Prop 2 Rainy Day Fund, California 2026: Who's Paying and Why

On the November 3 Ballot

Prop 2: Rainy Day Fund

Raises the cap on state reserves

Why it's on your ballot The Legislature passed it, but the law requires voters to approve it. It changes the state constitution, which only voters can do.⁶ The rule: Cal. Constitution, Art. XVIII, §§ 1, 4. Amendments the Legislature proposes must be approved by a majority of voters.⁷

History Voters created the current rainy day fund rules in 2014 (Prop 2).⁸

A YES vote means: The state would keep larger budget reserves and would have to make extra debt payments for longer.⁶
A NO vote means: The rules for state reserves and debt payments would not change.⁶

Yes side $0 No side $0 Who gains, who pays

Who it helps if it passes

Schools, health care and other programs that would face less severe cuts in a recession
Employers, who pay higher federal payroll taxes until the state repays its $20 billion unemployment insurance debt

Who pays or loses if it passes

Programs that would otherwise get more money in good years
Opponents say taxpayer rebates under the state spending limit would become less likely

What the funders get No campaign on either side has raised $1 million.¹

Cost to taxpayers No new taxes. More money would be set aside in good years instead of being spent.⁶

Raises the limit on the state's rainy day reserve from 10% to 20% of general fund tax revenue, and allows tax revenue to be used to pay down California's $20 billion federal unemployment insurance debt.⁶

The state could save more money in good years to spend in bad ones. Money put into reserves is not available for current programs.⁶

YES side special interest: None

✗ One funder dominates: No major funders¹
✗ Funders profit: No major funders¹
✗ Narrow benefit: Statewide budget rule¹
✗ Outside money: No major funders¹

NO side special interest: None

✗ One funder dominates: No major funders¹
✗ Funders profit: No major funders¹
✗ Narrow benefit: No major funders¹
✗ Outside money: No major funders¹

Endorsed by

Gov. Gavin Newsom
Legislative Democrats
California Democratic Party

Opposed by

Legislative Republicans
Reform California

Funding the YES campaign

No committee has raised $1M or more. That is the state's threshold for reporting top donors.

Funding the NO campaign

No committee has raised $1M or more. That is the state's threshold for reporting top donors.

Sources for this measure: ^1,6,8,9