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Chapter 5 discusses the legislature’s response to the budget problems that occurred at the end of the Mabus administration. The legislature grew frustrated with the unrealistic revenue forecasting used to construct the state’s budget and responded by passing the Budget Reform Act of 1992 in order to strengthen the budget process. The reform act created a proper reserve fund known as the Working Cash-Stabilization Reserve Fund (Rainy Day Fund). The act also created a revenue 2 percent set-aside requirement as a cushion.

This chapter, one of three chapters (along with chapters 6 and 7) analyzing policy-related state constitutional amendments, examines amendments that constrain the policy choices of public officials. The chapter identifies various kinds of policy-constraining amendments and the reasons they have been adopted. As the chapter shows, groups and officials have been led to enact policy-constraining amendments because they have viewed public officials as susceptible to undue influence form powerful groups when making policy in certain areas or likely to act in a short-sighted manner and without due regard for the long-term public interest. An early wave of nineteenth-century amendments prohibited legislatures from chartering or operating lotteries. In the mid-nineteenth century, amendments prevented legislatures from investing in banks and other corporations and undertaking internal improvement projects. Amendments in the nineteenth and twentieth centuries have constrained state officials’ ability to raise, spend, and borrow money, through adoption of tax-and-expenditure limitation amendments, debt-limitation amendments, balanced-budget amendments, and amendments requiring revenue to be deposited in rainy-day funds and trust funds.

This chapter explores one of the largest asset categories for present and future retirees, namely the equity in their homes. For most people, the big three asset categories in retirement are social security wealth, pension accumulations, and home equity. This chapter does similar cohort analyses for home equity. It is found that the likelihood of home ownership by age changed very little over the past twenty-five years for married couples, single women, and single men. It is well known that most retirees stay in their home and retain their home equity until late in retirement, when shocks such as the death of a spouse or entry into a nursing home may cause the home to be sold. In a way, the house serves as a “rainy day fund” for potential life changes or expensive developments later in life. This raises the natural question about whether home equity is a safe store of wealth for the rainy day fund.