Proposition 2 (2014) | californiachoices.org

My vote

Proposition 2 (2014) would change the requirements for the State's Budget Stabilization Account, which was created in 2004 by Proposition 58 to force the government to pass a balanced budget each year. The measure would require half the revenues to be used to repay state debts as well as limiting use of remaining fund to emergencies and budget deficits.

Proposition 2 is a legislatively-referred constitutional amendment. If passed, it would amend Section 12.5 of Article IV and Sections 20-22 of Article XVI of the California Constitution.

Official Results

Yes votes: 4,831,045 [69.1%]

No votes: 2,158,004 [30.9%]

See Endorsements for Proposition 2 (2014)

Details

Pro/Con

Pro:

Supporters of Prop. 2 believe that it will force legislators to "live within their means" and will protect citizens from unnecessary tax increases. They say that the budget deficit of several years ago required the Legislature to make education cuts and that must be avoided in the future.

Supporters

Yes on Props 1 and 2

Democratic Party

Con:

Those that oppose Prop. 2 believe that the measure violates the minimum Proposition 58 guarantee. They say the measure will force schools to wait in "good years" for constitutionally guaranteed revenues. Prop. 2 opponents believe that the measure will unfairly allow the State Controller and the legislature to use withheld educational funds to manage the general fund. They also believe the measure's requirement that school districts lower their minimum reserves when any money is paid into Prop. 2's stablization account will place districts in dangerous financial circumstances.

Opposition

Educate Our State

In Depth

California uses budget reserves to save money when the state's economy is healthy. During these periods, those funds are not spent on public programs. During unhealthy financial years, the state uses that money to balance the budget. Proposition 58 (March 2004) requires the governor to decide each year whether or not to allow 3 percent of general fund revenues into the Budget Stablization Account state reserve. Under Prop. 58, each year's amount continues to go to the BSA until a target maximum is reached. The legsislature can vote to take the money out of the BSA. During recent years of fiscal crisis, California governors have decided not to put any funds into the BSA. However, Governor Jerry Brown did put money into the BSA in 2014.

Proposition 2 would amend the State Constitution to replace the rules established for the Budget Stabilization Account, the state's budget reserve. The new rules would alter how the state pays off debt and saves money in reserves. Proposition 2 would initiate a new state law which would set how much school districts can keep in local reserve for future years. The measure would require the Governor's office to guesstimate General Fund earnings and spending in future years.

Rules changed:

Where currently there is no required extra spending on existing state debts, Prop. 2 would require a minimum of $800 million. When capital gains revenues are strong, the minimum could go as high as 2 billion or more.
Current law requires a basic amount of about 3 billion dollars for state reserves. Prop. 2 would require a minimum of $800 million, and when capital gains revenues are strong, the minimum could go as high as 2 billion or more. Currently the governor can put less than the base amount for the BSA at any point. Under Prop. 2, the governor would need to call a fiscal emergency and the legislature would have to agree. The state can currently take out any amount from the BSA. Prop. 2 would require that only enough is taken out which is needed to address a fiscal emergency.
The BSA's current maximum size is $8 billion or 5 percent of General Fund revenues. The maximum under Prop. 2 would be about 10 percent of general fund revenues. Currently, there is no requirement for state school reserves. Prop. 2 would put money into a new state reserve for schools and community colleges in some years when capital gains revenues are healthy. There is currently no limit on the maximum size of school districts reserves. Prop. 2 would set a maximum on the amount school districts can keep at the local level.

Polling

Hoover Institution Golden State Poll, October 3-17, 2014

PPIC Californians And Their Government, October 2014

PPIC Californians And Their Government, September 2014

Voter Resources

Official CA Documents
Official Voter Information Guide

Campaign Finance Information
Cal-Access
Check out how much money is being raised and spent to pass or defeat this measure, and where the money is coming from.

Cal-Access Ballot Measure Summary Data Search
Select "General 04 November 2014" and "Proposition 02" from the drop-down menus. Cal-Access provides financial information supplied by state candidates, donors, lobbyists, and others.

Nonpartisan Analyses
Ballotpedia
League of Women Voters: Pros and Cons

Proposition 2: Should California Prioritize Paying Down Debt And Significantly Change State Budget Reserve Policies? California Budget Brief, Sept. 2014.

Multimedia

Supporters