(The Center Square) – The California Assembly and Senate passed a constitutional amendment on Thursday that would increase the state’s “rainy day” fund from 10% to 20% of general fund revenues.
The measure now heads to the Nov. 3 ballot for California voters to approve or reject.
Assembly Constitutional Amendment 20, authored by Assemblymember Jesse Gabriel, D-Encino, aims to increase state reserves for future years. That’s roughly akin to someone putting more money in savings now for a cushion in the future, lawmakers said.
“This is a proposed constitutional amendment that would strengthen and modernize our rainy day fund,” Gabriel said Thursday on the Assembly floor. “The premise of this proposal is the commonsense wisdom of California families – that when you have good times, you should set aside a little bit of money so you can be prepared for downturns.”
Among other provisions of the amendment, ACA 20 aims to expand allowable uses of the money in the state’s budget stabilization account, the formal name of the rainy day fund. Those uses can include paying off the state’s unemployment insurance debt, budget loans, and K-12 and community college funding obligations, according to a legislative analysis.
The bill also would require increases in rainy day fund deposits during years when excess revenues are collected.
The amendment garnered some opposition on Thursday, with Republican lawmakers in the Assembly calling the increase in required rainy day fund deposits essentially an increase in the slush fund.
“We don’t have a rainy day fund in California,” Assemblymember Joe Patterson, R-Rocklin, said on the Assembly floor. “All this does is create a bigger slush fund for money to be used the following years instead of returning the money to the taxpayer.”
Patterson also said that instead of allocating constitutionally-required money to schools, lawmakers in future years will continue to spend money in the state’s rainy day fund.
“Instead of paying off the school debt that you have, instead of paying the unemployment debt, let’s continue to collect god-awful amounts of money,” Patterson said.
The Legislature’s approval of increasing the rainy day fund follows the Legislative Analyst’s Office projections that the state, despite record revenue growth, is facing a $16.9 billion budget deficit in the coming years. That is largely due to planned expenditures exceeding revenues, officials from the Legislative Analyst’s Office said in an Assembly Budget Subcommittee meeting in May.
ACA 20 passed the Assembly 54 to 8 on Thursday morning before heading to the Senate, which then passed the measure.
