California leaders announce Save for California’s Future Act to strengthen rainy day fund, fiscal responsibility to protect future generations

Delivering greater stability

The Save for California’s Future Act will deliver greater stability for California taxpayers by creating a stronger financial foundation — one that better prepares for uncertainty and helps preserve the services, programs and benefits that families rely on most. The Legislature is scheduled to vote on the Save For California’s Future Act on Thursday, June 25.

While the state’s economy is among the largest and most dynamic in the world, it is also subject to the same economic cycles and fluctuations in revenue experienced by every nation. Natural disasters, public health emergencies and other unforeseen events can place significant strain on the state budget.

When state revenues decline during economic downturns, insufficient reserves can force difficult choices that disrupt the essential programs and services that California families, workers and businesses need to survive.

Protecting critical programs

Building and maintaining strong budget reserves during periods of economic growth is not just the right thing to do: it protects Californians from sudden reductions in essential services and mitigates the need for drastic corrective actions during periods of fiscal stress.

Just like families save for emergencies and unexpected expenses, California should save during good years to protect schools, public safety and vital programs.

“Even as we navigate our current budget challenges, we must take steps to build a stronger financial foundation for future generations. By strengthening California’s Rainy Day Fund, we can protect funding for schools and essential public services, better weather future economic downturns, and leave our children a stronger, more resilient California. This proposal is an investment in California’s future and a commitment to responsible stewardship for future generations.”  Assemblymember Jesse Gabriel (D–Encino), Chair of the Assembly Budget Committee and author of ACA 20.

“As we have learned from past spending and recent budget uncertainties, California should be more mindful during budget surplus years to ensure a savings safety net for future generations of Californians. California’s economy is dynamic, but it is also vulnerable. It is high time California updates its fiscal playbook. I look forward to working with my colleagues in the legislature and the administration to get this critical work to the end zone.” Assemblymember Avelino Valencia (D-Anaheim)

“Families across the Central Valley understand what it means to stretch every dollar and prepare for uncertainty. The state must continue to do the same. I am proud to serve as an author on this measure to strengthen California’s Rainy Day Fund.  This is a responsible action to protect taxpayers, safeguard essential services, and ensure we are not forced into deeper cuts when revenues decline, or costs are shifted in Washington. Expanding California’s reserves recognizes that fiscal responsibility and protecting working families must go hand in hand. Taking this important step gives California a stronger backstop for schools, health care, public safety, wildfire response, and countless other programs our communities rely on.” Senator Melissa Hurtado (D-Bakersfield)

“California’s revenues are volatile, and we know that strong years don’t last forever. This proposal would strengthen the Rainy Day Fund by increasing reserves, capturing more revenue during boom years, and helping the state pay down long-term obligations. The idea is to save more during good times so we’re better prepared during difficult times. That’s how we protect essential services and maintain long-term fiscal stability.” Senator John Laird (D-Santa Cruz) 

The Save For California’s Future Act would:

• Increase the constitutional cap on California’s main rainy day fund, from 10% to 20%
• Fully protect guaranteed funding for California’s public schools
• Increase the amount saved in the rainy day fund during years when taxes generated by capital gains and other asset-related income reach especially high levels
• Extends the requirement that certain funds be dedicated to paying down state liabilities and expands the types of liabilities that can be paid down, including for schools and federal Unemployment Insurance loans.