Late last week, California Gov. Jerry Brown called for a special session of the State Legislature to address revising ACA 4, a constitutional amendment negotiated by then-Gov. Arnold Schwarzenegger and Republican and Democratic state legislative leaders to institute a “rainy-day” fund. Since its approval by lawmakers in 2010, ACA 4 has been moved from the June 2012 primary election ballot to the November 2014 general election ballot. Now, Gov. Brown and Democratic legislative leaders want to amend the language before voters have a say.
In its current form, ACA 4 would boost reserves from 5% to 10% of the General Fund, mandate 3% of the general revenues be deposited for most years into the reserve, require non-recurring revenues above historic trends be deposited into reserve, and limit spending. ACA 4 would also only allow withdraws from the reserve when state revenues drop below last year’s budget, adjusted for population and inflation, and for other rare reasons like a declared emergency.
Liberals criticize the current version for being too restrictive (i.e., it saves too much therefore preventing large future spending increases), while conservatives are wary of Gov. Brown and legislative Democrats’ revisions for being too loose (i.e., not enough money is saved and it can too easily be withdrawn and spent).
Here’s a bit of California reality that neither side can dispute: while it’s good news that Sacramento is showing a renewed interest in a rainy-day fund, the state’s volatile budget requires more than just slipping a few coins into the Golden State’s piggy bank in years of plenty.