April 16 (Bloomberg) -- California Governor Jerry Brown called lawmakers into a special session to consider altering a measure on the November ballot that would create a budget reserve.
The proposal headed to voters now, which Democrats who control the legislature oppose, would fill the reserve whenever all tax revenue exceeds 3 percent of general-fund spending. Brown instead wants to sock away only capital-gains revenue and use surplus funds to pay down budget and bond debt. He also wants to create a special reserve for education funding to shield schools from cuts during downturns.
“We simply must prevent the massive deficits of the last decade and we can only do that by paying down our debts,” the 76-year-old Democrat said in a news release today.
Credit-rating companies have said California needs to protect its budget against economic volatility.
The proposal on the ballot is favored by Republicans and opposed by public-employee unions. Brown’s new plan requires passage by two-thirds of the legislature. Democrats had such a supermajority until three senators were recently suspended after being charged in unrelated cases.