Summary#

ACA 20, the Save for California’s Future Act, proposes amendments to the California Constitution’s state-finance rules. Its goal is to increase state reserves and set rules for using them; that goal is not a guaranteed result.

• From 2027–28 through 2039–40, the Controller would transfer half of specified amounts to the Budget Stabilization Account and the Legislature would appropriate the other half for listed obligations. If eligible obligations are less than the amount to be appropriated, the remainder would go to the account, subject to its limit.
• The specified amounts include half of the regular 1.5% reserve transfer and half of a new calculation based on capital-gains tax revenue above 8% of tax proceeds, adjusted for a school-funding obligation.
• From 2040–41 onward, the full specified amounts would go to the reserve account, though the Legislature could appropriate up to half for the listed obligations.
• The account’s balance limit would rise from 10% to 20% of estimated General Fund tax proceeds. Transfers that would exceed the limit could be spent only on infrastructure.
• Revised budget proposals could count as the Governor’s budget-emergency proclamation when the stated emergency conditions exist and the proposal would change reserve transfers or use reserve funds.

What it means for you#

• Californians generally: This changes how some state tax revenue is saved or directed to specified obligations. It does not create a new individual benefit, tax, fee, or fine.
• Schools and community colleges: The measure requires the Department of Finance to calculate how including the specified capital-gains amount affects the state’s school-funding obligation. It says it is not intended to change the Proposition 98 minimum funding guarantee.
• State government: The Controller must make the specified transfers, following a schedule from the Director of Finance. The Legislature must appropriate the designated share for listed purposes, including unfunded obligations, certain pension and retiree-benefit costs, and federal loans to the Unemployment Fund.
• People relying on public services: The measure allows certain reserve transfers to be excluded from the state appropriations limit when deposited, with limits for the Projected Surplus Temporary Holding Account. Withdrawals that were not counted when deposited would count against the limit when withdrawn. The bill does not guarantee that reserves will prevent service cuts.

Money#

No cost estimate is included in the supplied material; the amounts depend on future revenue estimates and budget decisions.

• The measure directs transfers between the General Fund and the Budget Stabilization Account, and appropriations for specified obligations.
• The reserve balance limit would increase to 20% of estimated General Fund tax proceeds.
• No estimate is given for staffing, administration, or the amounts that would be transferred or appropriated.

What is unclear#

• The supplied status labels the measure “signed into law,” but its text proposes a constitutional amendment to the people. The material does not say whether voters approved it or when the changes would take effect.
• The amount of future transfers and appropriations is unknown because it depends on tax revenue, estimates, and eligible obligations.
• The bill does not explain how the listed purposes would be prioritized if the available amount is not enough to cover them.
• The supplied material does not explain how the new rules would interact with other reserve or spending-limit rules beyond the changes described.

Case for#

• The bill appears intended to save more revenue during stronger years and make funds available for specified obligations.
• A possible argument for the higher reserve limit is that it would let the state hold more funds before directing additional amounts to infrastructure.
• The bill sets out a route for using reserves during a budget emergency, including when a qualifying budget revision proposes reserve changes.

Case against#

• One concern is that directing more revenue to reserves could leave less available for other budget choices in the years when the transfers are made.
• The formula is technical, and future amounts depend on estimates and calculations that may be difficult for the public to assess.
• It is unclear how much the rules would change the state’s actual financial cushion or spending decisions; the bill provides no dollar estimates.