Assembly budget chair presents ACA 20 to expand California's rainy day fund to 20%

Assembly Budget Chair Jesse Gabriel presented ACA 20 — the Safer California Futures Act — to the Assembly Budget Subcommittee on Accountability and Oversight, saying the measure would raise the Budget Stabilization Account cap from 10% to 20% of general fund revenues and modernize how the state treats deposits and withdrawals under the Gann (state appropriations) limit.

"Known as the Safer California Futures Act, ACA 20 is premised on the common sense principle that ... we should set aside savings during good times to prepare for downturns," Gabriel said, framing the change as a way to protect schools, public safety and essential services against future economic shocks.

The measure would do four things, Gabriel said: increase the maximum size of the rainy day fund from 10% to 20% of general fund revenues; increase mandatory deposits in especially strong growth years; treat the Gann limit so withdrawals — rather than deposits — count against the limit; and update the list of eligible debt repayments to include budget loans, Proposition 98 settle-ups and federal unemployment insurance debt.

Why voters? Committee members asked why the proposal requires voter approval. Carolyn Chu of the Legislative Analyst's Office summarized the legal reason: "Constitutional amendments can only be adopted through approval of the voters," and because ACA 20 would change provisions that currently sit in the constitution (including how much can be set aside), the amendments must be placed before voters by the Legislature and approved by majority vote.

Authors and witnesses repeatedly stressed that ACA 20, as drafted, does not change the calculation of Proposition 98 (the constitutional minimum school funding guarantee). Gabriel said the text includes an explicit sentence making that intent "crystal clear" for education stakeholders.

On Gann-limit treatment, LAO and budget staff said the proposal would exclude deposits from the appropriations limit in the year funds are placed into the BSA and count withdrawals as appropriations in the year they are spent. LAO staff noted that this treatment is intended to make it easier to set aside voluntary deposits in high-revenue years without immediately counting the deposit against the spending limit.

Committee members pressed for specifics about the mandatory-deposit mechanics and current balances. Witnesses and staff provided the working figures discussed in the hearing: the mandatory deposit component would be 1.5% of the general fund plus excess capital gains above an 8% threshold (half of that excess is split between the rainy day fund and debt payments); the deposit trigger was described roughly as about $25 billion and the committee heard that under the two‑chamber plan the BSA balance would be about $15 billion.

Members also asked whether ACA 20 mandates particular debt repayments. Assembly staff explained the measure updates the list of eligible debts (and adds unemployment insurance fund loans) and requires the Legislature each year to choose among eligible categories; it does not compel repayment of a single specified liability automatically.

Opposition and concerns appeared mostly technical and political: Assemblymember Lackey said the complexity could obscure effects and warned it "seems to create more opportunity to spend" and called it a potential "slush fund." Gabriel and supporters pushed back that the intent is conservative: hold money in reserve in boom years so core services are protected in downturns. Lisa Rosinski of the Department of Finance said the administration "fully supports the provisions before you" and emphasized that deposits placed into the BSA are constrained and not available to spend until formally withdrawn.

Public commenters who appeared at the end of the hearing spoke in favor. Nuen Taraki (California Forward) urged the subcommittee to strengthen reserves to protect against shocks; an Elevate California representative and the California Chamber of Commerce also expressed support or interest in the measure proceeding to the ballot.

The committee heard technical questions about recent suspensions of mandatory deposits; witnesses explained that mandatory deposits have been suspended for recent budget years and said the current proposed budget was not projected to suspend the deposit for the upcoming budget year. Committee members asked for follow‑up figures and staff said they could provide exact numbers to members' offices.

With discussion complete, the subcommittee's moderator closed the hearing, thanked staff and witnesses, and noted ACA 20 is expected to be on the Assembly floor the following day.