San Francisco and California Ballot Backstory · Why is this on my ballot?
Prop 2: summary
Increases State’s Rainy Day Fund
Mark your own choices here. You may bring this sheet into the voting booth.
A YES vote means
Rainy day fund deposits continue until 20% of General Fund taxes (not 10%) and skip the spending limit until withdrawn. Extra debt payments through 2040.
A NO vote means
Rainy day fund deposits continue until 10% of General Fund taxes and count toward the spending limit. Extra debt payments become optional after 2030.
Both ovals are empty on purpose. The choice is yours.
If it fails
Nothing changes if it fails
If Prop 2 fails, current rules stay. Required deposits stop once the rainy day fund reaches 10 percent of General Fund taxes, and that money must then be spent on infrastructure. The extra debt payment requirement ends in 2030.
Why it’s on the ballot now
Voters created the current rainy day fund rules in 2014. Today, required deposits stop once the fund reaches 10% of General Fund taxes.
The Legislative Analyst's analysis in the voter guide for this election says the state has about $20 billion in reserves that can be used for any public program. This year, the state plans to spend about $250 billion from its General Fund.
State revenues swing widely. The LAO says a bad recession or market crash can cut them, over a few years, by 50% or more of a year's General Fund revenues.
The current rule requiring extra payments on state pension and retiree health debts ends in 2030.
In a budget emergency, the state can already stop making rainy day fund deposits or take money out of the fund.
The money
Prop 2 saves more revenue in good years instead of spending it. The LAO says reserves would be higher, making budgets somewhat easier to balance when revenues fall, and debt payments might increase. The money set aside for extra debt payments could also cover required payments to schools and community colleges, loans from other state funds and some federal loans. See the money chart for the latest filed totals.
Needs a simple majority (50% + 1) to pass Some measures need 55% or two-thirds of votes to pass. This one needs only a simple majority.Who bears the cost
State government (the General Fund)
The Legislative Analyst (LAO) says Prop 2 requires deposits until the fund reaches 20 percent of General Fund taxes, instead of 10 percent. The LAO says it would also require larger deposits in years when investment-gain tax revenue is very high.
Taxpayers
The LAO says rainy day fund deposits would not count toward the state spending limit, a cap on how much tax revenue the state can spend. The money would count when it is taken out.
The strongest case for and against
Strongest case for
Supporters include the California Professional Firefighters, the Los Angeles Area Chamber of Commerce and Assembly Budget Chair Jesse Gabriel. They say the budget swings from boom to bust. They say it went from a $100 billion surplus to a $50 billion deficit in a few years. They say raising the reserve requirement from 10 to 20% gives the state a real cushion. They say that way, schools, health care and public safety are not first in line for cuts. They say it saves more when tax revenues spike, instead of funding ongoing spending the state can't sustain. They say the rebate opponents describe is theoretical. They say Republicans and Democrats in the Legislature back it. They also say the LAO has recommended saving significantly more than current rules require.
Strongest case against
Opponents include Assembly Budget Vice Chair David Tangipa, Senate Elections Vice Chair Steven Choi and Carl DeMaio of Reform California. They say Prop 2 weakens the spending limit voters approved in 1978. They say moving billions into reserves that no longer count toward the limit makes tax rebates less likely. They say those rebates are owed when revenues exceed the limit. They say it does not guarantee any new money for health care, education or public safety. They say that within 24 hours of introducing the measure, many of the same politicians who praised it supported legislation to suspend more than $5 billion in required deposits. They argue the state needs to follow its existing rules, not a new tool. They argue Prop 2 makes the budget more volatile.