By admin 
Changing California’s Budget Stabilization Account, also known as the “rainy day fund,” is not the sexiest issue on the ballot in November. But the proposals in Proposition 2 could have major consequences for the state’s fiscal future, including how deep legislators will have to cut in a major downturn.
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The measure, which was put on the ballot by legislative Democrats, would require the state to set aside more money, particularly in times of revenue spikes. California traditionally has boom and bust budget cycles due to the strong influence that the stock market has on state tax revenue. In recent years, that revenue has boomed largely due to enthusiasm over artificial intelligence, but those days of flush cash will not continue forever.
What does the measure do?
It would require lawmakers to put a higher percentage of state taxes into the reserve account and to make larger contributions to the backup fund in years when revenues greatly increase. Money put into the fund will also not count towards a state spending limit created in the 1970s that requires the Legislature take certain actions — including refunding taxpayers — if the California’s budget surpasses a certain spending limit.
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What do supporters say?
The measure will strengthen the state’s reserves by forcing lawmakers to set aside more money each year.
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“Proposition 2 does not give Sacramento any new money to spend,” they wrote in the state . “On the contrary, it doubles the state’s reserve requirement and forces more savings—rather than new spending — when tax revenues spike.”
What do opponents say?
Republican legislators argue the measure is a gimmick to evade the state appropriations limit and will ultimately lead to more wasteful spending.
“Sacramento politicians will continue to decide how much to spend each year, not you,” they wrote in the . “Prop. 2 only allows for politicians to spend more on pet projects.”
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