Revenue Stabilization Fund

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.

Under the new law,  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, 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. Similarly to the Rainy Day Fund, the Legislature could withdraw from the RSF only in the case of a mid-year revenue failure or declining total revenue for the upcoming year.

The threshold was initially set at $5.7 billion and was not met in 2017 or 2018. In 2018, the Legislature passed SB 1583 raising the threshold to $6.6 billion.

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