SACRAMENTO -- Gov. Jerry Brown's new budget proposal drew praise Monday from state analysts for his "prudent" commitment to pay down the state's debt, but they slammed his pitch to use a climate change fund to prop up the bullet train.

Last week, Brown introduced a $106.8 billion general-fund budget for the next fiscal year that would spend $11 billion, or more than 10 percent of the overall budget, to pay off the state's credit cards.

He also wants to put $1.6 billion in a reserve fund to protect the state from financial meltdowns.

"The governor's proposal would place California on an even stronger fiscal footing," said the report from the nonpartisan Legislative Analyst's Office. "Setting aside money for a rainy day is exactly what the state should be doing when revenues are soaring as they are now."

This image provided by the California High-Speed Rail Authority shows an artist’s conception of a high-speed rail car in California. Officials on
This image provided by the California High-Speed Rail Authority shows an artist's conception of a high-speed rail car in California. Officials on Thursday Dec. 2, 2010 approved a $4.3 billion proposal to build California's first segment of high-speed rail line that would run through the state's agricultural heart. (AP Photo/California High-Speed Rail Authority)

Indeed, the report suggests billions more may come in by the spring.

But transferring $250 million in fees collected from the state's biggest polluters under the state's landmark "cap and trade" program to the cash-strapped high-speed rail project would be "legally risky" and "inefficient," according to the report.

The high-speed rail project's state and federal funding has been in jeopardy since late last year when a Sacramento judge rejected the California High-Speed Rail Authority's request to sell $8.6 billion in bonds. The judge ordered officials to show how they will pay for the first 300 miles of track, from Merced to the San Fernando Valley.


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If the San Francisco to Los Angeles rail line is ever built, it will reduce emissions by deterring travel on the state's roadways, the analysts conceded. Until then, the project's heavy construction equipment will actually produce new emissions.

And because the cap and trade fees must be used to ease the adverse effects of the activity on which the fee is levied, the state's lawyers advised the analysts that spending cap and trade money on high-speed rail presents legal challenges.

Speaking at Fresno City Hall on Monday, Brown defended his bullet-train financing plan, the Los Angeles Times reported.

"I believe it's legal, my lawyers believe it's lawful," he said. "It's a very appropriate source of funding. You take funding that's coming off petroleum or fossil fuel use and put it into a rail system that will over time reduce greenhouse gases."

Monday's report is the sharpest indictment yet of the governor's plan to spend new state money on the train, and the analysts' concerns echo criticisms lawmakers and environmentalists voiced last week after they learned of the plan.

Many environmental advocates who questioned spending some cap and trade money on high-speed rail still praised the plan to spend $600 million on more immediate greenhouse gas reductions, such as retrofitting state buildings, reducing the risk of forest fires and water conservation.

"He's put together a really good plan for cap and trade money, with the exception of high-speed rail," said Kathryn Phillips, executive director of Sierra Club California. "It doesn't make sense to use this kind of money for a project that isn't going to (produce) greenhouse gas reductions when we need them most desperately, and that's now."

The analysts also expressed concern over spending on higher education, jails and the teacher pension plan.

New money for state colleges and universities should come with more strings attached, according to the report, and California may not need the new county jails Brown has pledged hundreds of millions of dollars to build.

The analysts also stressed that Brown must allocate some of the state's unexpected revenue to CalSTRS, the underfunded teacher pension system. Currently, it hasn't enough money to ensure its solvency.

Contact Jessica Calefati at 916-441-2101. Follow her at Twitter.com/calefati. Read the Political Blotter at IBAbuzz.com/politics.