Increases State's Rainy Day Fund
Raises California’s main rainy-day-fund cap from 10% to 20% of General Fund tax revenue.
The measure would require more state savings in the Budget Stabilization Account and extend required extra debt payments through 2040. Deposits into the account would not count against the state spending limit until the money is withdrawn.
What it does
- Raises the Budget Stabilization Account cap from 10% to 20% of estimated General Fund tax revenue.
- Continues annual deposits of 1.5% of estimated General Fund revenue and requires larger deposits when personal-income-tax revenue from capital gains exceeds specified thresholds.
- Extends through 2039-40 the requirement to direct half of specified annual deposits to extra debt payments or other permitted obligations.
- Allows those payments to cover required school and community-college funding, specified loans and claims, pension and retiree-health liabilities, and federal loans to the Unemployment Fund.
- Excludes deposits into the rainy-day fund from the state appropriations limit until the money is withdrawn or returned to the General Fund.
- Excludes up to 10% of General Fund tax revenue deposited annually into the Projected Surplus Temporary Holding Account from the appropriations limit until withdrawn or transferred.
Who it affects
- State agencies and programs that receive General Fund support.
- Schools and community colleges that receive constitutionally required state funding.
- State debtors, including pension systems and the Unemployment Fund.
Context
Current law requires annual rainy-day-fund deposits and additional deposits in years with above-normal capital-gains tax revenue, but stops required deposits once the fund reaches 10% of General Fund tax revenue. Current law requires specified extra debt payments through 2029-30, after which they are optional.
A yes vote means
A yes vote would raise the cap on California’s main rainy-day fund to 20% of General Fund tax revenue, require additional savings under the measure’s formulas, extend specified extra debt payments through 2040, and change how certain reserve deposits count toward the state spending limit.
A no vote means
A no vote would keep the rainy-day-fund cap at 10% of General Fund tax revenue, keep current rules for required deposits and the state spending limit, and leave the existing extra-debt-payment requirement scheduled to end after 2029-30.
Fiscal effect
The Legislative Analyst's Office estimates:
- State budget reserves would be higher.