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Administration, advocates and senators spar over how to reform California's rainy day fund and who should pay
Summary
At a Senate Budget and Fiscal Review hearing, the Department of Finance defended a more modest 20% cap and SAL exclusion, while advocates urged larger caps and structural fixes (unemployment insurance, targeted reserves). Senators debated business exits, EDD debt and whether to create separate emergency reserves.
The Department of Finance and outside experts presented competing approaches for strengthening California's Budget Stabilization Account and the committee's members spent much of the hearing testing trade‑offs among higher reserves, tax policy and program priorities.
Lisa Murzynski of the Department of Finance summarized the administration's proposals: "The administration proposed two changes to the BSA: increasing the cap from 10% to 20% and excluding deposits into and out of the reserve from counting against the State Appropriations Limit," she told the committee. The DOF framed this as maintaining the BSA's intent while giving lawmakers more flexibility to save during revenue surges.
Independent analysts and advocates pushed for more ambitious reforms. "The reserve policy can truly, truly…
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