SACRAMENTO (AP) – The state Legislature on Thursday overwhelmingly passed a fresh version of a rainy day fund measure for the November ballot, a bipartisan plan that seeks to smooth out the boom-and-bust cycles of state budgeting while creating a clear path for paying down California’s massive debts and unfunded liabilities.
Lawmakers voted 75-0 in the Assembly and 36-0 in the Senate to replace a rainy day fund measure already scheduled to go before voters this fall. The proposed constitutional amendment required a two-thirds vote in both houses and easily surpassed that threshold.
It does not require action by Gov. Jerry Brown, who negotiated the deal with legislative leaders of both parties.
Democratic and Republican lawmakers praised the compromise during debate in both houses.
“This is a genuine bipartisan proposal that will build on the progress we made in terms of stabilizing and strengthening California’s finances,” said Assemblyman John Perez, D-Los Angeles, who negotiated the deal before stepping down as speaker this week. “It represents a commitment to break the bad habits of the past.”
The version moving through the Legislature on Thursday will create a reserve funded primarily from excess capital gains revenue during boom years as well as an annual contribution equal to 1.5 percent of the state’s general fund. The set yearly contribution was a provision pushed by Republican lawmakers.
“I think it demonstrates to the people of California that when you have a robust bipartisan discussion, you can make things better because we all bring something to the table…” said Senate Minority Leader Bob Huff, R-Diamond Bar. “To that end, we wanted to make sure that it’s truly a rainy day fund, and not an everyday fund.”
For the next 15 years, half the money set aside would help pay down the state’s debt and unfunded liabilities, including public employee pensions and retiree health care. The state’s total long-term liabilities are estimated at $340 billion.
The state’s existing rainy day fund dates back a decade. It was first approved by voters in 2004 but was quickly drained and not refilled.
Former Republican Gov. Arnold Schwarzenegger negotiated a rainy day fund fix preferred by Republicans during a 2010 budget crisis, but it was delayed in going before voters two years ago. Brown said the version negotiated under Schwarzenegger was too rigid and too difficult to tap in case of emergencies, disasters or recessions.
“While you may not believe it to be perfect, it is significantly stronger than existing law,” Assembly Republican leader Connie Conway told members of her party before the vote.
Associated Press writer Judy Lin contributed to this report.
Copyright 2014 The Associated Press.