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California lawmakers reach deal on rainy day fund for state budget

California Governor Jerry Brown walks onstage to speak at the 2014 California Democrats State Convention at the Los Angeles Convention Cente
California Governor Jerry Brown walks onstage to speak at the 2014 California Democrats State Convention at the Los Angeles Convention Cente

SACRAMENTO, California (Reuters) - California lawmakers said on Thursday they were signing on to Governor Jerry Brown's plan to enshrine a rainy-day fund in the state's constitution, a proposal aimed at ensuring financial stability after years of boom-and-bust budgets.

The bipartisan agreement, which must be approved by voters in November, would require the state to put aside 1.5 percent of its general fund revenues each year and use half of that money to pay down principal on debts.

The state would also set aside a portion of any money earned in the stock market and on other investments.

Leaders of both parties in the Senate and Assembly said they would support the agreement, in statements and interviews on Thursday.

Brown, a Democrat who has followed a path of fiscal restraint since returning as governor in 2011 after two previous terms of office in the 1970s and '80s, is widely credited with restoring stability to California's battered budget after years of multibillion-dollar deficits.

The agreement announced on Thursday came after weeks of wrangling among legislative leaders and Brown, who called for a special session to discussion the proposal last month.

The proposal is expected to go before the legislature for a formal vote in the coming weeks, and will then be placed on the November ballot.

(Reporting by Sharon Bernstein; Editing by Cynthia Johnston and Steve Orlofsky)

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