| SACRAMENTO, Calif., April 16
SACRAMENTO, Calif., April 16 California Governor
Jerry Brown on Wednesday stepped up his efforts to enshrine a
rainy day fund in the state's constitution, stealing some
thunder from Republicans backing a similar measure as he seeks
an unprecedented fourth term.
Brown, a Democrat who has followed a path of fiscal
restraint since returning as governor in 2011 from two previous
terms of office in the 1970s and '80s, is widely credited with
restoring stability to California's battered budget after years
of multibillion-dollar deficits.
"We simply must prevent the massive deficits of the last
decade, and we can only do that by paying down our debts and
creating a solid rainy day fund," Brown said.
On Wednesday, he called a special session of the Legislature
for next week to discuss his plan for requiring the state to set
aside money earned from volatile investments such as those in
the stock market in flush years for use later during lean times.
"The reason you have a rainy day fund is to put money away
in good times, so that in those bad times when they come - and
we know they will come - we'll have more money," Michael Cohen,
Brown's chief financial adviser, said in a briefing with
Cohen said pushing a state constitutional amendment for a
rainy day fund would be a top priority in advance of spending
negotiations with the Legislature for next year.
Brown's plan would require approval of two-thirds of state
lawmakers and ratification by voters in November. If passed by
the Legislature during the special session, it would knock a
similar proposal, backed by Republicans, off the ballot.
In a nod to concerns raised by more liberal Democrats, whose
votes he needs to reach a two-thirds majority, Brown's plan
allows more flexibility in spending than the Republican-backed
measure already on the ballot, and preserves a portion of the
fund for spending on education.
Democrats in California control both houses of the
Legislature as well as all statewide offices. But a recent
series of scandals has cost the party its two-thirds majority in
the state Senate, so Brown will also have to reach out to
Republicans if he wants his proposal to pass.
On Wednesday, Republicans in the Legislature applauded
Brown's call for the special session but said they were
skeptical of provisions giving lawmakers more flexibility to
spend the money than their proposal would allow.
"It's just common sense for California to put away money
during the 'boom' years to avoid future tax increases and
spending reductions in the 'bust' years," said Senate Republican
leader Bob Huff. "However, we are mindful that legislative
Democrats have undermined similar efforts in the recent past."
Left on the sidelines when the Democrats held a two-thirds
super-majority that allowed new taxes and proposed
constitutional amendments to be passed without consulting them,
Republican lawmakers said they were pleased that Brown would
have to work with them to get his measure through.
"We are certainly open to talking about this with the
governor," said Huff's spokesman, Peter DeMarco.
The Republican-backed plan, drawn up during the
administration of Arnold Schwarzenegger as part of a compromise
with Democrats, would require the state to set aside a portion
of its overall revenues in a fund that could only be touched
during a natural disaster or fiscal emergency.
Brown's plan, by contrast, only requires the state to set
aside money for the fund during years when income spikes from
investments - so-called capital gains - amounts to more than 6.5
percent of its revenue. Such investments are projected to make
up about 7.7 percent of the state's general fund revenue this
California set up a rainy day fund in 2004, but
contributions were not enshrined in the constitution, and the
state has not contributed to it since 2007.
(Additional reporting by Robin Respaut; Editing by Steve Gorman
and Ken Wills)