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View Full Version : A 'hidden' pool of money? Or simply accounting illiteracy?



c1ue
05-23-10, 02:59 AM
I saw this article on globalresearch.ca:

http://www.globalresearch.ca/index.php?context=va&aid=19279



That was in Missouri, but the figures I was particularly interested were for my own state of California, which was struggling with a budget deficit of $26.3 billion (http://www.latimes.com/news/local/la-statebudget-fl,0,95571.htmlstory) as of April 2010. Yet the State Treasurer’s website says that he manages a Pooled Money Investment Account (PMIA) (http://www.treasurer.ca.gov/pmia-laif/performance/sum_invest_data.pdf) tallying in at nearly $71 billion as of the same date, including a Local Agency Investment Fund (LAIF) of $24 billion. Why isn’t this money being used toward the state’s deficit? The Treasurer’s answer to this question, which he evidently gets frequently, is that legislation forbids it. His website (http://www.treasurer.ca.gov/pmia-laif/laif-statute.asp) states:
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“Can the State borrow LAIF dollars to resolve the budget deficit?
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“No. California Government Code 16429.3 states that monies placed with the Treasurer for deposit in the LAIF by cities, counties, special districts, nonprofit corporations, or qualified quasi-governmental agencies shall not be subject to either of the following:
“(a) Transfer or loan pursuant to Sections 16310, 16312, or 16313.
“(b) Impoundment or seizure by any state official or state agency.”<O:p</O:p
The non-LAIF money in the pool can’t be spent either. It can be borrowed, but it has to be paid back. When Governor Schwarzenegger tried to raid the Public Transportation Account for the state budget, the California Transit Association took him to court and won (http://www.caltransit.org/node/1138). The Third District Court of Appeals ruled in June 2009 that diversions from the Public Transportation Account to fill non-transit holes in the General Fund violated a series of statutory and constitutional amendments enacted by voters via four statewide initiatives dating back to 1990.
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In short, the use of these funds for the state budget has been blocked by the voters themselves. Bond issues are approved for particular purposes. When excess funds are collected, they are not handed over to the State toward next year’s budget. They just sit idly in an earmarked fund, drawing a modest interest.


Now, I have had many issues with Ellen Brown's reporting in the past - so have to try especially hard not to automatically assume this is crap.

Looking into the details of the PMIA:

http://www.treasurer.ca.gov/pmia-laif/pmib-program.asp


The PMIA has three primary sources of funds: the State general fund; special funds held by State agencies; and moneys deposited by cities, counties and other entities into the Local Agency Investment Fund (LAIF). At the end of April 2010, the PMIA portfolio totaled $73.6 billion. The daily investment activity in April 2010, averaged $1.2 billion.

So far, so good - this is consistent with what is in the Ellen Brown article.

But then I looked at the actual California state general fund, May 2010 statement:

http://www.sco.ca.gov/Press-Releases/2010/05-10summary.pdf

3329

The numbers don't match precisely, but certainly it seems possible that the $70B or so is simply the float of the annual California tax receipts - with some local revenues thrown in.

Reading through the text of the report does seem to imply (to me) that the general fund is simply the accounting ledger in which all CA revenues and expenditures are placed.

Perhaps someone with more formal accounting experience and/or CA government book-keeping experience can comment?

Because if this is true, then the $70B+ is truly not touchable - it is money already 'spent' in the CA annual budget...and the article is full of you know what.