Brown Calls Special Legislative Session on New Budget Reserve

Calif. Gov. Jerry Brown is throwing the full weight of his office behind his push for a new state budget reserve by calling the legislature into special session next week.  But Republicans say he’ll have to strengthen his proposal to win their support.

There’s already a “rainy day fund” on the November ballot, but Democrats want to replace it with one they like better.  Brown's Director of Finance, Michael Cohen, says the governor’s proposal would automatically set aside money any year that inconsistent capital gains revenues come in higher than usual.  The extra revenue could be stored in a reserve or used to pay down debt, including long-term unfunded pension liabilities.

“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 and we’ll be able to avoid many of the tough decisions that we’ve been through over the last 15 years or so,” says Cohen.

Under Brown’s plan, the governor and a majority of the legislature could use the rainy day fund when times get tough.  But that’s getting pushback from Republicans who otherwise are praising Brown for calling the special session.  They want to require a two-thirds vote.  Or better yet, says Senate Minority Leader Bob Huff (R-Diamond Bar), a formula that would clearly set out how much money could be used – and when.

“The formula can’t be gamed as much,” Huff says.  “That seems to be a lot better rainy day fund than just a slush fund that can be pulled out at will by ginned-up demand.”

But there appears to be a willingness from all sides to work out a deal, which will require Republican votes.

“I’d like to see stronger controls in place that will prevent future legislatures from being able to so easily take money out of the rainy day fund,” says Assembly Budget Committee Vice-Chair Jeff Gorell (R-Camarillo).  “I can’t say that the governor’s language is strong enough that it would receive the Republican support that it needs to move through, but it’s going in the right direction, and we want to be part of the consensus effort to make it stronger.”

“It’s important that the governor left room to negotiate with all legislators – Republicans amongst them – and so that’s exactly what you want to use the time in a special session to do.” says Assembly Speaker John Pérez (D-Los Angeles), who supports the governor’s proposal.

The governor wants a rainy day fund deal before he releases his revised budget proposal in mid-May.