California’s massive state budget will have more financial backup — and more leeway for misspending, critics argue — under a ballot measure approved by voters on Tuesday.

Nearly 60% of California voters approved of Proposition 2, enough for the Associated Press to project it passing with 58% of the ballots counted.

“This good government reform will strengthen our rainy day fund and is an important step toward ensuring that we are better prepared for economic uncertainty in the years to come,” Assemblymember Jesse Gabriel (D), the budget committee chair who authored Prop. 2, said in a statement.

The measure will allow California lawmakers and the governor to put up to 20% of the state’s general fund tax revenue, double the current cap of 10%, into a rainy-day fund.

Under current law, the state has to set aside 1.5% of its general fund revenue and any spikes in capital gains tax revenue each year for reserves and paying down debts. Up to half the reserves can be withdrawn if the governor and lawmakers declare a budget emergency.

That happened in June 2024 when Gov. Gavin Newsom declared a formal fiscal budget emergency to help resolve massive multi-year deficits during the 2024–25 and 2025–26 budget cycles.

Newsom tapped at least $4.9 billion from the rainy-day fund for the 2024–25 budget and an additional $7.1 billion for the 2025–26 budget — moves critics argued were done because the state spent too much even with higher revenues.

Prop. 2 will only continue to allow for less careful spending of taxpayer dollars if governors and lawmakers know they have more backup dollars, state Republicans have claimed.

“When they say we’re here for fiscal responsibility, it’s like the devil offering a Bible study. Don’t buy it,” Assemblymember Carl DeMaio said during the legislative session on the measure.

Democrats and their allies insist Prop. 2 is about good fiscal governance, capturing revenue in good times such as an AI boom and for bad times like a potential recession.

“As Washington moves to cut billions in health care and food assistance funding, this measure will ensure California is better prepared to absorb those losses without slashing the programs Californians depend on,” the Prop 2 Coalition said in its ballot arguments.