Democrats want California voters to give them more flexibility over spending
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SACRAMENTO — Gov.Gavin Newsom and Democratic leaders of the California Legislature plan to approve a proposed constitutional amendment this week that would ask voters to give them more flexibility over state spending and allow them to save money that could otherwise go back to taxpayers.
The proposal seeks to exempt deposits into state savings accounts from a spending limit that voters adopted through a series of ballot measures dating back to the late 1970s and to increase the share of tax revenue that can be put into the rainy day fund.“Putting money aside to protect ourselves from future uncertainties isn’t just good government; it’s common sense,” Newsom said in a statement.“California is strong and resilient, but we’re not immune to economic headwinds.
At a time when our essential services are under pressure, we have a responsibility to safeguard the programs and investments that Californians rely on.” Assembly Constitutional Amendment 20, which Democrats are calling the “Save for California’s Future Act,” could receive push back from taxpayer advocates.Under an existing state appropriations restraint, also known as the Gann limit, lawmakers cannot spend more than an amount determined by a formula that takes into consideration annual tax proceeds and changes to the population and cost of living.
Tax revenue above the limit must be divided between schools and refunds to taxpayers.With few exceptions, the limit applies to most appropriations of tax revenue, including money that lawmakers tuck away into the rainy day fund and other reserves.
California voters have also capped the amount of money lawmakers can set aside in the rainy day fund to 10% of general fund proceeds in a given year.Since taking office, Newsom has argued that it doesn’t make sense for savings to count as spending under state law.
State budget revenue is subject to dramatic swin...