Gov. Brown calls to strengthen rainy day fund to pay down CA debt, liabilities
OCBC has led the effort to strategically engage key stakeholders from both the Orange County business and education/workforce training communities with the goal of bridging the gap between existing IT curriculum and training, with the needs of local businesses. On March 14, representatives from Orange County’s business and education communities received an update on the Orange County
Governor Jerry Brown called a special session of the Legislature Wednesday to replace the Rainy Day Fund on the November ballot with a dedicated reserve that would allow the state to pay down its debts and unfunded liabilities. In 2010, the Legislature approved the proposal on the November 2014 ballot – ACA 4 – for the consideration of voters, but that proposal does not address the volatility of the capital gains revenue or provide for schools to help cushion future downturns, and constrains the state’s ability to pay down long-term liabilities. The Rainy Day Fund was enacted with the passage of Proposition 58 in 2004 and directs 3 percent of annual revenues into the Budget Stabilization Account.
The Governor proposed these specific changes to the Rainy Day Fund:
- 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 revenues.
- Limit withdrawals to ensure the state does not overly rely on the fund at the start of a downturn.
- Create a Proposition 98 reserve to smooth school spending and avoid future cuts. This reserve for schools makes no changes to the guaranteed level of funding dedicated to schools under Proposition 98. In addition, the Proposition 98 reserve would not begin until school funding is fully restored following cuts made during the Great Recession.
For more information, contact Bryan Starr, Senior Vice President, Government Affairs.