Sacramento, CA – Assembly Budget Committee Vice-Chair Jeff Gorell today warned the legislature of the dangers of relying on volatile revenues without a solid “rainy day fund,” pointing out that personal income tax revenues now make up 75 percent of general fund sources, a historic high.

“California relies on revenues from the personal income tax more than ever before,” stated Assemblyman Gorell. “This is one of the most volatile revenue sources available. Relatively small shifts in the economy and decisions by a handful of high income earners can result in wild up and down swings to state revenues. We need to be saving the surplus revenues now if we expect to have a safety net during the next recession. The failure to save today means that in the lean years we will again have to cut programs and services, which is harmful to Californians and our economy.”

The LAO recently reported that with Proposition 30 tax increases, personal income tax had now jumped to become the source of 75 percent of California’s general fund. By comparison, the personal income tax share of the revenues had exceeded 60 percent only once prior in California history – at the collapse of the “dot-com” boom in 2000-2001.

“The legislature and Governor must resist the temptation to spend the surplus,” said Gorell. “And we need a real “rainy day fund” in our Constitution to avoid the collision course with deficits we will inevitably face.”