Gov. Jerry Brown at the Governor's Mansion. (Monica Lam/KQED)
Gov. Jerry Brown at the Governor’s Mansion. (Monica Lam/KQED)

Gov. Jerry Brown made a rare appearance before a legislative committee Monday afternoon to lobby for his plan to require the state to save some excess tax dollars in a revamped rainy day fund.

Brown has made the proposal, which would be submitted to voters as a constitutional amendment this November, a top fiscal priority. He highlighted the plan in his January State of the State address and further elevated the issue by calling the Legislature into special session earlier this month

Brown argues that by trying to capture funds from periodic spikes in capital gains tax revenue, the plan could smooth out the deep deficits that have hit California when the economy weakens. Before the Assembly Budget Committee on Monday, he said that stability is worth the cost of forgoing several billions of dollars’ worth of spending on state programs.

“There is some curb, because if you don’t curb you’ll go back into this constant recurrence of debt,” Brown said. “Boom and bust, red and black.”

The Brown proposal would replace California’s current rainy day fund, which has been virtually ignored by governors and lawmakers since 2007. And it would bump a competing proposal, approved by the Legislature in 2010, off the November ballot.

Under the governor’s plan, whenever capital gains taxes make up more than 6.5 percent of the state’s general fund revenue, the excess would be steered into a reserve account. That account would max out at 10 percent of general fund tax proceeds. The proposal would allow the state to use some of that account to pay down debts and other liabilities, and it would set up a new reserve account to support school funding.

Both Democrats and Republicans on the Assembly budget panel voiced support for a new rainy day fund. (The panel asked Brown just one question during his hourlong appearance.) Republican enthusiasm for Brown’s cautious fiscal approach underscored the difficulty GOP opponents face in this year’s election. In fact, Assemblywoman Diane Harkey, an Orange County Republican, may have inadvertently shown just how little faith the party has in challengers Tim Donnelly and Neel Kashkari when she said that she trusted Brown’s approach to governing, but worried “he will only be here for another term.”

Regardless, GOP lawmakers do want to make some changes to how the fund’s money could be tapped in future years. Brown’s plan would only require a simple majority vote to spend reserve money.

“There’s been some conversation about requiring a two-thirds vote,” said committee vice chair Jeff Gorell, a Republican from Ventura County. “There’s some logic to that,” he said, pointing out that “urgency” legislation currently requires a supermajority. Gorell added that a higher threshold would force governors and lawmakers to cut spending as much as possible before tapping emergency funds.

Brown said he’s willing to consider a higher vote threshold.

“The Legislature could also define the conditions that would permit withdrawal,” he said. “I think we ought to explore both. Both a vote threshold, and a specification that these conditions — one, two, or three — must occur, or no money comes out.”

The appearance had its share of Brownisms. When the governor made his pitch for the revamped rainy day fund in January, he handed out playing cards featuring his popular corgi, Sutter. Brown returned to the dog theme Monday, saying, “This is kind of a set of bones for our backyard. Because we don’t know what we’ll need to chew on if capital gains go awry.”

And Brown ended with this thought: “I was just thinking, where will I be in 11 years? I added it up. I’ll be 87. So I don’t know what office I’ll be holding then, but it probably won’t be in Sacramento. But that still gives me a lot of scope.”

White House-watchers, take note.

  • Palo Jon

    All governments are like gangster Johnny Rocco in the movie Key Largo. When you ask what they want, the answer is always “more.” Now they want more than they need, just in case they might need it later. And you know what, if they get it, they will need it. And more.


Scott Detrow

Sacramento bureau chief Scott Detrow covers state government, politics and policy for KQED News and its statewide news program, The California Report.

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