Sacramento, CA — California law makers agree to replace the current rainy day fund measure with a bipartisan one.
Governor Jerry Brown and legislative leaders have agreed to replace the rainy day fund measure on the November ballot with a bipartisan plan. It would set aside revenue equal to 10 percent of California’s general fund.
“There’s nothing complicated about the idea of saving money and exercising fiscal restraint, but it’s not always easy to do,” said Governor Brown. “Democrats and Republicans have come together to create a Rainy Day Fund that ensures we’re not only saving for the next downturn, but also paying off our debt.”
The Legislature is expected to vote on the replacement measure next week. It would then supersede the rainy day fund already slated to go before voters in the general election.
Senate Republican Leader Bob Huff says, “It just makes sense to help avoid the tax increases and spending reductions that result from overspending in prosperous years. Good things happen when we can work together to benefit all Californians. I am confident the people will agree when they get to vote for it on the November ballot.”
The Governor’s Office outlines these key elements of the Rainy Day Fund agreement announced today:
- Increase deposits when the state experiences spikes in capital gains revenues, the state’s most volatile tax revenue, and require annual deposits.
- Require supplemental payments to accelerate payoffs of the state’s debts and liabilities.
- Raise the maximum size of the Rainy Day Fund to 10 percent of General Fund revenues.
- Allow transfers to be suspended and withdrawals to be made from the Rainy Day Fund when needed during recessions within prescribed limits.
- Create a Proposition 98 reserve to smooth school spending and avoid future cuts. This reserve for schools makes no changes to the guaranteed level of funding dedicated to schools under Proposition 98. In addition, the Proposition 98 reserve would not begin until school funding is fully restored following cuts made during the Great Recession.
If passed by the legislature next week, the proposal will go on the November ballot for voters to decide.