Golden State seeks to increase its rainy day fund through ballot measure

SACRAMENTO, Calif. (CN) — California lawmakers are racing against the clock to ensure they get a measure on November’s ballot that would increase the state’s rainy day fund.

The Save For California’s Future Act is an agreement between both legislative chambers and Governor Gavin Newsom that, if passed, would shore up the state’s piggy bank and institute other fiscal moves to pay down liabilities.

Top Democratic leaders said the measure would increase a cap on the rainy day fund from 10% to 20%, increase the amount saved in that fund when taxes stemming from capital gains and related income exceed certain levels and protect guaranteed funding for public schools. It would also strengthen a requirement that specific funds pay down liabilities and increase the kind of liabilities affected, like federal Unemployment Insurance loans.

Republicans regularly point to the latter, as California is the only state that hasn’t fully paid back a loan taken out in 2020 because of the Covid-19 pandemic. It’s estimated the state will owe $21.3 billion by the end of 2027.

Lawmakers are poised to pass the constitutional amendment Thursday by a two-thirds vote, putting the measure on the ballot. Thursday is the last day measures can qualify to appear on the November ballot.

“Putting money aside to protect ourselves from future uncertainties isn’t just good government; it’s common sense,” Newsom said in a statement. “California is strong and resilient, but we’re not immune to economic headwinds. At a time when our essential services are under pressure, we have a responsibility to safeguard the programs and investments that Californians rely on.”

Newsom regularly touts California’s economy as being the fourth largest in the world. However, the Legislative Analyst’s Office has noted the state relies heavily on high-income earners for its tax dollars. The state experiences bull and bear years based on the stock market’s performance, which can lead to boom-and-bust financial cycles.

In lean times, lawmakers must make difficult decisions that affect essential programs and, consequently, families and businesses.

Newsom argued those are reasons to maintain robust budget reserves when times are good, enabling California to stave off program cuts during stormy financial periods.

Leaders of both legislative houses praised the move.

“California has faced tough decisions, requiring legislators to dip into the fund to help fill the gaps — but there is more work to be done,” said Senate President pro Tempore Monique Limón in a statement. “Boosting the rainy day fund will continue to provide a needed reserve for future years and protect programs that working families need.”

Assembly Speaker Robert Rivas in a statement said lawmakers must abide by an axiom Californians live by: save money during good times to prepare for when they’re not.

“As California’s leaders, we must step up and save more to protect the healthcare, school and affordable housing programs families count on,” he added.

The Save For California’s Future Act is one of a handful of ballot measures racing to meet Thursday’s deadline or has already passed the finish line.

On Monday, lawmakers announced the Veterans and Affordable Housing Bond Act of 2026. If approved by voters, $10 billion in general obligation bonds would fund affordable housing for lower-income residents. The other $1.25 billion in self-supporting bonds would support the CalVet home loan program.

Newsom has said it would help over 40,000 people buy homes through down payment assistance and mortgage financing.

A handful of other measures have already made the cut for the November election. They include a one-time, 5% tax on billionaires. A measure requiring voters to show photo ID at the polls is also headed to the general election.