California to hold special legislative session for “rainy day fund” amendment

Governor Jerry Brown called a special session of the state Legislature to replace the “Rainy Day Fund” on the November, 2014 ballot with a dedicated reserve to allow the state to pay down its debts and unfunded liabilities.  In Assembly Constitutional Amendment 4 [“ACA 4”], the 2010 Legislature approved the proposal for the November 2014 ballot to go before the general electorate.  In calling for this special session, Governor Brown observed that the proposal did not address the volatility of capital gains revenue, did not provide a reserve for schools to help cushion future downturns, and constrained the state’s ability to pay down long-term liabilities.

The text of the proclamation for this special legislative session is set forth below:


WHEREAS, an effective Rainy Day Fund, combined with strong fiscal management, is critical to protect the state from the ill effects of boom-and-bust budget cycles; and

WHEREAS, the state’s existing Rainy Day Fund was established in 2004 but should be strengthened; and

WHEREAS, an existing proposed amendment to the Constitution to alter the state’s Rainy Day Fund is currently scheduled to appear before the state’s voters in November 2014 but does not allow the state to adequately address its debts and liabilities; and

WHEREAS, these extraordinary circumstances require the Legislature of the State of California to be convened in an extraordinary session:

NOW, THEREFORE, I, EDMUND G. BROWN JR., Governor of the State of California, in accordance with Section 3(b) of Article IV of the Constitution of the State of California, hereby convene the Legislature of the State of California to meet in extraordinary session in Sacramento, California, on the 24th day of April, 2014, at a time to be determined, for the following purpose:

To consider and act upon a constitutional amendment to be placed before the state’s voters at the November 2014 election to strengthen the state’s Rainy Day Fund. The Rainy Day Fund should:

a. Increase deposits when the state experiences spikes in capital gains revenues, the state’s most volatile tax revenue.

b. Allow supplemental payments to accelerate the state’s payoff of its debts and liabilities.

c. Create a Proposition 98 reserve to smooth school spending and avoid future cuts.

d. Raise the maximum size of the Rainy Day Fund to 10 percent of General Fund revenues.

e. Limit withdrawals to ensure the state does not overly rely on the fund at the start of a downturn.

I FURTHER DIRECT that as soon as hereafter possible, this Proclamation be filed in the Office of the Secretary of State and that widespread publicity and notice be given of this Proclamation.

IN WITNESS WHEREOF, I have hereunto set my hand and caused the Great Seal of the State of California to be affixed this 16th day of April 2014.

Governor of California


Secretary of State

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