By David Siders
Published: Thursday, May. 8, 2014 – 10:36 pm
Last Modified: Thursday, May. 8, 2014 – 10:46 pm
An agreement between Gov. Jerry Brown and legislative leaders on a rainy-day fund Thursday came uncharacteristically early in the state’s annual budget-making process, with none of the public rancor that seemed likely only recently.
Republican lawmakers, who had been all but ignored by Brown on budget matters since early 2011, had the numbers to block any reserve proposal. Even within Brown’s own Democratic Party, it was just last week that Senate President Pro Tem Darrell Steinberg balked publicly at taking up the reserve account measure apart from broader budget talks.
But on Thursday, following several weeks of private negotiations, Brown and the legislative leaders of both parties announced an agreement on a proposal to set aside 1.5 percent of total general fund revenue every year, plus revenue from capital-gains taxes when the economy is especially robust.
By resolving the rainy-day fund measure now, Brown, who called a special session of the Legislature to focus attention on the issue, will avoid complicating it with controversies around individual line items in his spending plan.
“There’s nothing complicated about the idea of saving money and exercising fiscal restraint, but it’s not always easy to do,” Brown said in a prepared statement. “Democrats and Republicans have come together to create a Rainy Day Fund that ensures we’re not only saving for the next downturn, but also paying off our debt.”
The Senate’s Republican leader, Bob Huff of Diamond Bar, said in a prepared statement that Republicans “have long fought for this type of protection for Californians” and that Brown “set up a good framework” for the agreement.
The proposal, if approved by lawmakers, would replace a reserve measure already on the Nov. 4 ballot. The original measure, ACA 4, was part of a 2010 budget deal originally scheduled to go before voters in 2012. But public-employee unions, among other Democratic allies, criticized the plan, and lawmakers postponed it to 2014.
Republican lawmakers, who embraced ACA 4 as the stronger reserve earlier this year, in recent weeks acknowledged potential problems with its wording. Also, that measure looked likely to draw well-funded opposition from public-employee unions this fall.
The agreement reached Thursday changes a proposal Brown included in his January budget plan to replace ACA 4. The compromise would set aside capital-gains revenue that exceeds 8 percent of total general fund revenue in any year, a higher threshold than the 6.5 percent Brown originally proposed.
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