This explainer was originally published by our news partners CalMatters. Be prepared for California’s midterms: Sign up for CalMatters' free election newsletter and be the first to know when they update the CalMatters 2026 Voter Guide with information on key races.
What does California Proposition 2 do?
This constitutional amendment would allow the state to deposit up to 20% of its general fund tax revenue in the state’s reserves, up from the current ceiling of 10%. The deposits would not count toward the voter-approved Gann Limit, which caps the amount state lawmakers can spend each year and requires excess funds to be returned to the people. It also authorizes spending some tax revenue to pay down California’s $20 billion federal unemployment insurance debt. The California Legislature placed this measure on the ballot.
What do supporters and opponents say?
- California Democratic Party
- Legislative Democrats
- Gov. Gavin Newsom
- Reform California
- Legislative Republicans
Ballot text
INCREASES STATE’S RAINY DAY FUND. LEGISLATIVE CONSTITUTIONAL AMENDMENT. Increases California’s Rainy Day Fund, approved by voters in 2014, to provide funding for education, health care, public safety, and other essential services during economic downturns. Fiscal Impact: State budget reserves would be higher.
Source: California Secretary of State
