Prop. 2 explained: Doubling the state's rainy day fund
The amendment raises California's savings cap from 10% to 20% and changes how deposits count against the spending limit.
SAN JOSE - Proposition 2 would change the state Constitution so California can save more money in its "rainy day fund," a reserve used when tax collections drop. The Legislature placed it on the ballot as ACA 20, which passed the Senate 29-2 and the Assembly 59-8.
What it would do
According to the Legislative Analyst's Office (LAO), the state would keep making deposits until the fund reaches 20% of General Fund taxes, up from 10% today. It would deposit even more in years when taxes on investment gains are very high, such as when the stock market booms.
The state would also have to make extra debt payments through 2040 instead of 2030, and could use that money for more purposes, such as repaying loans from other state funds.
The measure also changes how savings count toward the state appropriations limit, a 1979 cap on how much tax money the state may spend. Deposits into the reserve would not count against the limit when saved; they would count when the money is taken out.
Who would be affected
The change affects how the state budgets rather than any one group directly. In a downturn, a larger reserve could reduce cuts to schools, health care and other programs. In boom years, less money would be available for new spending, and opponents argue taxpayers would be less likely to get a rebate.
What it would cost
The LAO says state budget reserves would be higher and the state might make more debt payments. It does not estimate a direct cost.
Supporters and why
Supporters listed by the state include the California Professional Firefighters, the Los Angeles Area Chamber of Commerce, Gov. Gavin Newsom, gubernatorial candidate Xavier Becerra and Assemblymember Jesse Gabriel. Their argument says the budget swung "from a $100 billion surplus to a $50 billion deficit in just a few years."
"Proposition 2 strengthens that fund, so schools, healthcare, and public safety don't pay the price for Sacramento's boom-and-bust budgeting." - Argument in favor of Prop. 2
Opponents and why
The argument against was signed by Carl DeMaio, chairman of Reform California, and Steven Choi, vice chair of the Senate Elections and Constitutional Amendments Committee, among others. The state lists Assemblymember David Tangipa as the contact for the No side. They say the measure creates loopholes in the spending limit.
"Prop. 2 creates loopholes and accounting gimmicks so politicians can eliminate any chance of you getting your tax rebate." - Argument against Prop. 2
Where the parties stand
The California Democratic Party recommends yes; the California Republican Party opposes it. In the PPIC survey, 85% of Democrats, 57% of independents and 23% of Republicans said they would vote yes.
The money
As of Oct. 29, the Secretary of State listed no contributions to committees formed for or against Prop. 2.
Polling
In a Public Policy Institute of California (PPIC) survey of 1,086 likely voters taken Oct. 16-22 (margin of error plus or minus 3.8 points), 61% said yes and 38% no, about the same as September.
What your vote means
A yes vote means rules for state reserves and extra debt payments would change, and reserves would be higher. A no vote means the rules would stay the same.
Source: Secretary of State, Voter Information Guide, Prop. 2; Legislative Analyst analysis, Prop. 2; Official arguments and rebuttals, Prop. 2; Secretary of State Quick Guide to Props, Prop. 2; California Democratic Party endorsements; California Republican Party endorsements; PPIC Statewide Survey, October 2026