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As part of his continuing commitment to pay down California's massive "Wall of Debt," Governor Brown convened a special session of the Legislature to address the state's Rainy Day Fund.
The governor is asking legislators to revise a ballot measure that would divert additional funding to the Rainy Day account and would increase restrictions on how the funding can be used. The measure would require the funds to predominantly be used for natural emergencies, such as wildfires. Brown is urging California's elected officials to consider the use of funds to used to respond to fiscal emergencies as well.
According to the Sacramento Business Journal, Brown's proposed changes to the ballot measure would:
Increase deposits when the state experiences spikes in capital gains revenues, the state’s most volatile tax revenue. Allow supplemental payments to accelerate the state’s payoff of its debts and liabilities. Raise the maximum size of the rainy day fund to 10 percent of general fund revenue. Limit withdrawals to ensure the state does not overly rely on the fund at the start of a downturn. Create a separate school reserve to stabilize school spending.
The Rainy Day Fund was established by public vote in 2004. It currently receives 3% of state revenue annually, regardless of whether or not there is a budget deficit.
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