two other retirement funds. They noted that a little less money for the Rainy Day Fund this year is acceptable because there is a healthy balance of $8.4 billion currently in the Rainy Day Fund.
(A “Yes” vote is in favor of any excess capital gains revenue above $1 billion going to the Rainy Day Fund and the two retirement funds. A “No” vote is for raising the threshold to $1.375 billion.)
Sen. Patricia Jehlen No