ACA20 - Save for California’s Future Act.

Assembly Constitutional Amendment No. 20 CHAPTER 130 A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by amending Sections 20 and 22 of Article XVI thereof, relating to state finance. [ Filed with Secretary of State June 25, 2026. ] LEGISLATIVE COUNSEL'S DIGEST ACA 20, Gabriel. Save for California’s Future Act. (1) The California Constitution establishes the Budget Stabilization Account and requires the Controller to transfer from the General Fund to the account, no later than October 1 of each fiscal year, a sum equal to 1.5% of the estimated amount of General Fund revenues for that fiscal year. The Department of Finance is required to report specified information to the Legislature, including (A) an estimate of the amount of General Fund proceeds of taxes that may be appropriated for that fiscal year, (B) an estimate of the portion of that amount that is derived from personal income taxes paid on net capital gains, and (C) the portion of the estimate in (B) that exceeds 8% of the estimate made in (A). Notwithstanding the requirement for the Controller to transfer 1.5% of General Fund revenues for each fiscal year to the account, for the 2015–16 fiscal year to the 2029–30 fiscal year, inclusive, the California Constitution instead requires 50% of that amount and 50% of the amount described in (C) to be transferred to the Budget Stabilization Account. The California Constitution requires the remaining 50% to be appropriated for unfunded liabilities and other specified purposes. Commencing with the 2027–28 fiscal year, this measure would require the Department of Finance to report the sum of the portion of the estimate in (B) that exceeds 8%, but does not exceed 10%, of the estimate in (A) and 150% of the estimate in (B) that exceeds 10% of the estimate in (A). The measure would require 50% of that sum and 50% of the amount equal to 1.5% of the estimated amount of General Fund revenues for the fiscal year to be transferred to the Budget Stabilization Account each fiscal year until the 2039–40 fiscal year, and it would require the remaining 50% to be appropriated for unfunded liabilities and other specified purposes. The measure would add repayment of federal loans relating to unemployment insurance to the purposes for which the remaining 50% may be appropriated. The California Constitution limits the amount that is required to be transferred to the Budget Stabilization Account for any fiscal year from exceeding an amount that would result in a balance in the account that, when the transfer is made, exceeds 10% of the estimated amount of the General Fund proceeds of taxes for the fiscal year, as specified. This measure would increase that limit to 20% of the estimated amount of the General Fund proceeds of taxes for the fiscal year. (2) The California Constitution creates the Public School System Stabilization Account in the General Fund and requires the Controller to transfer specified amounts from the General Fund to the account. Upon a proclamation by the Governor declaring a budget emergency, the Legislature may suspend or reduce transfers to the Budget Stabilization Account or Public School System Stabilization Account, return funds in the Budget Stabilization Account to the General Fund, and appropriate funds in the Public School System Stabilization Account for the support of school districts and community college districts. The California Constitution defines “budget emergency” for these purposes to mean (A) the existence of conditions of disaster or extreme peril, as declared by the Governor, or (B) a determination by the Governor that estimated resources are inadequate to fund General Fund expenditures for the current or ensuing fiscal year at a level equal to the highest amount of total General Fund expenditures estimated at the time of enactment of any of the three most recent Budget Acts. The California Constitution requires the Governor, within the first 10 days of each calendar year, to submit to the Legislature a proposed budget for the fiscal year commencing on July 1 of that calendar year. Under existing statutory law, the Director of Finance is required to submit a revised budget proposal to the Legislature on or before May 14. Under this measure, the revised budget proposal submitted on or before May 14, or any other budgetary revision required to be submitted to the Legislature, would constitute the Governor’s proclamation of a budget emergency if the above-described conditions for a budget emergency exist, and if the budgetary revision proposes to suspend or reduce transfers from the General Fund to the Budget Stabilization Account or Public School System Stabilization Account, return funds in the Budget Stabilization Account to the General Fund, or appropriate money from the Public School System Stabilization Account. (3) The California Constitution prohibits the total annual appropriations subject to limitation of the State and of each local government from exceeding the appropriations limit of the entity of government for the prior year, adjusted for the change in the cost of living and the change in population. The California Constitution defines “appropriations subject to limitation” of the State for these purposes. This measure would exclude both of the following from the appropriations subject to limitation of the State commencing with the 2027–28 fiscal year: (A) transfers to the Budget Stabilization Account; and (B) transfers to a General Fund reserve account established by the Legislature known as the Projected Surplus Temporary Holding Account, provided that the amount not subject to limitation may not exceed 10% of the amount of General Fund proceeds of taxes for the applicable fiscal year. Funds withdrawn, transferred, or appropriated from those reserve accounts, if they were not counted previously as appropriations subject to limitation of the State when deposited, would constitute appropriations subject to limitation of the State in the fiscal year in which the withdrawal, transfer, or appropriation occurs. Digest Key Vote: 2/3 Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text Resolved by the Assembly, the Senate concurring, That the Legislature of the State of California at its 2025–26 Regular Session commencing on the second day of December 2024, two-thirds of the membership of each house concurring, hereby proposes to the people of the State of California that the Constitution of the State be amended as follows: First— (a) This measure shall be known, and may be cited, as the Save for California’s Future Act. (b) The Legislature finds and declares all of the following: (1) California families understand that responsible financial planning requires setting aside savings during good times to prepare for unexpected challenges and economic downturns. The State of California should follow the same commonsense principle. (2) Californians expect their government to manage public finances responsibly, prudently, and with an eye toward future generations. Maintaining adequate reserves helps ensure that essential public services remain available when they are needed most. (3) California’s economy is among the largest and most dynamic in the world, but it is also subject to economic cycles, fluctuations in revenue, natural disasters, public health emergencies, and other unforeseen events that can place significant strain on the state budget. (4) When state revenues decline during economic downturns, insufficient reserves can force difficult choices that disrupt essential programs and services relied upon by California families, students, seniors, veterans, workers, and businesses. (5) Building and maintaining strong budget reserves during periods of economic growth helps protect Californians from sudden reductions in essential services and reduces the need for drastic corrective actions during periods of fiscal stress. (6) Sound financial planning requires looking beyond the next fiscal year and preparing for future challenges before they arise. Just like families save for emergencies and unexpected expenses, California should save during good years to protect schools, public safety, and essential services during tough times. (7) Strong reserve policies promote fiscal stability, improve public confidence in state government, support long-term economic growth, and help preserve California’s ability to respond effectively to emergencies and economic downturns. (8) Proposition 98 was enacted by the voters in 1988 to provide a minimum funding level for schools. Nothing in this act is intended to change the calculation or funding of the minimum guarantee under Section 8 of Article XVI. (c) It is therefore the intent of the Legislature to strengthen the state’s commitment to responsible budgeting, long-term financial planning, and prudent savings by enhancing California’s budget reserves and ensuring that the state is better prepared for future economic challenges. Strengthening reserves is an investment in California’s future and in future generations. Second— That Section 20 of Article XVI thereof is amended to read: SEC. 20. (a) (1) (A) The Budget Stabilization Account is hereby created in the General Fund. (B) Balances deposited in the Budget Stabilization Account pursuant to paragraph (2) of this subdivision (a) and subdivisions (c) and (d) prior to the effective date of the measure adding this subparagraph shall remain in the account and shall be transferred, withdrawn, or adjusted thereafter pursuant to the provisions of this Constitution as amended by the measure adding this subparagraph. (2) For the 2027–28 fiscal year and each fiscal year thereafter, based on the Budget Act for the fiscal year, the Controller shall transfer from the General Fund to the Budget Stabilization Account, no later than October 1, a sum equal to 1.5 percent of the estimated amount of General Fund revenues for that fiscal year. (b) (1) For the 2027–28 fiscal year and each fiscal year thereafter, based on the Budget Act for the fiscal year, the Department of Finance shall provide to the Legislature all of the following information: (A) An estimate of the amount of General Fund proceeds of taxes that may be appropriated pursuant to Article XIII B for that fiscal year. (B) (i) An estimate of that portion of the General Fund proceeds of taxes identified in subparagraph (A) that is derived from personal income taxes paid on net capital gains. (ii) The sum of the following: (I) The portion of the estimate in clause (i) that is in excess of 8 percent, but not in excess of 10 percent, of the estimate made under subparagraph (A). (II) 150 percent of the portion of the estimate in clause (i) in excess of 10 percent of the estimate made under subparagraph (A). (C) That portion of the state’s funding obligation under Section 8 that results from including the amount calculated under clause (ii) of subparagraph (B), if any, as General Fund proceeds of taxes. (D) The amount of any appropriations described in clause (ii) of subparagraph (B) of paragraph (1) of, or subparagraph (C) of paragraph (2) of, subdivision (c), that are made from the revenues described in clause (ii) of subparagraph (B) of this paragraph. (E) The amount resulting from subtracting the combined values calculated under subparagraphs (C) and (D) from the value calculated under clause (ii) of subparagraph (B). If less than zero, the amount shall be considered zero for this purpose. (F) The lesser of the amount calculated under subparagraph (E) or the amount of transfer resulting in the balance in the Budget Stabilization Account reaching the limit specified in subdivision (e). (2) In the 2027–28 fiscal year, with respect to the 2026–27 fiscal year only, and in the 2028–29 fiscal year and each fiscal year thereafter, separately with respect to each of the two next preceding fiscal years, the Department of Finance shall calculate all of the following, using the same methodology used for the relevant fiscal year, and provide those calculations to the Legislature: (A) An updated estimate of the amount of General Fund proceeds of taxes that may be appropriated pursuant to Article XIII B. (B) (i) An updated estimate of that portion of the General Fund proceeds of taxes identified in subparagraph (A) that is derived from personal income taxes paid on net capital gains. (ii) The sum of the following: (I) That portion of the updated estimate in clause (i) that is in excess of 8 percent, but not in excess of 10 percent, of the updated estimate made under subparagraph (A). (II) 150 percent of the portion of the estimate in clause (i) in excess of 10 percent of the estimate made under subparagraph (A). (C) The updated calculation of that portion of the state’s funding obligation under Section 8 that results from including the updated amount calculated under clause (ii) of subparagraph (B), if any, as General Fund proceeds of taxes. (D) The amount of any appropriations described in clause (ii) of subparagraph (B) of paragraph (1) of, or subparagraph (C) of paragraph (2) of, subdivision (c), that are made from the revenues described in clause (ii) of subparagraph (B) of paragraph (1). (E) The amount resulting from subtracting the combined values calculated under subparagraphs (C) and (D) from the value calculated under clause (ii) of subparagraph (B). If less than zero, the amount shall be considered zero for this purpose. (F) The amount previously transferred for the fiscal year by the Controller from the General Fund to the Budget Stabilization Account pursuant to subdivisions (c) and (d). (G) The lesser of (i) the amount, not less than zero, resulting from subtracting, from the amount calculated under subparagraph (E), the value of any suspension or reduction of transfer pursuant to paragraph (1) of subdivision (a) of Section 22 previously approved by the Legislature for the relevant fiscal year, and the amount previously transferred for that fiscal year by the Controller as described in subparagraph (F), or (ii) the amount of transfer resulting in the balance in the Budget Stabilization Account reaching the limit as specified in subdivision (e). (c) (1) (A) By October 1 of the 2027–28 fiscal year and each fiscal year thereafter to the 2039–40 fiscal year, inclusive, based on the estimates set forth in the annual Budget Act pursuant to paragraphs (2) and (3) of subdivision (h), and the sum identified in paragraph (2) of subdivision (a), the Controller shall transfer amounts from the General Fund and the Budget Stabilization Account, pursuant to a schedule provided by the Director of Finance, as provided in subparagraph (B). (B) Notwithstanding any other provision of this section, in the fiscal year to which the Budget Act identified in subparagraph (A) applies: (i) Fifty percent of both the amount identified in paragraph (2) of subdivision (a), and the amount resulting from subtractin [Text truncated for display. Full text available on Congress.gov.]