ACA 37 Assembly Constitutional Amendment

BILL NUMBER: ACA 37	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Niello

                        MARCH 10, 2010

   A resolution to propose to the people of the State of California
an amendment to the Constitution of the State, by amending Section 12
of Article IV thereof, and by amending Section 20 of, and adding
Section 21 to, Article XVI thereof, relating to state finance.


	LEGISLATIVE COUNSEL'S DIGEST


   ACA 37, as introduced, Niello. State finance.
   Existing provisions of the California Constitution require the
Governor to submit to the Legislature, within the first 10 days of
each calendar year, a proposed budget for the ensuing fiscal year
containing itemized statements for recommended state expenditures and
estimated state revenues. In addition, the Constitution prohibits
the Legislature from passing, and the Governor from signing, a Budget
Bill that would appropriate from the General Fund a total amount
that, when combined with all appropriations from the General Fund for
that fiscal year made as of the date of the Budget Bill's passage,
and the amount of any General Fund moneys transferred to a reserve
account, exceeds estimated General Fund revenues for that fiscal
year. The estimate of General Fund revenues is required to be set
forth in the Budget Bill.
   This measure would require the Governor in his or her proposed
budget to identify estimated total state resources available to meet
recommended state expenditures and to further identify the amount of
those resources that are anticipated to be one-time resources. The
measure would prohibit passage of a Budget Bill that appropriates an
amount that, when combined with prior appropriations and transfers to
the reserve account, exceeds the estimate of General Fund revenues,
transfers, and balances available from the prior fiscal year. The
measure would require the estimate of General Fund revenues,
transfers, and balances to be set forth in the Budget Bill.
   Existing provisions of the California Constitution establish the
Budget Stabilization Account in the General Fund and currently
require the Controller, no later than September 30 of each year, to
transfer from the General Fund to the account a sum equal to 3% of
the estimated amount of General Fund revenues for the current fiscal
year. This transfer of moneys is not required, unless otherwise
directed by the Legislature by statute, in any fiscal year to the
extent that the resulting balance in the account would exceed 5% of
the General Fund revenues estimate set forth in the Budget Bill for
that fiscal year, as enacted, or $8,000,000,000, whichever is
greater. This transfer of moneys also may be suspended or reduced for
a fiscal year as specified by an executive order issued by the
Governor no later than June 1 of the preceding fiscal year. Of the
moneys transferred to the account in each fiscal year, 50%, up to an
aggregate amount of $5,000,000,000 for all fiscal years, is deposited
in the Deficit Recovery Bond Retirement Sinking Fund Subaccount and
continuously appropriated to the Treasurer for the purpose of
retiring deficit recovery bonds. All other moneys transferred to the
account in a fiscal year are not deposited in the sinking fund
subaccount and may, by statute, be transferred back to the General
Fund.
   This measure would rename this account the Budget Stabilization
Fund. This measure would also provide that the transfer of moneys
from the General Fund to the Budget Stabilization Fund is not
required in any fiscal year to the extent that the resulting balance
in the fund would exceed 12.5% of the General Fund revenues estimate
set forth in the Budget Bill for that fiscal year, as enacted, and
would delete the alternative $8,000,000,000 limit on the fund. This
measure would provide that, apart from a transfer made for the
purpose of responding to an emergency declared by the Governor, as
defined, or a loan to meet General Fund cash requirements which would
be repaid within a fiscal year, the total amount that may be
transferred from the Budget Stabilization Fund to the General Fund
for any fiscal year shall not exceed the amount derived by
subtracting the General Fund revenues, transfers, and balances
available from the prior fiscal year for that fiscal year from the
expenditure forecast amount for the current fiscal year, determined
as total General Fund expenditures for the immediately preceding
fiscal year adjusted for changes in population and the cost of
living.
   This measure would require the Director of Finance, on or before
May 29 of each year, to report to the Legislature and the Governor
(1) an estimate of the amount of General Fund revenues, transfers,
and balances available from the prior fiscal year for the current
fiscal year, (2) the revenue forecast amount, as defined, for the
current fiscal year, and (3) an estimate of specified General Fund
obligations for the public schools that have not yet been funded by
the state. This measure would provide that if, pursuant to a formula
based on those figures, there are unanticipated revenues in the
current fiscal year, those revenues may be used only for specified
purposes, and in a specified order of priority.
   Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.



   Resolved by the Assembly, the Senate concurring, That the
Legislature of the State of California at its 2009-10 Regular Session
commencing on the first day of December 2008, two-thirds of the
membership of each house concurring, hereby proposes to the people of
the State of California that the Constitution of the State be
amended as follows:
  First--  That Section 12 of Article IV thereof is amended to read:
      SEC. 12.  (a) Within the first 10 days of each calendar year,
the Governor shall submit to the Legislature, with an explanatory
message, a budget for the ensuing fiscal year containing itemized
statements for recommended state expenditures and estimated 
state revenues   total state resources available to meet
those expenditures  . If recommended expenditures exceed
estimated  revenues   resources  , the
Governor shall recommend the sources from which the additional
 revenues   resources  should be provided.
 The itemized statement of estimated total state resources
available to meet recommended expenditures submitted pursuant to this
subdivision shall identify the amount, if any, of those resources
anticipated to be one-time resources. 
   (b) The Governor and the Governor-elect may require a state
agency, officer, or employee to furnish whatever information is
deemed necessary to prepare the budget.
   (c) (1) The budget shall be accompanied by a budget bill itemizing
recommended expenditures.
   (2) The budget bill shall be introduced immediately in each house
by the persons chairing the committees that consider the budget.
   (3) The Legislature shall pass the budget bill by midnight on June
15 of each year.
   (4) Until the budget bill has been enacted, the Legislature shall
not send to the Governor for consideration any bill appropriating
funds for expenditure during the fiscal year for which the budget
bill is to be enacted, except emergency bills recommended by the
Governor or appropriations for the salaries and expenses of the
Legislature.
   (d) No bill except the budget bill may contain more than one item
of appropriation, and that for one certain, expressed purpose.
Appropriations from the General Fund of the State, except
appropriations for the public schools, are void unless passed in each
house by rollcall vote entered in the journal, two-thirds of the
membership concurring.
   (e) The Legislature may control the submission, approval, and
enforcement of budgets and the filing of claims for all state
agencies.
   (f) For the 2004-05 fiscal year, or any subsequent fiscal year,
the Legislature may not send to the Governor for consideration, nor
may the Governor sign into law, a budget bill that would appropriate
from the General Fund, for that fiscal year, a total amount that,
when combined with all appropriations from the General Fund for that
fiscal year made as of the date of the budget bill's passage, and the
amount of any General Fund moneys transferred to the Budget
Stabilization  Account   Fund  for that
fiscal year pursuant to Section 20 of Article XVI, exceeds General
Fund revenues  , transfers, and balances available from the prior
fiscal year  for that fiscal year estimated as of the date of
the budget bill's passage. That estimate of General Fund revenues
 , transfers, and balances  shall be set forth in the budget
bill passed by the Legislature.
  Second--  That Section 20 of Article XVI thereof is amended to
read:
      SEC. 20.  (a) The Budget Stabilization  Account
  Fund  is hereby created in the General Fund.
   (b) In each fiscal year as specified in paragraphs (1) to (3),
inclusive, the Controller shall transfer from the General Fund to the
Budget Stabilization  Account   Fund  the
following amounts:
   (1) No later than September 30, 2006, a sum equal to 1 percent of
the estimated amount of General Fund revenues for the 2006-07 fiscal
year.
   (2) No later than September 30, 2007, a sum equal to 2 percent of
the estimated amount of General Fund revenues for the 2007-08 fiscal
year.
   (3) No later than September 30, 2008, and annually thereafter, a
sum equal to 3 percent of the estimated amount of General Fund
revenues for the current fiscal year.
   (c) The transfer of moneys shall not be required by subdivision
(b) in any fiscal year to the extent that the resulting balance in
the  account   Budget Stabilization Fund 
would exceed  5   12.5  percent of the
General Fund revenues estimate set forth in the budget bill for that
fiscal year, as enacted  , or eight billion dollars
($8,000,000,000), whichever is greater  . The Legislature
may, by statute, direct the Controller, for one or more fiscal years,
to transfer into the  account   Budget
Stabilization Fund  amounts in excess of the  levels
  level  prescribed by this subdivision.
   (d) Subject to any restriction imposed by this section, funds
transferred to the Budget Stabilization  Account 
 Fund  shall be deemed to be General Fund revenues for all
purposes of this Constitution.
   (e) The transfer of moneys from the General Fund to the Budget
Stabilization  Account   Fund  may be
suspended or reduced for a fiscal year as specified by an executive
order issued by the Governor no later than  June 1 of the
preceding fiscal year   one day prior to the date of the
transfer set forth in subdivision (b). For a fiscal year commencing
on or after July 1, 2011, this subdivision shall be operative only if
a transfer of moneys from the Budget Stabilization Fund to the
General Fund is authorized for that fiscal year pursuant to
subparagraph (A) of paragraph (2) of subdivision (f)  .
   (f) (1) Of the moneys transferred to the  account
  Budget Stabilization Fund  in each fiscal year,
50 percent, up to the aggregate amount of five billion dollars
($5,000,000,000) for all fiscal years, shall be deposited in the
Deficit Recovery Bond Retirement Sinking Fund Subaccount, which is
hereby created in the  account   Budget
Stabilization Fund  for the purpose of retiring deficit recovery
bonds authorized and issued as described in Section 1.3, in addition
to any other payments provided for by law for the purpose of
retiring those bonds. The moneys in the sinking fund subaccount are
continuously appropriated to the Treasurer to be expended for that
purpose in the amounts, at the times, and in the manner deemed
appropriate by the Treasurer. Any funds remaining in the sinking fund
subaccount after all of the deficit recovery bonds are retired shall
be transferred to the  account   Budget
Stabilization Fund  , and may be transferred to the General Fund
pursuant to paragraph (2).
   (2) All other funds transferred to the  account 
 Budget Stabilization Fund  in a fiscal year shall not be
deposited in the sinking fund subaccount and may  , by
statute,  be transferred to the General Fund  by statute
as specified in this paragraph  . 
   (A) Apart from a transfer pursuant to subparagraph (B), the total
amount that may be transferred to the General Fund pursuant to this
paragraph for any fiscal year shall not exceed the amount derived by
subtracting the General Fund revenues, transfers, and balances
available from the prior fiscal year for that fiscal year from the
expenditure forecast amount for the current fiscal year. For purposes
of this subparagraph, "General Fund revenues, transfers, and
balances available from the prior fiscal year for that fiscal year"
does not include revenues transferred from the General Fund to the
Budget Stabilization Fund pursuant to subdivision (b) for that fiscal
year. For purposes of this subparagraph, Section 21, and Section 12
of Article IV, "balances available from the prior fiscal year for
that fiscal year" means the funds in the Special Fund for Economic
Uncertainties, or a successor fund, as of June 30 of the prior fiscal
year. The "expenditure forecast amount" for a fiscal year is the
total General Fund expenditures for the immediately preceding fiscal
year adjusted for the change in population of the State, as defined
in Section 8 of Article XIII B, and the change in the cost of living
for the State, as measured by the California Consumer Price Index,
between the immediately preceding fiscal year and the fiscal year in
which the transfer is made. "Total General Fund expenditures for the
immediately preceding fiscal year" do not include, for this purpose,
the expenditure of unanticipated revenues pursuant to subparagraph
(B) or pursuant to paragraph (3) or (4) of subdivision (c) of Section
21.  
   (B) Any funds necessary for the purpose of responding to an
emergency declared by the Governor may be transferred by statute. For
purposes of this subparagraph, "emergency" has the same meaning as
set forth in paragraph (2) of subdivision (c) of Section 3 of Article
XIII B.  
   (g) In addition to any transfer authorized by this section, funds
in the Budget Stabilization Fund may be loaned to meet General Fund
cash requirements on the condition that the funds are repaid within
the same fiscal year in which the loan is made. 
  Third--  That Section 21 is added to Article XVI thereof, to read:
      SEC. 21.  (a) On or before May 29 of each year, the Director of
Finance shall do all of the following, reporting the result in each
case to the Legislature and the Governor:
   (1) Separately estimate General Fund revenues, transfers, and
balances available from the prior fiscal year for the current fiscal
year.
   (2) Determine the revenue forecast amount for the current fiscal
year in the manner set forth in subdivision (d).
   (3) Estimate the amount, as of that date, of any General Fund
obligations arising under Section 8 for the current fiscal year,
including any maintenance factor allocation for the current fiscal
year required pursuant to subdivision (e) of Section 8, that have not
yet been funded by the State.
   (b) (1) Except as provided in paragraph (2), "unanticipated
revenues" for a fiscal year, for purposes of this section, shall be
the lesser of the following:
   (A) Estimated General Fund revenues for the current fiscal year
reported pursuant to paragraph (1) of subdivision (a) minus the
revenue forecast amount for the current fiscal year.
   (B) Estimated General Fund revenues, transfers, and balances
available from the prior fiscal year for the current fiscal year
reported pursuant to paragraph (1) of subdivision (a) minus the
expenditure forecast amount for the current fiscal year determined
pursuant to subparagraph (A) of paragraph (2) of subdivision (f) of
Section 20.
   (2) If the amount determined pursuant to paragraph (1) is less
than zero, the amount of unanticipated revenues shall be zero.
   (c) Unanticipated revenues, as determined pursuant to this
section, may be used only as follows:
   (1) Unanticipated revenues shall be appropriated to satisfy any
unfunded General Fund obligations arising under Section 8 for the
current fiscal year, as estimated pursuant to paragraph (3) of
subdivision (a).
   (2) Any unanticipated revenues that remain after deducting, in
accordance with paragraph (1), the amount of the estimate required by
paragraph (3) of subdivision (a) shall be transferred by the
Controller no later than June 27 of the current fiscal year to the
Budget Stabilization Fund, not exceeding the amount needed to
increase the balance in the fund to an amount equal to 12.5 percent
of the estimate of General Fund revenues as set forth in the enacted
budget bill for that fiscal year. Notwithstanding any other provision
of this Constitution:
   (A) If the Director of Finance determines at any time that the
total amount of General Fund obligations arising under Section 8 for
a fiscal year, including any maintenance factor allocation for that
fiscal year required pursuant to subdivision (e) of Section 8,
exceeds the total amount of those General Fund obligations as
calculated for that fiscal year for purposes of the estimate required
by paragraph (3) of subdivision (a), he or she shall so report to
the Legislature, the Governor, and the Controller. The Controller
shall thereupon transfer funds in the amount of that difference from
the Budget Stabilization Fund to the General Fund, and the funds so
transferred shall be appropriated only for purposes of funding the
additional amount of General Fund obligations under Section 8
determined pursuant to this paragraph.
   (B) If the Director of Finance determines at any time that the
total amount of General Fund obligations arising under Section 8 for
a fiscal year, including any maintenance factor allocation for that
fiscal year required pursuant to subdivision (e) of Section 8, is
less than the total amount of those General Fund obligations as
calculated for that fiscal year for purposes of the estimate required
by paragraph (3) of subdivision (a), he or she shall so report to
the Legislature, the Governor, and the Controller. The Controller
shall thereupon transfer funds in the amount of that difference from
the General Fund to the Budget Stabilization Fund, not exceeding the
amount needed to increase the balance in the latter fund to an amount
equal to 12.5 percent of the estimate of General Fund revenues as
set forth in the enacted budget bill for that fiscal year.
   (3) Any unanticipated revenues remaining after any appropriations
and transfers described in paragraphs (1) and (2) shall be
appropriated to retire outstanding budgetary obligations. For
purposes of this paragraph, "budgetary obligations" means any of the
following:
   (A) Unfunded prior fiscal year General Fund obligations pursuant
to Section 8.
   (B) Any repayment obligations created by the suspension of
subparagraph (A) of paragraph (1) of subdivision (a) of Section 25.5
of Article XIII.
   (C) Any repayment obligations created by the suspension of
subdivision (a) of Section 1 of Article XIX B.
   (D) Bonded indebtedness authorized pursuant to Section 1.3.
   (4) Any unanticipated revenues remaining after any appropriations
and transfers described in paragraphs (1), (2), and (3) are made to
retire all outstanding budgetary obligations shall be used as
follows:
   (A) Transfer by statute to the Budget Stabilization Fund.
   (B) Appropriation for one-time infrastructure or other capital
outlay purposes.
   (C) Appropriation to retire, redeem, or defease outstanding
general obligation or other bonded indebtedness of the State.
   (D) Return to taxpayers within the current or immediately
following fiscal year by a one-time revision of tax rates or fee
schedules.
   (E) Appropriation for unfunded liabilities for vested nonpension
benefits for state annuitants.
   (d) For the 2011-12 fiscal year, and for each fiscal year
thereafter, the revenue forecast amount shall be determined as
follows:
   (1) The General Fund revenues for the current fiscal year shall be
forecast by extrapolating from the trend line derived by a linear
regression of General Fund revenues as a function of fiscal year for
the period of the 10 preceding fiscal years. For purposes of this
paragraph, General Fund revenues shall exclude both of the following:

   (A) The General Fund revenue effect of a change in state taxes
that affects General Fund revenues for less than the entire period of
the 10 preceding fiscal years.
   (B) Any proceeds of bonds authorized by subdivision (a) of Section
1.3.
   (2) The amount forecast pursuant to paragraph (1) shall be
increased or decreased, as applicable, to reflect the net current
fiscal year General Fund revenue effect of a change in state taxes
for which General Fund revenue effects were excluded pursuant to
subparagraph (A) of paragraph (1).