Assemblymember Avelino Valencia (D-Anaheim) announces the introduction of ACA 1

SACRAMENTO, CA – Assemblymember Avelino Valencia (D – Anaheim) made a significant move towards securing California’s financial future by introducing Assembly Constitutional Amendment 1 (ACA 1). This proposed ACA aims to strengthen the state’s economic stability by revising the rainy day fund and updating the rules that govern the Gann limit. These measures, alongside prudent budget management during surplus years, will better prepare the state and its communities for future economic challenges.

California’s Budget Stabilization Account, or rainy day reserve, has proven to be a key tool in mitigating budget deficits. This was particularly evident during the 2024 budget year, when the state encountered a $45 billion shortfall, just two years after experiencing a historic $97.5 billion surplus. The existing financial constraints within the constitution led to budgetary uncertainties, causing delays, adjustments, and cuts in funding.

Current law (Prop. 2) limits the state's rainy day reserve to 10% of the General Fund tax. During the pandemic, tax revenues saw increases for two consecutive years. To avoid reaching the Gann limit (Prop. 4) or state appropriation limit, the state had to spend funds rather than save them, which contributed to the 2024 deficit. Given California’s volatile and unpredictable revenue sources, it is vital to build reserves during prosperous years to prepare for economic downturns.

These collective efforts have played a crucial role in managing California’s budgeting process. Assemblymember Valencia states, “As we have learned from past spending and recent budget uncertainties, California should be more mindful during budget surplus years to ensure a savings safety net for future generations of Californians. California’s economy is dynamic, but it is also vulnerable. It is high time California updates its fiscal playbook. I look forward to working with my colleagues in the legislature and the administration to get this critical work to the end zone.”

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Assemblymember Avelino Valencia proudly represents the 68th Assembly district which includes the cities of Anaheim, Orange and Santa Ana. Valencia chairs the Assembly Budget Subcommittee #7 on Accountability and Oversight.