What is the main goal of Proposition 2?

Proposition 2 aims to double the size of California's rainy day fund to better manage budget volatility and avoid deep cuts to state programs during economic downturns.

California Proposition 2 Aims to Bolster Rainy Day Fund

A bipartisan proposal seeks to double the state's budget reserves to mitigate the impact of economic downturns and reduce the need for program cuts.

2026-10-13 · Updated 2026-10-13

State leaders from both Democratic and Republican parties have found common ground on a measure designed to stabilize California's budget. Proposition 2, as it is being called, aims to increase the state's savings for economic downturns.

California's economy is known for its size and dynamism, but also for its volatility, ranking fifth nationally in revenue fluctuations. Despite this, the state's budget reserves are relatively small, ranking 29th in the nation. This imbalance often leads to significant cuts in essential services like healthcare, higher education, public safety, and social safety nets during economic challenges.

Proposition 2 proposes to double the size of the state's rainy day fund. This measure would require California to save more during periods of strong revenue growth, thereby creating a larger cushion to absorb the impact of future economic downturns without necessitating immediate, painful budget reductions.

The initiative builds upon a framework approved by voters in 2014 and incorporates lessons learned from over a decade of experience with the existing reserve fund. The proposal was developed with input from budget experts, including the Legislative Analyst's Office, the Department of Finance, independent fiscal analysts, and business leaders.

Supporters argue that a larger rainy day fund will enhance California's fiscal credibility, enabling it to weather economic storms more effectively, borrow at lower rates, and provide greater confidence to families and businesses that the state can maintain its commitments during challenging economic times.

FAQ

What is the main goal of Proposition 2?: Proposition 2 aims to double the size of California's rainy day fund to better manage budget volatility and avoid deep cuts to state programs during economic downturns.
Who was involved in developing Proposition 2?: The proposal was developed by budget experts, including the Legislative Analyst's Office, the Department of Finance, independent fiscal experts, and business leaders, with bipartisan support from state leaders.