The Legislature is expected to vote next week on a rainy-day fund agreement between Gov. Jerry Brown and legislative leaders, the governor's office announced Thursday, hours after details of the agreement first emerged from the Capitol.
The deal resolves a major part of Brown's budget proposal far earlier than usual in the annual budget-making process. It includes a higher minimum set-aside of general fund revenue each year than the Democratic governor had initially proposed, a measure necessary to satisfy Republicans.
At least two Republican votes are needed in the Senate for a constitutional amendment because Democrats lost their supermajority in the upper house when three senators facing criminal charges were suspended.
"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 release issued jointly by the governor and legislative leaders. "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 agreement follows private negotiations held after Brown called last month for a special session of the Legislature to take up the proposal. The agreement Brown and lawmakers announced would fund a rainy-day account with capital gains revenue that exceeds 8 percent of total general fund revenue in any year, a higher threshold than the 6.5 percent Brown had originally proposed. But it would also require contributions of 1.5 percent of all general fund revenue.
Half of the money set aside would be used for the reserve account and half would be used to pay off long-term debts, including public pension liabilities, according to the agreement. That provision was included to satisfy Senate President Pro Tem Darrell Steinberg. He said dedicating some of the revenue for long-term debt will allow more flexibility to spend remaining general fund revenue on programs.
Assembly Speaker John A. Pérez, who is running for state controller and first proposed a restructured rainy-day fund almost exactly a year ago, called the agreement "a strong example of what is possible when we all work together."
The rainy day fund proposal would replace a budget reserve measure already on the November ballot. That measure had been criticized by public employee unions, allies of Brown and Democratic lawmakers.
The original measure, ACA 4, was part of a 2010 budget deal among Democrats, Republicans and then-Gov. Arnold Schwarzenegger and originally scheduled to go before voters in 2012, but lawmakers postponed it to 2014. The state's current rainy-day fund was established in 2004, but governors can waive its provisions and it has rarely been used.
Senate Republican leader Bob Huff, R-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.
PHOTO: Gov. Jerry Brown signs bills in Sacramento on March 24, 2011 as Senate President Pro Tem Darrell Steinberg, D-Sacramento, and Sen. Mark Leno, D-San Francisco look on. The Sacramento Bee/Hector Amezcua