A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by amending Sections 20 and 22 of Article XVI thereof, relating to state finance.

(1) The California Constitution establishes the Budget Stabilization Account and requires the Controller to transfer from the General Fund to the account, no later than October 1 of each fiscal year, a sum equal to 1.5% of the estimated amount of General Fund revenues for that fiscal year. The Department of Finance is required to report specified information to the Legislature, including (A) an estimate of the amount of General Fund proceeds of taxes that may be appropriated for that fiscal year, (B) an estimate of the portion of that amount that is derived from personal income taxes paid on net capital gains, and (C) the portion of the estimate in (B) that exceeds 8% of the estimate made in (A) . Notwithstanding the requirement for the Controller to transfer 1.5% of General Fund revenues for each fiscal year to the account, for the 2015–16 fiscal year to the 2029–30 fiscal year, inclusive, the California Constitution instead requires 50% of that amount and 50% of the amount described in (C) to be transferred to the Budget Stabilization Account. The California Constitution requires the remaining 50% to be appropriated for unfunded liabilities and other specified purposes. Commencing with the 2027–28 fiscal year, this measure would require the Department of Finance to report the sum of the portion of the estimate in (B) that exceeds 8%, but does not exceed 10%, of the estimate in (A) and 150% of the estimate in (B) that exceeds 10% of the estimate in (A) . The measure would require 50% of that sum and 50% of the amount equal to 1.5% of the estimated amount of General Fund revenues for the fiscal year to be transferred to the Budget Stabilization Account each fiscal year until the 2039–40 fiscal year, and it would require the remaining 50% to be appropriated for unfunded liabilities and other specified purposes. The measure would add repayment of federal loans relating to unemployment insurance to the purposes for which the remaining 50% may be appropriated. The California Constitution limits the amount that is required to be transferred to the Budget Stabilization Account for any fiscal year from exceeding an amount that would result in a balance in the account that, when the transfer is made, exceeds 10% of the estimated amount of the General Fund proceeds of taxes for the fiscal year, as specified. This measure would increase that limit to 20% of the estimated amount of the General Fund proceeds of taxes for the fiscal year. (2) The California Constitution creates the Public School System Stabilization Account in the General Fund and requires the Controller to transfer specified amounts from the General Fund to the account. Upon a proclamation by the Governor declaring a budget emergency, the Legislature may suspend or reduce transfers to the Budget Stabilization Account or Public School System Stabilization Account, return funds in the Budget Stabilization Account to the General Fund, and appropriate funds in the Public School System Stabilization Account for the support of school districts and community college districts. The California Constitution defines "budget emergency" for these purposes to mean (A) the existence of conditions of disaster or extreme peril, as declared by the Governor, or (B) a determination by the Governor that estimated resources are inadequate to fund General Fund expenditures for the current or ensuing fiscal year at a level equal to the highest amount of total General Fund expenditures estimated at the time of enactment of any of the three most recent Budget Acts. The California Constitution requires the Governor, within the first 10 days of each calendar year, to submit to the Legislature a proposed budget for the fiscal year commencing on July 1 of that calendar year. Under existing statutory law, the Director of Finance is required to submit a revised budget proposal to the Legislature on or before May 14. Under this measure, the revised budget proposal submitted on or before May 14, or any other budgetary revision required to be submitted to the Legislature, would constitute the Governor's proclamation of a budget emergency if the above-described conditions for a budget emergency exist, and if the budgetary revision proposes to suspend or reduce transfers from the General Fund to the Budget Stabilization Account or Public School System Stabilization Account, return funds in the Budget Stabilization Account to the General Fund, or appropriate money from the Public School System Stabilization Account. (3) The California Constitution prohibits the total annual appropriations subject to limitation of the State and of each local government from exceeding the appropriations limit of the entity of government for the prior year, adjusted for the change in the cost of living and the change in population. The California Constitution defines "appropriations subject to limitation" of the State for these purposes. This measure would exclude both of the following from the appropriations subject to limitation of the State commencing with the 2027–28 fiscal year: (A) transfers to the Budget Stabilization Account; and (B) transfers to a General Fund reserve account established by the Legislature known as the Projected Surplus Temporary Holding Account, provided that the amount not subject to limitation may not exceed 10% of the amount of General Fund proceeds of taxes for the applicable fiscal year. Funds withdrawn, transferred, or appropriated from those reserve accounts, if they were not counted previously as appropriations subject to limitation of the State when deposited, would constitute appropriations subject to limitation of the State in the fiscal year in which the withdrawal, transfer, or appropriation occurs.