California’s Brown readies budget ax

Jerry Brown returns as California governor today after an absence of almost three decades, facing a “day of reckoning” over a $28 billion budget gap that promises battles with lawmakers, unions and investors threatening to shun the bonds of the most-indebted state.

Brown, 72, a Democrat who served two terms as governor from 1975 to 1983, has pledged an austerity budget, due Jan. 10. It will be free from gimmicks and will skirt the gridlock that forced the state to pay bills with IOUs two years ago. He’s told Californians they’ll face painful choices to restore fiscal health. Whether that will mean higher taxes, he hasn’t said.

In the U.S. state with the biggest economy and population, Brown faces a super-size version of the stress governors confront coast to coast. “Please sit down if you’re reading the stories on the budget on Jan. 10,” Brown told educators in Los Angeles last month.

The governor inherits the nation’s third-highest unemployment rate at 12.4 percent, what the treasurer’s office says is $88.3 billion of bond debt and as much as $500 billion of pension liabilities following the longest recession since World War II.