Calif. Gov. Says Lawmakers Must Save, Not Spend, Budget Surplus Money

Jerry Brown warns that there will be lean years again.

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By David Siders

One day after the California Legislature's fiscal analyst projected years of multibillion-dollar budget surpluses, Gov. Jerry Brown urged caution Thursday, calling on lawmakers to bolster reserves.

"It turns out, according to the legislative analyst, we have billions of dollars in surplus," Brown said at an event in Santa Monica. "So there will be a great effort to spend it as quickly as possible."

The Democratic governor, speaking at the Milken Institute California Summit, said the budget's reliance on capital gains _ a traditionally volatile source of revenue _ makes financial peaks and valleys more pronounced.

"The question is, 'When do we get the next valley?' " he said. "And the only way to avoid that is to put it in a rainy day fund, to say no when necessary, along with saying yes when that's appropriate."

The nonpartisan Legislative Analyst's Office projected Wednesday that the state will enjoy a $5.6 billion surplus by June 2015, with annual surpluses reaching $8.3 billion by the 2016-17 budget year. The office urged lawmakers to hold much of any excess in reserve, warning that even a moderate economic downturn could knock the state back into deficit.

Brown and the Democratic-controlled Legislature are under pressure from social service advocates to restore or expand programs cut during the recession, and calls for increased spending are likely to intensify in budget talks next year.

Brown said he has a "lot of optimism about this state. I mean, I would have never thought we could go from financial instability to stability and surplus, and we can do that."

But he said significant financial concerns remain.

"We have deferred maintenance on our roads, that is serious, we have unfunded and growing liabilities in our pension and retiree health _ state, university and local level," Brown said. "That's real."

Brown was scheduled to remain in Los Angeles on Thursday evening to attend a campaign fundraiser hosted by movie industry executives. The third-term governor has not yet said if he will seek re-election, but he is widely expected to run.

"It will be a successful event," Brown said when asked about the fundraiser earlier this week. "As you know, raising funds for any potential campaign takes a good deal of time and I don't jump into these things lightly."

(c)2013 The Sacramento Bee

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Daniel Luzer is GOVERNING's news editor.
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