ELI5: As of 2026, the state transfers 1.5% of estimated general fund revenues into the BSA each year. The California Department of Finance separately calculates the share of general fund revenue derived from personal income taxes paid on capital gains, and the portion exceeding 8% of total general fund proceeds of taxes forms the basis for an additional deposit. Proposition 2 would maintain this treatment for capital gains revenue between 8% and 10%, and would count revenue above 10% at 150% of its va

This rule is like a strict family budget plan that forces California to stash extra cash into its emergency piggy bank, especially when the state has a lucky financial year.

Think of California as a giant household, and the Budget Stabilization Account (BSA) as its "rainy day" piggy bank. Just like a smart family saves money for surprise car repairs, the state saves money for years when jobs are scarce and tax money goes down.

Here is how the household savings plan works using everyday life:

• The Regular Allowance Rule: Every single month, the family automatically puts a tiny slice—just 1.5%—of its regular paycheck straight into the piggy bank. It does not matter what else is happening; this amount always gets saved.
• The Lucky Bonus Rule: Sometimes, a family member gets a surprise bonus at work—like selling an old baseball card or house for a huge profit. The state calls this money capital gains. Because this extra cash is unpredictable, the state says, "If our lucky bonus money makes up more than 8% of our total income, we must put the extra amount into savings too."
• The Proposition 2 Supercharger: This new rule makes the family save even more aggressively during the luckiest years:

By using this rule, the state prevents itself from going on a wild shopping spree during boom times, ensuring there is plenty of cash hidden away for when tough times arrive.