California Senate approves ACA 20 to expand rainy day fund and change debt rules

The California State Senate on June 26 voted to order Assembly Constitutional Amendment 20 (ACA 20), a proposed constitutional change that would expand the state’s rainy day fund and alter rules for deposits and withdrawals.

Sen. Ben Laird, the measure’s floor author, said ACA 20 “mandates deposits into the rainy day fund until balance reaches 20% of general fund taxes, doubling the prior cap of 10%,” and would change how reserves are counted under the state appropriations limit so that withdrawals — not deposits — are counted. Laird said the change would strengthen the state’s fiscal resilience and help avoid the program cuts and tax increases seen in past downturns.

Opponents warned the amendment leaves too much discretion to use the reserves to pay other debts. “It authorizes payments towards the UI debt, but it doesn't require them,” said Sen. John Sejarto, who argued the measure could allow the Legislature to delay paying down nearly $19 billion in federal unemployment‑insurance debt. Several Republican members said the change could create a larger pot of funds that future legislatures might borrow against.

Supporters — including Sen. Hurtado, a co‑author — said the amendment imposes discipline and is necessary to manage volatile revenue swings. Sen. Cabaldon noted independent credit‐rating agencies favor higher reserves and said a stronger rainy day fund could reduce borrowing costs for taxpayers.

After extended debate, the measure passed on a roll‑call vote. The Senate recorded 29 ayes and 2 noes; the measure will now proceed as a constitutional amendment to be placed before voters.