Proposition 2, the \u201cSave for California\u2019s Future Act,\u201d would increase the cap on the state\u2019s rainy day fund from 10% to 20%.<\/p>\n
Money for the state\u2019s Budget Stabilization Account, known as the rainy day fund, comes from capital gains and income tax revenues.<\/p>\n
About $15.1 billion was in California\u2019s rainy day fund heading into the 2026-2027 fiscal year, according to the state budget<\/a>. At the beginning of the previous fiscal year, it held about $11.2 billion<\/a>.<\/p>\n Assembly Democrats touted the effort as a way for California to set aside more money when times are good, increasing the amount that can be saved during years when revenues from these tax sources reach especially high levels, so the state has more of a cushion when economic downturns hit.<\/p>\n Republican leaders, however, have said Proposition 2 does not rein in what they see as chronic overspending by legislative Democrats or require payments to address California\u2019s outstanding federal loan balance.<\/p>\n According to Assembly Speaker Robert Rivas, D-Hollister, passing Proposition 2 would shore up funding<\/a> for public schools across the state and expand the types of liabilities that can be paid down. Gov. Gavin Newsom\u2019s office says Proposition 2 would reduce unemployment insurance trust fund liabilities to protect schools and businesses, proponents said.<\/p>\n But Sen. Tony Strickland, R-Huntington Beach, said passing Proposition 2 would be like taking out a credit card to pay off an old one \u201cwhile continuing the same reckless spending habits that created the problem in the first place.\u201d He said Democrats are asking taxpayers<\/a> to bankroll their spending.<\/p>\n