California Assembly Seal

By Melody Gutierrez and David Siders
mgutierrez@sacbee.com
Published: Wednesday, May. 8, 2013 – 12:00 am | Page 3A

Assembly Speaker John A. Pérez is proposing a new state spending restriction that would set aside money from capital gains taxes in good years to help the state through economic downturns.

The proposed rainy-day fund would go on next year’s ballot, replacing a constitutional amendment already on the ballot that unions strongly oppose.

Republican lawmakers say they will be watching for additional details on Pérez’s proposal to ensure it is as fiscally prudent as the one voters are currently scheduled to consider.

“We are constantly trying to learn from our experiences in what will help us stabilize not only our budget, but our economy,” said Pérez, who will publicly unveil a budget proposal today that includes the rainy-day fund. It also calls for funding a “middle-class scholarship” to reduce student fees at California public universities and community colleges by as much as 40 percent.

The state’s current rainy-day fund was established in 2004, but has rarely been used – governors can waive its provisions in any year.

Pérez’s proposal would fill a new rainy-day fund with transfers of capital gains tax revenues when they spike above 6.5 percent of overall general fund revenues. That has occurred in about half of the past 20 years, according to the speaker’s office.

The rainy-day fund would cap at 10 percent of the overall general fund. Excess revenue would then be used for one-time purposes, such as paying down debt.

Pérez said the rainy-day fund was crafted as a reflection of broad conversations and that he believes it’s something Republicans can embrace.

To read entire story, click here.