Proposition 2, placed on the Nov. 3 ballot by the Legislature, would rewrite the rules for California's rainy day fund, the Budget Stabilization Account, so the state can save more in good years.
Why it matters: California's budget leans on capital gains taxes, which swing with the stock market and Bay Area tech wealth. Prop 2 would set aside more of that money when it surges.
What it would do
- Double the fund's cap from 10% to 20% of general fund tax revenue.
- Require bigger set-asides in capital gains boom years, including 1.5 times the normal amount for gains above 10% of tax revenue.
- Keep required extra debt payments going through 2039-40 instead of 2029-30, and allow that money to repay federal unemployment insurance loans, certain school obligations and Medi-Cal loans.
- Stop counting reserve deposits toward the state's Gann spending limit until they're withdrawn.
It would not change the Prop 98 school funding guarantee, the California Budget & Policy Center says.
The arguments
Supporters, including Gov. Gavin Newsom and the California Professional Firefighters, say it protects schools, health care and public safety in downturns. Assemblymember David Tangipa, who wrote the opposing argument, says it would mean more spending and fewer taxpayer rebates. No money has been reported for or against, per the Secretary of State.
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