Proposition 2: Should California Prioritize Paying Down Debt and Significantly Change State Budget Reserve Policies?

Yesterday the California Budget Project (CBP) released its analysis of Proposition 2, the rainy day fund measure that will appear on the November 4, 2014 statewide ballot.

Proposition 2 would amend the California Constitution to make key changes to state budgeting practices. These include rewriting the rules for the state’s current budget reserve; requiring that certain state liabilities be paid down each year for 15 years; and creating a new state budget reserve for K-14 education, though with significant constraints both on when dollars would be placed in this new account and on the amount of these deposits.

The CBP’s analysis examines the provisions of Proposition 2, including those that would govern deposits into and withdrawals from the reserves. This analysis also discusses what the new debt payment and reserve policies would mean for the overall state budget and for K-14 education funding, along with other policy issues raised by the measure.

The CBP neither supports nor opposes Proposition 2. This analysis aims to help voters make an informed decision based on the merits of the proposal.

— Steven Bliss