SACRAMENTO (AP) — California has a weak rainy day fund, but voters will get a chance to strengthen its requirements next year.
In March 2004, voters approved then-Gov. Arnold Schwarzenegger’s proposal to borrow $15 billion in bonds to deal with that year’s budget deficit. He paired the measure with a ban on future deficit borrowing and established a reserve under Proposition 58.READ MORE: Sabrina Spellman Makes An Appearance On The CW's Riverdale; Kiernan Shipka Reveals 'Fans Will Get Some Clarity'
Known as the Budget Stabilization Account, that rainy day fund never specified the size of the reserve or the conditions under which money would be placed into it.
Schwarzenegger and lawmakers sought to strengthen the fund, but voters rejected their plan during a special election in May 2009 when it was paired with an extension of temporary tax increases. Under Proposition 1A, the state would have been required to set aside up to 3 percent of annual revenue each year until the fund reached 12.5 percent of the state general fund.
The changes also would have restricted how and when lawmakers could withdraw from the fund.READ MORE: Christmas Tree At Oakland's Jack London Square Catches Fire; Arson Investigation Underway
Before leaving office, Schwarzenegger persuaded lawmakers to put the rainy day fund to another vote on the February 2012 ballot.
Similar to Proposition 1A, that measure would require 3 percent of annual revenue to be deposited into the fund each year, except during a weak economy. Lawmakers could not tap it unless certain conditions are met.
The rainy day fund would be considered full once it hits an amount equal to 10 percent of general fund revenue. Any extra tax revenue coming to the state in a given year could be used only for one-time expenses, such as debt payment, rather than to fund programs that will require money year after year.MORE NEWS: Mountain View Uses Google Grant To Create Monarch Butterfly Habitat
(Copyright 2011 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services may have contributed to this report.)