18 sources, dated 2026-06-25 – 2026-10-23· last searched 2026-10-28
Official title: Increases State's Rainy Day Fund. Legislative Constitutional Amendment.
Overview
Synthesized 2026-10-28 in an operator-run Claude session from 16 sources dated 2026-06-25 to 2026-10-23. Machine-written; numbers link to the sources below.
Proposition 2 is a legislative constitutional amendment (ACA 20, the "Save for California's Future Act") that the Legislature placed on the November 3, 2026 ballot 12,9. It would raise the cap on the state's main rainy day fund, the Budget Stabilization Account, from 10 to 20 percent of General Fund taxes, and require larger set-asides when capital gains revenue is very high 14,9,12. It would also extend required extra debt payments from 2030 to 2040 and allow them to go to more purposes, including school obligations, internal borrowing, and federal unemployment insurance loans 14,13,12. It would change how rainy day fund deposits, and surplus holding account deposits up to 10 percent of General Fund taxes, count under the state appropriations (Gann) limit: deposits would count only when withdrawn 14,13,12. And it would let the Governor's May budget revision serve as a budget emergency proclamation 13,12. The Legislative Analyst's Office estimates that state budget reserves would be higher and that the state might make more debt payments, without giving a dollar figure 14,9,11. Supporters, including Gov. Gavin Newsom, the California Democratic Party, firefighters, hospitals and business groups, say a bigger reserve protects services from California's volatile revenue 8,6,3,7. Opponents, led by Republican legislators and Reform California, say excluding deposits from the spending limit makes taxpayer rebates less likely and creates a "slush fund" 8,6,2. A separate criticism, from David Crane in September 2026, is that the measure leaves the withdrawal rules essentially unchanged 10,1. The nonpartisan California Budget & Policy Center takes no position; it explains the trade-offs and argues the measure misses some opportunities 13. The most recent coverage is CalMatters' October 23, 2026 explainer 1.
Record
The Legislature passed ACA 20 on June 25, 2026, Senate 29-2 and Assembly 59-8, placing it on the ballot as Proposition 2 (Resolution Chapter 130, Statutes of 2026).9,11,12,16
CalMatters reports that Assemblymember Josh Hoover was the only Republican lawmaker to vote for the measure; KQED similarly says only one Republican in the Legislature supported placing it on the ballot.1,7
The measure amends Article XVI, Sections 20 and 22 of the California Constitution; its new reserve and spending-limit rules begin in the 2027-28 fiscal year.12
Voters created the Budget Stabilization Account with Prop. 58 in 2004 and reformed it with Prop. 2 in 2014, which nearly 70 percent of voters approved.1,13
Governor Newsom issued a budget emergency proclamation on June 27, 2025, after the Legislature had passed the budget, according to the Budget Center.13
According to David Crane, the 2024-25 and 2025-26 budgets withdrew $4.9 billion and $7.1 billion from the rainy day fund, while the 2018-19 budget deposited $4.4 billion.10
Stated positions
Supporters listed by guides include Gov. Gavin Newsom, the California Democratic Party and legislative Democrats; the official argument in favor is signed by the California Professional Firefighters, Assembly Budget Chair Jesse Gabriel, and the Los Angeles Area Chamber of Commerce.6,5,4,8,17
Opponents listed by guides are Reform California and legislative Republicans; the official argument against is signed by Assemblymember David Tangipa, Senator Steven Choi, and Reform California chairman Carl DeMaio.6,5,4,8
Republican Assemblymember Josh Hoover co-wrote an October 2026 commentary with Gabriel supporting the measure.3,1
Senator Melissa Hurtado, who describes herself as an author of ACA 20, issued a supporting statement on June 25, 2026.16
GrowSF recommends a "weak yes" (last updated September 8, 2026).11
David Crane of Govern for California urged in September 2026 that the measure be rejected and replaced with one that limits withdrawals.10
The California Budget & Policy Center says it does not endorse or oppose ballot measures.13
CalMatters lists editorial endorsements from The Sacramento Bee, The San Diego Union-Tribune and The Orange County Register, but the stored page does not show which side each took.6
Arguments for
California's revenue is volatile and tied to the stock market; a bigger reserve lets the state save in booms and avoid deep cuts or tax increases in downturns. — Jesse Gabriel, Josh Hoover, California Professional Firefighters, Scott Graves (California Budget & Policy Center), CalMatters (summarizing supporters)3,8,2,6
The measure forces the state to bank more of revenue spikes rather than commit them to ongoing spending, and gives Sacramento no new money to spend. — Signers of the official argument in favor and rebuttal8
The reforms follow the Legislative Analyst's Office's recommendation that the state save more, and have bipartisan support. — Jesse Gabriel, Josh Hoover, Signers of the official argument in favor3,8,1
The spending-limit change removes a barrier to building reserves in strong revenue years, when saving would otherwise push the state over the Gann limit. — California Budget & Policy Center13
The 'rebate' opponents cite relies on an old accounting rule that rewards spending instead of saving. — Linda Darling-Hammond, Carmela Coyle, Francisco J. Silva (rebuttal signers)8
Saving more protects schools, health care, public safety and other services from federal cuts and revenue declines. — Senator Melissa Hurtado, Signers of the official argument in favor16,8
Arguments against
Excluding reserve deposits from the voter-approved spending limit makes constitutionally required taxpayer rebates less likely. — David Tangipa, Steven Choi, Carl DeMaio, Reform California, Legislative Republicans8,6,2,7
The reserve would be a "slush fund" that politicians can raid, and a bigger reserve gives state leaders more to spend. — Signers of the official argument against, Asm. Joe Patterson, Republican lawmakers8,7,1
The measure leaves the withdrawal rules essentially unchanged, so a future governor could still draw down reserves whenever revenue falls short of the prior three years' spending. — David Crane10,1
Backers voted to suspend more than $5 billion in required reserve deposits within 24 hours of placing the measure on the ballot, which opponents say shows a lack of discipline. — Signers of the official argument against and rebuttal8
The measure provides no new dollars for health care, education or public safety. — Signers of the official argument against and rebuttal8,17
Using set-aside funds for federal unemployment insurance loans would shift a cost now borne by businesses to the state and crowd out pension and retiree health payments; required debt payments also stay unsuspendable for ten more years. — California Budget & Policy Center13
Where sources disagree
The Secretary of State's online page lists "Opponents: None submitted," while the official voter guide prints an argument against signed by Tangipa, Choi and DeMaio, and the same page names Tangipa as the contact against.17,8
The official argument in favor says Republicans and Democrats in the Legislature support the measure; CalMatters and KQED report that only one Republican lawmaker (Josh Hoover) voted for it. The official tally was Senate 29-2 and Assembly 59-8.8,1,7,9
Some short guides say deposits "would not count" toward the Gann limit. The LAO, the Budget Center and the measure text say they would count when withdrawn.5,4,14,13,12
Crane and CalMatters describe the withdrawal rules as unchanged. The Budget Center notes that the definition of a budget emergency and the withdrawal limits stay the same, but that the measure adds a new way to declare an emergency through the May Revision.10,1,13
What we could not find
No campaign finance figures: the guides' contribution tables did not come through, and KQED reported little spending on either side as of late September 2026.
No newspaper editorial board texts were collected; CalMatters lists three without showing their positions.
No dollar estimate of how much reserves or debt payments would change; the LAO gives none.
Opposition material is mostly the official ballot argument plus one op-ed (Crane); no Reform California or taxpayer-group publication of its own was collected, and no Howard Jarvis Taxpayers Association position was found.
The stored measure text lacks strikeout and italic formatting, so the exact deletions must be checked in the formatted PDF.
No official legislative bill history or roll-call records were collected; one press release (Assemblymember Gabriel's) failed to fetch (SSL error).
Questions to consider
How much less likely would Gann-limit taxpayer rebates become, and in what kind of revenue years?
Would a larger reserve change how often governors and legislators declare budget emergencies, given that the withdrawal rules stay the same?
How would the Legislature split the debt-payment set-aside among pensions, retiree health, school obligations, Medi-Cal loans and unemployment insurance loans?
How much infrastructure spending would be lost because the higher cap is reached less often?
According to the official roll call, how did each party's legislators vote on ACA 20, and how many did not vote?
How did the newspapers listed by CalMatters come down on the measure, and why?
Text analysis
Written 2026-10-28 in an operator-run Claude session from 2 primary texts12,18. An evaluative machine reading: check each point against its quoted evidence.
Coverage: Full Text of Proposed Laws for Proposition 2 (ACA 20, Resolution Chapter 130, Statutes of 2026), voter guide pages 106-109: the findings and declarations ("First"), amended Article XVI Section 20 ("Second"), and amended Article XVI Section 22 ("Third"). The text is complete, but the stored plain-text version loses the strikeout and italic formatting that marks deleted and added words, so old and new wording appear side by side (for example "10 20 percent"). Where a finding depends on which words are deleted, this is noted.
Drafting: Adequate
The measure is a technical amendment to an existing, formula-heavy constitutional section, and it mostly follows that section's structure, numbering and defined terms. The main changes (a 20 percent cap, a 150 percent capital gains tier, a 2039-40 end date for required debt payments, new allowable debt uses, a Gann limit exclusion for two reserves, and a May Revision path to a budget emergency) are stated precisely, and a transition clause addresses existing balances. Weaknesses: the new rule that withdrawn funds count against the limit only if they "were not counted previously" gives no method for telling which dollars in a commingled account were counted; several new debt categories are defined by cross-reference to statutes (the Government Code holding account "or any successor", the Education Code, the Medical Providers Interim Payment Fund) without freezing those statutes as of a date, unlike the infrastructure definition the section keeps; and the interaction between the 150 percent multiplier and the Proposition 98 calculation is not spelled out. These leave real choices to future budget acts and the Department of Finance. The rating would be easier to confirm against the formatted PDF showing deletions.
Findings
special clausehigh impactArt. XVI, Sec. 20(i)
This overrides, for rainy day fund deposits, the state appropriations (Gann) limit rule that money is counted when it is appropriated. Deposits would no longer use up room under the limit in the year they are made, and the money would be counted when withdrawn. Because the limit determines when excess revenue must be split between schools and taxpayer rebates, this changes when, and whether, that requirement is triggered. Using a later constitutional amendment to adjust Article XIII B is a legitimate route; the point is that the effect reaches beyond reserves.
“Notwithstanding Section 5 of Article XIII B, for the 2027–28 fiscal year and each fiscal year thereafter, transfers to the Budget Stabilization Account shall not constitute “appropriations subject to limitation” for purposes of Article XIII B.”12
ambiguitymedium impactArt. XVI, Sec. 20(i)
The account will hold a mix of pre-2027-28 balances (already counted at deposit) and later deposits (not counted). The text gives no ordering or tracing rule for deciding whether a given withdrawal comes from counted or uncounted money. The choice affects how much a withdrawal adds to the limit in a given year. The same wording appears for the holding account in Sec. 20(j).
“funds withdrawn or transferred from the Budget Stabilization Account that were not counted previously as “appropriations subject to limitation” for purposes of Article XIII B shall constitute “appropriations subject to limitation””12
expansive languagemedium impactArt. XVI, Sec. 20(j)
The constitutional exclusion from the spending limit attaches to an account created by statute, "or any successor" to it. The Legislature can change that account's rules (such as how long money stays in it) by ordinary statute, and the text does not define what counts as a successor. The exclusion is capped at 10 percent of General Fund proceeds of taxes for the year, but within that cap, the account's terms are left to statute.
“the Projected Surplus Temporary Holding Account established in Section 16418.7 of the Government Code, or any successor to that account, shall be an added responsible budgeting technique to counter tax revenue volatility”12
ambiguitymedium impactArt. XVI, Sec. 20(b)(1)(B)(ii)(II) and (C)
With the multiplier, the clause (ii) amount can be larger than the actual capital gains revenue above the threshold. Subparagraph (C) then computes the Proposition 98 share "that results from including the amount calculated under clause (ii)" as proceeds of taxes. The text does not say whether the Proposition 98 share is figured on the multiplied amount or only on the real revenue, even though the findings say the act is not intended to change the Proposition 98 calculation.
“One hundred fifty percent of the portion of the estimate in clause (i) in excess of 10 percent of the estimate made under subparagraph (A).”12
expansive languagemedium impactArt. XVI, Sec. 20(c)(1)(B)(ii)(I)
In the extracted text the July 1, 2014 date limit appears next to this phrase in a way consistent with its deletion. If it is deleted, the debt-payment half of the set-aside could be used for any current or future unpaid Proposition 98 obligation, not just pre-2014 debt. That widens what counts as allowable "debt" and lets set-aside dollars cover school obligations that would otherwise be paid from the General Fund. The formatted PDF should be checked to confirm the deletion.
“Unfunded prior fiscal year General Fund obligations pursuant to Section 8”12
ambiguitymedium impactArt. XVI, Sec. 20(c)(1)(B)(ii)(V)
This new allowable use has no date limit, so it could cover future federal loans as well as the current balance. It also does not say whether it covers interest as well as principal. Both choices affect how much of the debt-payment set-aside could go to unemployment insurance debt instead of pension and retiree health liabilities.
“(V) Federal loans made to the Unemployment Fund.”12
durationmedium impactArt. XVI, Sec. 20(c)(1)(A)
The period in which half of the set-aside must go to the listed debts is extended by ten years, from 2029-30 to 2039-40. Section 22(a)(1) allows a budget emergency bill to suspend or reduce transfers to the Budget Stabilization Account, but the text gives no matching way to suspend the debt-payment half, so that requirement stays fixed for ten more years. After 2039-40, Sec. 20(c)(2)(C) lets the Legislature choose to appropriate up to 50 percent for those purposes.
“each fiscal year thereafter to the 2029– 30 2039–40 fiscal year, inclusive”12
special clausemedium impactArt. XVI, Sec. 22(c)
A May budget revision that proposes suspending deposits or withdrawing reserves would itself count as the Governor's emergency proclamation, with no separate proclamation. This applies only "If the conditions required for the Governor to declare a budget emergency pursuant to subdivision (b) exist," but the text does not say who determines that those conditions exist, or when.
“shall constitute the Governor’s proclamation of the budget emergency if the revision proposes either of the following:”12
otherlow impactArt. XVI, Sec. 20(c)(1)(B)(ii)(II)
These debt categories are defined by reference to a statutory fund and an Education Code provision as they may later read. By contrast, Sec. 20(e) freezes its infrastructure definition to Government Code Section 13101 "as that section read on January 1, 2014." Leaving these references dynamic means later statutes could change what the constitutional debt category covers.
“earlier than scheduled recognition of the costs of loans made to the Medical Providers Interim Payment Fund and earlier than scheduled recognition of costs described in paragraph (1) of subdivision (c) of Section 41206.04 of the Education Code”12
otherlow impactArt. XVI, Sec. 20(e)
The central change doubles the cap on the account balance. Spillover above the cap is still limited to infrastructure, as under current law. This is a plain change of a number, but because the higher cap is reached less often, spillover to infrastructure may happen less often.
“exceeds 10 20 percent of the amount of General Fund proceeds of taxes for the fiscal year estimated pursuant to subdivision (b)”12
Who benefits, as written
School districts and community colleges owed unpaid Proposition 98 amounts: The debt-payment half of the set-aside may be used for unfunded prior-year Proposition 98 obligations, and for earlier-than-scheduled recognition of costs under Education Code Section 41206.04.
“Unfunded prior fiscal year General Fund obligations pursuant to Section 8”12
The state Unemployment Fund (its federal loan balance): Federal loans to the Unemployment Fund become an allowable use of the debt-payment set-aside.
“(V) Federal loans made to the Unemployment Fund.”12
State-level pension plans and retiree health (OPEB) prefunding: Required supplemental payments toward these liabilities continue for ten more years, through 2039-40, though they now share the set-aside with the new categories.
“Unfunded liabilities for state-level pension plans and prefunding other postemployment benefits”12
Open questions in the text
How will the Department of Finance decide whether withdrawn reserve money was 'counted previously' under the spending limit when the account mixes pre- and post-2027-28 deposits?
Is the Proposition 98 share of 'excess' capital gains computed on the 150 percent amount or on the actual revenue above the threshold?
Does the new Unemployment Fund category cover interest and future federal loans, or only principal on existing loans?
What qualifies as a 'successor' to the Projected Surplus Temporary Holding Account, and can the Legislature change that account's holding period by statute?
Who determines that budget emergency conditions 'exist' when a May Revision is treated as the Governor's proclamation?
How will the Legislature split the debt-payment half among pensions, retiree health, Proposition 98 obligations, Medi-Cal loans and unemployment loans?
Limits: This is a close reading of the measure's text only; it does not estimate fiscal effects. The stored text lacks strikeout and italic formatting, so it is not always possible to tell from it alone which words are deleted; findings that depend on deletions say so. The analysis does not use outside sources on how the existing Article XVI rules have worked in practice.
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LAist's Proposition 2 voter guide, adapted from CalMatters. It explains that the measure doubles the deposit cap to 20 percent, excludes deposits from the Gann Limit, and authorizes paying down the $20 billion federal UI debt. It reprints the ballot label, the yes/no meanings, the LAO fiscal summary, and one-paragraph supporter and opponent views, and notes a simple majority is needed.
A simple majority is needed to pass.
Supporters: California Democratic Party, legislative Democrats, Gov. Gavin Newsom.
Opponents: Reform California and legislative Republicans.
Quotes the LAO that reserves would grow over time and that balancing the budget would be somewhat easier in downturns.
Facts, claims & caveats
Vote needed
Simple majority
Federal UI debt
$20 billion
Notable supporters
California Democratic Party; legislative Democrats; Gov. Gavin Newsom
Notable opponents
Reform California; legislative Republicans
Supporters argue a higher ceiling lets the state save more when the economy is strong and build a bigger cushion for recessions.
Opponents warn reserves can be used as a 'slush fund' and argue the measure lets lawmakers hold back revenue without triggering the spending limit, avoiding refunds.
The LAO says the state would save more over time and that balancing the budget would be somewhat easier when revenues decline.
Limits: Republished CalMatters content with local framing; it adds no independent analysis. Campaign finance information did not come through in the stored text.
CalMatters' 2026 voter guide entry for Proposition 2 summarizes the supporters' and opponents' cases in one sentence each, lists endorsements, and reprints the ballot label. Supporters say a higher ceiling lets the state save more in booms; opponents say reserves can be a 'slush fund' and the measure would let lawmakers withhold revenue without triggering the spending limit and avoid refunds.
Media endorsements listed: The Sacramento Bee, The San Diego Union-Tribune, The Orange County Register (the extracted page does not show which side each took).
Reprints the official ballot label and fiscal impact.
Facts, claims & caveats
Supporting endorsers
California Democratic Party; Legislative Democrats; Gov. Gavin Newsom
Opposing endorsers
Reform California; Legislative Republicans
Media endorsements listed
Sacramento Bee; San Diego Union-Tribune; Orange County Register
Supporters say raising the ceiling would let the state save more when the economy is booming and build a stronger reserve for downturns.
Opponents say reserves can be used by politicians as a 'slush fund' and that the measure would let lawmakers withhold more tax revenue without triggering the spending limit, avoiding refunds to taxpayers.
Limits: A brief guide entry; the campaign finance tables did not come through in the stored text, and it does not say which position each listed newspaper took.
California Secretary of Stateofficial analysisNeutral
The Proposition 2 pages of the state voter guide: the Attorney General's official title and summary, the final legislative votes on ACA 20, and the Legislative Analyst's analysis. The LAO explains current reserve and extra-debt-payment rules and says Proposition 2 would require deposits until the rainy day fund reaches 20 percent of General Fund taxes, make larger deposits when investment-gains revenue is very high, extend extra debt payments through 2040 for an expanded set of purposes, and exclude rainy day fund and surplus-holding-account deposits from the state appropriations limit until withdrawn.
Attorney General summary: doubles the reserve cap from 10 to 20 percent of General Fund revenues and requires additional savings when tax revenues are high.
LAO fiscal estimate: state budget reserves would be higher; possibly more debt payments.
Currently the state has about $20 billion in reserves usable for any program, according to the LAO.
Under current law, once the fund reaches 10 percent of General Fund taxes, money that would have been deposited must be spent on infrastructure.
Extra debt payments could be used for required payments to schools and community colleges, repaying borrowing from other state funds, and certain federal loans.
Holding-account deposits excluded from the limit could not exceed 10 percent of General Fund taxes in a year.
Facts, claims & caveats
Final Senate vote on ACA 20
Ayes 29, Noes 2
Final Assembly vote on ACA 20
Ayes 59, Noes 8
Chapter
Chapter 130, Statutes of 2026
Planned General Fund spending this year (LAO)
About $250 billion
Current reserves usable for any program (LAO)
About $20 billion
State debts (LAO)
More than $250 billion
Current required annual rainy day deposit (LAO)
0.75 percent of General Fund tax revenues
Extra debt payment requirement
Ends 2030 under current law; through 2040 under Proposition 2
The Legislative Analyst estimates that state budget reserves would be higher and that more reserves would make balancing the budget somewhat easier when revenues decline.
The Legislative Analyst says that by requiring extra debt payments through 2040, the state might make more debt payments than it would without Proposition 2.
The Attorney General's summary describes the measure as increasing reserves available for education, state debts, and pension obligations.
Limits: The LAO does not give a dollar estimate of how much reserves would grow. The analysis describes mechanics and fiscal effects; it does not weigh the arguments for or against. Vote counts are as printed in this guide.
Date from the page. Summary written 2026-10-28 in an operator-run Claude session. Link checked 2026-10-28.
GrowSF's San Francisco voter guide entry for Proposition 2, which recommends a 'weak yes'. It explains the 1.5 percent base deposit, the existing 8 percent capital gains rule, the new 150 percent tier above 10 percent with a worked example, the 20 percent cap, the Gann limit change and its effect on taxpayer rebates, and withdrawal rules, and lists reasons to vote yes along with a downside.
Worked example: in a $200 billion year with $30 billion of capital gains, current law sets aside $14 billion; Prop 2 sets aside $19 billion, before carve-outs for schools and debt.
Deposits stop counting against the Gann limit from 2027-28 until withdrawn, which GrowSF says makes rebates like the 2022 stimulus checks less likely.
Withdrawals still require a budget emergency and are limited to half the balance in one year.
The LAO does not put a dollar figure on the effects, GrowSF notes.
GrowSF calls its recommendation a weak yes.
Facts, claims & caveats
Recommendation
Yes (described as a weak yes)
Times the 10 percent cap was hit since 2014
Twice, per GrowSF
Legislative adoption
ACA 20 adopted by the Assembly and Senate on June 25, 2026, filed with the Secretary of State the same day
Author named
Assemblymember Jesse Gabriel
GrowSF argues California's reliance on volatile capital gains revenue makes a rainy day fund necessary.
GrowSF says reasonable people can disagree about how much to save and whether the government should be forced to.
GrowSF notes possible large AI-company IPOs as a source of revenue the state would save more of under Prop 2.
GrowSF says Prop 2 would make boom-year taxpayer refunds less likely.
Limits: An endorsement from a San Francisco political group; its worked example simplifies the formula (it notes the school and debt carve-outs are omitted). Last updated September 8, 2026.
The complete official text of Proposition 2 (Assembly Constitutional Amendment 20, Resolution Chapter 130, Statutes of 2026), titled the Save for California's Future Act. It adds findings and amends Sections 20 and 22 of Article XVI of the California Constitution governing the Budget Stabilization Account (rainy day fund). In this text extraction, the strikeout (deleted) and italic (added) formatting is lost, so old and new wording appear side by side.
Raises the cap on Budget Stabilization Account transfers from 10 to 20 percent of General Fund proceeds of taxes (Section 20(e)).
Adds a second tier of 'excess' capital gains set-aside equal to 150 percent of capital gains revenue above 10 percent of General Fund proceeds of taxes (Section 20(b)).
Extends the period in which half of set-aside revenue must go to specified debts from 2029-30 to 2039-40, and adds uses such as federal loans to the Unemployment Fund and certain Medi-Cal and education costs (Section 20(c)).
Provides that transfers to the Budget Stabilization Account, and to the Projected Surplus Temporary Holding Account up to 10 percent of General Fund proceeds of taxes, are not 'appropriations subject to limitation' under Article XIII B when made, but count when withdrawn (Section 20(i)-(j)).
Allows the Director of Finance's May budget revision to constitute the Governor's budget emergency proclamation when the emergency conditions exist and the revision proposes suspending deposits or withdrawing funds (Section 22(c)).
Declares that nothing in the act is intended to change the Proposition 98 school funding guarantee calculation.
California Constitution Article XVI, Sections 20 and 22
Reserve cap
20 percent of General Fund proceeds of taxes (previously 10 percent)
Annual base transfer
1.5 percent of estimated General Fund revenues
Debt-payment requirement period
Through the 2039-40 fiscal year (previously 2029-30)
Holding account exclusion cap
10 percent of General Fund proceeds of taxes for the fiscal year
First fiscal year of new rules
2027-28
Location in voter guide
Text of Proposed Laws, pages 106-109
The Legislature finds and declares that building and maintaining strong reserves during growth periods helps protect Californians from sudden reductions in essential services.
The Legislature states its intent to strengthen the state's commitment to responsible budgeting and prudent savings by enhancing budget reserves.
Limits: This is the operative legal text, but the plain-text extraction drops strikeout and italic formatting, so deleted and added words (for example "10 20 percent" and "2015-16 2027-28") run together; readers should check the formatted PDF to see exactly which words are removed. The text alone does not estimate fiscal effects.
Date from the page. Summary written 2026-10-28 in an operator-run Claude session. Link checked 2026-10-28.
The Legislative Analyst's Office's standalone analysis of Proposition 2 for the November 3, 2026 ballot. Its content matches the analysis printed in the state voter guide: background on the budget, reserves and debts; the proposal's four main changes; fiscal effects (higher reserves, possibly more debt payments); and the yes/no statement and ballot label fiscal impact.
Proposition 2 requires deposits until the rainy day fund reaches 20 percent of General Fund taxes instead of 10 percent.
Larger deposits would be made in years when investment-gains revenue is very high.
Extra debt payments would be required through 2040 instead of 2030 and could be used for more purposes, including payments to schools and community colleges, internal borrowing, and certain federal loans.
Rainy day fund deposits, and surplus holding account deposits up to 10 percent of General Fund taxes, would count toward the appropriations limit only when withdrawn.
Fiscal impact: state budget reserves would be higher.
Facts, claims & caveats
Current rainy day fund cap
10 percent of General Fund taxes
Proposed cap
20 percent of General Fund taxes
Current reserves usable for any program
About $20 billion
State General Fund spending this year
About $250 billion
Revenue decline in a bad recession
Can equal 50 percent or more of annual General Fund revenues over a few years
The LAO says reserves help the state avoid some spending cuts, tax increases, and borrowing to balance the budget.
The LAO says more reserves would make balancing the budget somewhat easier when revenues decline.
The LAO says making extra payments toward pension and retiree health debts saves the state money in the long run.
Limits: Largely duplicates the voter guide's LAO analysis. It gives no dollar estimate of the change in reserves or debt payments, and it does not address the arguments about taxpayer rebates.
Date from the page. Summary written 2026-10-28 in an operator-run Claude session. Link checked 2026-10-28.
The Secretary of State's online voter guide page for Proposition 2 gives the ballot label (put on the ballot by the Legislature; increases the Rainy Day Fund approved by voters in 2014), the fiscal impact line (state budget reserves would be higher), the yes/no vote meanings, short pro and con argument excerpts, and campaign contact information. It lists supporters and shows "Opponents: None submitted" in its summary box, although it also prints a con argument and names Assemblymember David Tangipa as the contact against.
Put on the ballot by the Legislature as a legislative constitutional amendment.
Fiscal impact per the guide: state budget reserves would be higher.
A YES vote changes the rules for building reserves and paying extra state debts and requires extra debt payments for longer; a NO vote leaves those rules unchanged.
The pro excerpt says the measure doubles the Rainy Day Fund and protects education, health care and public safety funding.
The con excerpt says the measure excludes reserve deposits from the constitutional spending limit and makes taxpayer rebates less likely.
Facts, claims & caveats
Listed supporters
CA Professional Firefighters; LA Chamber of Commerce; Gavin Newsom; Xavier Becerra; Assemblymember Jesse Gabriel
Listed opponents (summary box)
None submitted
Contact against
David Tangipa, Assemblymember (RejectProp2@gmail.com)
Contact for
Yes on Prop. 2, 445 S. Figueroa Street, Suite 2400, Los Angeles (YesonProp2.com)
Fiscal impact (ballot label)
State budget reserves would be higher
Supporters (pro argument excerpt) say Proposition 2 doubles the Rainy Day Fund, stops politicians from overspending in surplus years, ensures education funding continues in downturns, and has bipartisan support from firefighters, hospitals, health clinics and educators.
Opponents (con argument excerpt) say Proposition 2 guarantees more spending, not savings, creates a loophole that makes taxpayer rebates less likely by excluding reserve deposits from the constitutional spending limit, and provides no new funding for education, health care or public safety.
Limits: A short summary page; the argument excerpts are abbreviated advocacy text, not checked for accuracy. The "Opponents: None submitted" line sits alongside a printed con argument and a named opposition contact, so it should not be read as meaning the measure has no opponents. The full text and full LAO analysis are separate documents.
The San Francisco Standardthird party analysisOpposes
An opinion piece by David Crane, a Stanford public policy lecturer and president of Govern for California, published in The San Francisco Standard. He argues that Governor Newsom withdrew billions from the Rainy Day Fund in years of higher revenue because spending grew faster, and that Proposition 2 leaves the withdrawal rules essentially unchanged, so a bigger fund would not stop future governors from doing the same. He calls for rejecting Proposition 2 and replacing it with a measure that limits withdrawals.
The 2018-19 budget had $138 billion in General Fund tax revenue and deposited $4.4 billion into the fund, according to Crane.
The 2024-25 budget had $207 billion in General Fund tax revenue and took $4.9 billion from the fund; the 2025-26 budget had $209 billion and took $7.1 billion, according to Crane.
A governor can tap the fund by declaring a budget emergency ratified by a legislative majority when resources fall short of the highest of the prior three budgets.
Crane argues a larger reserve can make officials more comfortable committing to new spending.
He also notes the measure leaves the mechanism that earmarks surplus revenue for pension debt.
Facts, claims & caveats
2018-19 General Fund tax revenue and deposit
$138 billion; $4.4 billion deposited
2024-25 General Fund tax revenue and withdrawal
$207 billion; $4.9 billion withdrawn
2025-26 General Fund tax revenue and withdrawal
$209 billion; $7.1 billion withdrawn
2021-22 spending increase
33.7 percent, the largest single-year increase recorded by the Department of Finance, per Crane
Author
David Crane, president of Govern for California
Crane argues that under current law the Rainy Day Fund 'can be invaded even when it's not raining'.
Crane argues that because Proposition 2 does not change withdrawal rules, a future governor could dip into reserves simply because revenue fell short of hopes.
Crane argues that spending in 2024-25 and 2025-26 was 65 and 75 percent above the year Newsom took office, versus 50 and 51 percent revenue growth.
Crane says Proposition 2 should be rejected and replaced with a measure that limits withdrawals except when it is 'actually raining'.
Limits: An opinion piece by an advocate; it focuses on withdrawal rules and does not address the measure's spending-limit or debt-payment changes in detail. Budget figures are the author's readings of state documents.
California Budget & Policy Centerthird party analysisNeutral
An issue brief by the California Budget & Policy Center (Scott Graves, Alissa Anderson, Erik Saucedo) that explains what Proposition 2 would and would not change, and discusses implications. It describes the higher 20 percent cap, the 150 percent capital gains tier, expanded and extended debt-payment uses, the Gann Limit changes for two reserves, and the new May Revision path for declaring a budget emergency. It also argues the measure misses opportunities, such as allowing debt payments to be suspended in emergencies or counting federal funding losses as budget emergencies.
Prop. 2 would not change the 1.5 percent annual set-aside, the definition of budget emergency, the withdrawal limits, or the Prop. 98 guarantee.
Had the new capital gains rule applied from 2010-11 to 2023-24, more revenue would have been set aside in six of 14 years, by less than 1 to 2 percent of General Fund revenue each time.
Using set-aside funds to repay roughly $20 billion in federal unemployment insurance loans would shift a cost now borne by businesses to the state.
The Gann Limit change could add up to a few billion dollars a year of room under the cap.
A higher cap means less spillover revenue for infrastructure over time.
Facts, claims & caveats
Federal UI debt
Roughly $20 billion
2025-26 Medi-Cal loan
$4.4 billion transferred to the Medical Providers Interim Payment Fund
2022-23 Prop. 98 overpayment to be recognized
$6.2 billion, about $500 million a year from 2027-28 to 2039-40
Budget emergency proclamation 2025
Issued June 27, 2025
Debt-payment requirement
Extended from 2029-30 to 2039-40
Example of 150 percent tier
$2 billion above the 10 percent threshold requires a $3 billion set-aside
Endorsement position
The Budget Center does not endorse or oppose ballot measures
The Budget Center says a larger fund would give a bigger cushion and reduce the need for draconian cuts in downturns.
The Budget Center says the measure does not specify whether set-aside funds could pay interest as well as principal on federal UI loans.
The Budget Center argues the Gann Limit is an arbitrary cap that hinders state leaders' ability to respond to Californians' needs.
The Budget Center argues the measure misses an opportunity by keeping the prohibition on suspending debt payments during a budget emergency, now through 2039-40.
The Budget Center argues the measure misses an opportunity by not counting federal funding losses, such as from H.R. 1, as a budget emergency.
The Budget Center argues that meaningfully addressing Californians' needs requires significant new revenue beyond what Prop. 2 would divert.
Limits: The Budget Center takes no formal position, but its brief includes its institutional views (for example, that the Gann Limit is arbitrary and that new revenue is needed), so its framing is not neutral on related policy questions. Its historical simulation of the capital gains rule is a backward-looking estimate, not a forecast.
A CalMatters guest commentary by Assemblymembers Jesse Gabriel (D-Encino, Assembly Budget Chair) and Josh Hoover (R-Folsom, Appropriations Vice Chair) supporting Proposition 2. They argue California's revenue is highly volatile, that the measure doubles the rainy day fund and requires saving more in strong years without raising taxes, and that it builds on the 2014 framework and was recommended by the LAO.
The authors say California ranks fifth in revenue volatility but 29th in the size of budget reserves.
They describe the measure as a structural budget fix that does not raise taxes.
They say the reforms were recommended by the LAO and developed with input from the Department of Finance, fiscal experts and business leaders.
They argue a stronger fund would make the state more fiscally credible and let it borrow more cheaply.
Gabriel and Hoover argue the measure isn't about partisan politics but basic fiscal responsibility.
Gabriel and Hoover argue that 'Prop. 2 didn't start with politicians' and was born from budget experts, not special interests.
Gabriel and Hoover argue states that save responsibly borrow more cheaply and inspire more confidence.
Limits: Advocacy by the measure's lead legislative backer (Gabriel also signed the official argument in favor). It does not address the opponents' spending-limit and rebate arguments or the withdrawal-rule criticism.
California Secretary of Stateposition statementMixed
The official ballot arguments for and against Proposition 2 and the rebuttals, as printed in the state voter guide. Supporters (California Professional Firefighters, Assembly Budget Chair Jesse Gabriel, Los Angeles Area Chamber of Commerce) argue the measure doubles the reserve requirement and protects services in downturns. Opponents (Assemblymember David Tangipa, Senator Steven Choi, Reform California chairman Carl DeMaio) argue it weakens the voter-approved spending limit, makes taxpayer rebates less likely, and creates a 'slush fund'.
Pro argument: the budget swung from a $100 billion surplus to a $50 billion deficit in a few years; the measure doubles the reserve requirement to 20 percent and requires banking more of revenue spikes.
Pro argument: Republicans, Democrats and Governor Newsom support it, and it follows LAO advice to save more.
Con argument: excluding reserve deposits from the spending limit lets politicians avoid constitutionally required tax rebates.
Con argument: within 24 hours of placing it on the ballot, backers voted to suspend more than $5 billion in required reserve deposits.
Rebuttal for: the 'rebate' relies on an accounting rule that rewards spending instead of saving.
Facts, claims & caveats
Argument in favor signers
Darrell Roberts (California Professional Firefighters); Jesse Gabriel (Chair, Assembly Budget Committee); Maria S. Salinas (Los Angeles Area Chamber of Commerce)
Rebuttal to argument against signers
Dr. Linda Darling-Hammond (State Board of Education); Carmela Coyle (California Hospital Association); Francisco J. Silva (California Primary Care Association)
Argument against and rebuttal signers
David Tangipa (Vice Chair, Assembly Budget Committee); Steven Choi (Vice Chair, Senate Elections and Constitutional Amendments Committee); Carl DeMaio (Chairman, Reform California)
Opposing groups named
Reform California; the Transparency Foundation
Supporters argue the measure will stop overspending when tax revenues spike by requiring the state to bank more of the windfall.
Supporters argue the LAO has recommended that the state save significantly more than current rules require.
Opponents argue that within 24 hours of introducing the measure, many of its backers supported legislation to suspend more than $5 billion in required deposits into the reserve.
Opponents argue the measure creates a 'slush fund' and lets politicians 'gut the voter-imposed spending limit'.
Opponents argue the state budget has grown 76 percent since 2018 and state government by 40 percent after inflation.
Opponents argue the measure provides no new dollars for health care, education or public safety.
Supporters' rebuttal says the measure does not give Sacramento any new money to spend.
Limits: These are advocacy statements; the guide notes they are the opinions of the authors and were not checked for accuracy by any official agency. Figures such as the 76 percent budget growth and the $5 billion suspension are the authors' claims.
Date from the page. Summary written 2026-10-28 in an operator-run Claude session. Link checked 2026-10-28.
Office of Senator Melissa Hurtadoposition statementSupports
A press release from Senator Melissa Hurtado (D-Bakersfield) announcing passage of ACA 20, the Save for California's Future Act, which she describes herself as an author of. She frames the measure as responsible budgeting that protects services when revenues decline or costs shift from Washington.
Hurtado announces ACA 20's passage and says she serves as an author.
She says expanding reserves gives a stronger backstop for schools, health care, public safety, water infrastructure and other programs.
She chairs Senate Budget Subcommittee 4.
Facts, claims & caveats
Measure
ACA 20, the Save for California's Future Act
Statement date
June 25, 2026
Senator's role
Chair, Senate Budget Subcommittee 4; 16th Senate District
Senator Hurtado said the measure is 'a responsible action to protect taxpayer dollars, safeguard essential services, and ensure we are not forced into deeper cuts when revenues decline, or costs are shifted in Washington.'
Hurtado said fiscal responsibility and protecting working families must go hand in hand.
Limits: A legislator's press release; it describes no mechanics, vote counts or costs and presents only the supporting view.
Date stated in the document. Summary written 2026-10-28 in an operator-run Claude session. Link checked 2026-10-28.
A CalMatters explainer by Yue Stella Yu on Proposition 2. It describes the measure as letting the state save up to 20 percent of General Fund tax revenue and save more when revenue grows fast, gives the history of California reserves (Prop. 58 of 2004, Prop. 2 of 2014), explains current withdrawal rules, and presents supporters' and critics' views, including the criticism that the measure keeps withdrawal rules unchanged.
Proponents include Gov. Gavin Newsom and Democratic lawmakers; the measure is endorsed by labor unions, hospital associations and chambers of commerce.
Josh Hoover is described as the only GOP lawmaker to vote for the measure; most Republican lawmakers opposed it.
Current law requires setting aside 1.5 percent of General Fund revenue plus capital gains spikes, half to reserves and half to debts.
Withdrawals require a governor's budget emergency ratified by a legislative majority, with up to half the balance withdrawn at once.
Proposition 2 would keep those withdrawal rules, which critics say gives future governors broad authority to spend down reserves.
Facts, claims & caveats
Measure's name
Save for California's Future Act
2014 Prop. 2 vote share
Nearly 70 percent of voters approved it
Republican legislative support
Josh Hoover described as the only GOP lawmaker to vote for it
Prior reserve measure
Prop. 58 (2004)
Jesse Gabriel and Josh Hoover wrote that the measure doubles the rainy day fund and requires saving more in strong budget years.
Most Republican lawmakers argue the state should use excess revenue for taxpayer refunds and that a bigger reserve would give state leaders more to spend.
Assemblymember Carl DeMaio said: 'When they say we're here for fiscal responsibility, it's like the devil offering a Bible study. Don't buy it.'
David Crane wrote that the rainy day fund can be invaded even when it is not raining and that a larger reserve lets governors bake in spending based on optimistic forecasts.
Gabriel told CalMatters that voters approved the withdrawal rules in 2014, that the concern is 'very misplaced', and that the measure is recommended by experts.
Supporters note the LAO has long recommended the state set aside funding for downturns.
Limits: A news explainer; it quotes advocates on both sides but does not quantify the measure's effects. The page shows no publication date in the stored text.
A Spectrum News 1 report by Jamie Kennedy from a Sacramento proposition information session. It explains that Proposition 2 would double the rainy day fund ceiling and change how deposits count toward the spending limit, quotes Scott Graves of the California Budget & Policy Center on how a bigger fund and expanded debt uses would work, and quotes Assemblymember Carl DeMaio on the spending limit and refunds.
Proposition 2 would double the ceiling from 10 to 20 percent.
Deposits would count toward the spending limit only when spent, which opponents say could mean less money returned.
The set-aside for debt would expand to federal UI loans, certain K-14 obligations, and loans for Medi-Cal costs, per Graves.
Facts, claims & caveats
Analyst quoted
Scott Graves, California Budget and Policy Center
Opponent quoted
Assemblymember Carl DeMaio (R-San Diego)
Scott Graves said the change would help the state get through fiscal crises without deep cuts or asking voters for tax increases.
Carl DeMaio said revenue beyond the spending limit 'must be spent on education' and returned to taxpayers, and said Democrats do not want to do that.
Opponents argue the spending-limit change could mean less money returned to Californians.
Limits: A short news story with one analyst and one opponent quoted; no supporter campaign voice is included. It describes the fund as a share of the 'state budget', while official documents describe General Fund taxes.
Date stated in the document. Summary written 2026-10-28 in an operator-run Claude session. Link checked 2026-10-28.
KPBS republication of CalMatters' Proposition 2 explainer. It says the amendment would let the state deposit up to 20 percent of General Fund tax revenue in reserves, that the deposits would not count toward the Gann Limit, and that it authorizes spending some revenue to pay down the $20 billion federal unemployment insurance debt. It gives one-sentence supporter and opponent summaries and endorsement lists.
Raises the reserve ceiling from 10 to 20 percent of General Fund tax revenue.
Deposits would not count toward the Gann Limit, which caps annual spending and requires excess funds be returned.
Authorizes paying down the $20 billion federal unemployment insurance debt with some tax revenue.
Placed on the ballot by the Legislature.
Facts, claims & caveats
Federal UI debt
$20 billion
Supporter endorsements
California Democratic Party; Legislative Democrats; Gov. Gavin Newsom
Opponent endorsements
Reform California; Legislative Republicans
Election date
November 3, 2026
Supporters say raising the ceiling would allow the state to save more in booms, building a stronger reserve.
Opponents say reserves can be used by politicians as a 'slush fund' and that the measure would let lawmakers withhold more revenue without triggering the spending limit, avoiding refunds.
Limits: A brief republished explainer that largely duplicates the CalMatters voter guide. Its statement that deposits 'would not count' toward the Gann Limit omits that, per the official text, they count when withdrawn.
A KQED 'Prop Fest' podcast transcript in which politics correspondent Guy Marzorati explains Proposition 2: doubling the rainy day fund maximum to 20 percent, treating deposits as not spending under the state spending limit, and broadening the debts that set-aside money can pay. It covers Governor Newsom's backing, a near party-line legislative vote, Republican and anti-tax group opposition centered on taxpayer refunds, and little campaign spending on either side.
Newsom is the measure's main proponent and has said he wished he had saved more during the post-pandemic surplus, per Marzorati.
Marzorati says only one Republican in the Legislature supported placing it on the ballot.
Opponents argue the measure makes taxpayer refunds less likely; Marzorati notes a refund of more than $1 billion in 1987.
Reform California, led by Assemblymember Carl DeMaio, is campaigning against it; little spending on either side as of the episode.
California borrowed more than $20 billion from the federal government for unemployment benefits during COVID.
Facts, claims & caveats
Recent budget swings cited
Surplus around $100 billion and deficit around $50 billion within five years
Prior Gann Limit refund cited
1987, more than $1 billion
Federal UI borrowing
More than $20 billion
Campaign spending
Little or none on either side as of the episode
Senator Melissa Hurtado said ACA 20 'will make us more disciplined, not just in saving, but also in spending.'
Assemblymember Joe Patterson said the measure would 'create a bigger slush fund' instead of returning money to taxpayers, and that voters did not get a real rainy day fund in 2014.
Opponents argue the state spending limit was meant to return excess revenue to taxpayers and that Proposition 2 would reduce that.
Newsom said he has regrets about not saving more earlier, according to Marzorati.
Limits: A conversational explainer; Marzorati's statement that the Gann limit is in the proposition's title does not match the official title. The stored page also contains a large block of site code after the transcript, which was not read.
Long document: only the first 18,000 characters were summarized.
Date stated in the document. Summary written 2026-10-28 in an operator-run Claude session. Link checked 2026-10-28.