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  • Gov. Jerry Brown says that extending some taxes until September as a funding bridge is a "big sticking point" in negotiations with Republicans.

  • Republican Assemblyman Jeff Gorell said: "I think it's encouraging the speaker is taking a close look at saving."

Assembly speaker to push for new 'rainy-day fund' to help budget

Published: Wednesday, May. 8, 2013 - 12:00 am | Page 3A
Last Modified: Tuesday, May. 14, 2013 - 7:50 am

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.

Assemblyman Jeff Gorell, R-Camarillo, said he will be watching for additional details regarding the proposal, particularly how easy it will be for the Legislature to tap into the funds.

"I think it's encouraging the speaker is taking a close look at saving at a time where so many special interests are talking about spending the additional money coming in," Gorell said.

A vote on the constitutional amendment was originally scheduled for the November 2012 election before it was pulled by legislation Brown signed in 2011 – a victory for labor unions opposed to establishing a rainy-day fund.

That measure calls for 3 percent of the general fund revenue to be allocated to a reserve account along with certain unanticipated revenue.

Brown said when he signed the legislation delaying the rainy-day fund measure that "this needed reform must wait until we have recovered from the current recession and securely balanced our budget."

Less than two years later, Brown is now boasting the budget is balanced. He was noncommittal when asked about Pérez's proposal on Tuesday.

The governor said "we need reserves" but that, "we also need to pay down debt, which is a form of reserve, because it frees up money in hard times."

The governor is scheduled to submit a revised budget next week.

It is unusual for an Assembly speaker to promote so publicly a budget framework of his own ahead of a governor's May revision. Pérez's call for fiscal restraint is similar to the message Brown has delivered since before taking office in 2011.

Given that Democrats hold a supermajority of legislative seats, some have questioned whether any constitutional amendment would make it to the ballot at all.

"My expectation is that it will never appear on the ballot," said Peter Schaafsma, who served as fiscal staff director in the Assembly Republican Caucus and helped draft the measure scheduled for next year's ballot. "I don't think the Democrats are really interested in letting it go on the ballot."

Call Melody Gutierrez, Bee Capitol Bureau, (916) 326-5521. Follow her on Twitter @melodygutierrez.

© Copyright The Sacramento Bee. All rights reserved.



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