In 2016, the Legislature created a new budget reserve fund, the Revenue Stabilization Fund (RSF), which is designed to grow in years when collections from the state’s most volatile revenue sources are coming in above recent averages.
Every February the Board of Equalization compares the amount of money to be apportioned to the General Revenue Fund (GR) for the upcoming year with the average collection of the last five years for the gross production tax on oil and gas and the corporate income tax. Once actual General Revenue collections for the preceding fiscal year exceeded a threshold (currently $6.6 billion), if collections for the upcoming year for each of the three taxes are projected to be above the five-year average, 100 percent of the difference from each tax is to be deposited in reserve funds. For the gross production taxes, the entire amount goes to the Revenue Stabilization Fund; for the corporate income tax, 25 percent goes the Rainy Day Fund and the remainder to the Revenue Stabilization Fund. In 2019, annual deposits to the Fund were capped at 3 percent of the certified General Revenue Fund estimate for the current fiscal year.
Similarly to the Rainy Day Fund, the Legislature may withdraw from the RSF only in the case of a mid-year revenue failure or declining total revenue for the upcoming year.
In 2019, the Legislature deposited $197 million to the RSF from the General Revenue Fund and the Alcoholic Beverage Control Fund and transferred $202 million from the Rainy Day Fund. In 2020, the Legislature appropriated $64.1 million out of the Revenue Stabilization Fund as supplemental appropriations to limit the impact of shortfalls due to low energy prices and the COVID-19 pandemic and appropriated an additional $162.5 million to support the FY 2021 budget, leaving the the RSF with a balance of $171.3 million. The Fund received no deposit in FY 2021.