Public finance.

Plain English Breakdown

Checked against official source text during the last sync.

Public Finance Changes

This legislation changes how money is moved into a special savings account for California and sets new limits on that account.

What This Bill Does

• Changes the amount of money that must be put into the Budget Stabilization Account each year from 1.5% to an unspecified percentage of General Fund revenues.
• Increases the maximum balance in the Budget Stabilization Account from 10% to 20% of the estimated tax revenue for the fiscal year.
• Specifies that money moved into this account does not count towards yearly spending limits set by law.

Who It Names or Affects

• The State of California and local governments in California
• Taxpayers who contribute to General Fund revenues

Terms To Know

Budget Stabilization Account

A special savings account for the state that holds money during good financial times to help manage budget shortfalls during tough economic periods.

General Fund revenues

Money collected from various sources, like taxes and fees, which is used by the government for general expenses.

Limits and Unknowns

• The exact percentage of General Fund revenues that must be transferred to the Budget Stabilization Account has not been determined.
• This bill does not specify how the new limits will affect future budget decisions or economic stability.

Official Summary Text

ACA 1, as introduced, Valencia.
Public finance.
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.
The California Constitution establishes the Budget Stabilization Account and requires, for every fiscal year and based on the Budget Act for that fiscal year, the Controller to transfer from the General Fund to the Budget Stabilization Account, no later than October 1, a sum equal to 1.5% of the estimated amount of General Fund revenues for that fiscal year. The California Constitution requires other transfers between the General Fund and the Budget
Stabilization Account, as specified. The California Constitution prohibits the amount transferred pursuant to these provisions 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 amount of the General Fund proceeds of taxes for the fiscal year estimate, as specified.
This measure would change the 1.5% required transfer to an undetermined percentage of the estimated amount of General Fund revenues for that fiscal year. The measure would change the 10% limit on the balance in the Budget Stabilization Account to 20% of the amount of the General Fund proceeds of taxes for the fiscal year estimate, as specified. The measure would specify that funds transferred under these provisions to the Budget Stabilization Account do not constitute appropriations subject to the above-described annual appropriations limit.

Current Bill Text

Download Bill PDF