BILL ANALYSIS Ó AB 1021 Page 1 Date of Hearing: April 12, 2011 ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING Paul Fong, Chair AB 1021 (Gordon) - As Introduced: February 18, 2011 SUBJECT : Ballot measures: fiscal analysis. SUMMARY : Requires additional fiscal information be included in the circulating title and summary prepared by the Attorney General (AG) and the summary statements prepared by the Legislative Analyst for a proposed initiative measure. Specifically, this bill : 1)Requires the Joint Legislative Budget Committee (JLBC) and Department of Finance (DOF) to provide a paragraph to the AG, if it is determined in their joint analysis of an initiative measure submitted for a circulating title and summary that the measure does all of the following: a) Establishes a new or expanded program; b) Costs more than one million dollars per year, excluding costs attributable to the issuance, sale, or repayment of general obligation bonds; and, c) Does not provide new revenues or eliminate all or part of existing programs sufficient to pay the cost of the new or expanded program or service. 2)Provides that the paragraph submitted by the JLBC and DOF may be included in the title and summary prepared by the AG, and shall be stated as follows: The Joint Legislative Budget Committee and Department of Finance have determined that this measure does not include sufficient funds to pay the cost of the new or expanded program or service provided therein. Therefore, should the measure pass, other programs or services provided by the state would need to be reduced or eliminated, or new state revenues raised, in order for the measure to be implemented. 3)Requires a paragraph be added to the summary statements prepared by the Legislative Analyst, contained in the ballot AB 1021 Page 2 pamphlet, for a measure that has qualified for the ballot, if it is determined in the Legislative Analyst's analysis that the measure does all of the following: a) Establishes a new or expanded program; b) Costs more than one million dollars per year, excluding costs attributable to the issuance, sale, or repayment of general obligation bonds; and, c) Does not provide new revenues or eliminate all or part of existing programs sufficient to pay the cost of the new or expanded program or service. 4)Provides that the paragraph added to the summary statements by the Legislative Analyst read as follows: This measure does not include sufficient funds to pay the cost of the new or expanded program or service provided therein. Therefore, should the measure pass, other programs or services provided by the state would need to be reduced or eliminated, or new state revenues raised, in order for the measure to be implemented. 5)Makes other conforming changes. EXISTING LAW : 1)Establishes a process for the AG to prepare a summary of the chief purposes and points of a proposed initiative measure. Requires the AG to provide a copy of the title and summary to the Secretary of State within 15 days after receipt of the final version of a proposed initiative measure, or if a fiscal estimate or opinion is to be included, within 15 days after receipt of the fiscal estimate or opinion prepared by the DOF and the JLBC. 2)Requires the AG to include in the circulating title and summary, in boldface print, either the fiscal estimate of the amount of any increase or decrease in revenues or costs to the state or local government prepared by the DOF and the JLBC, or an opinion as to whether or not a substantial net change in state or local finances would result if the proposed initiative is adopted. AB 1021 Page 3 3)Requires the Legislative Analyst to prepare an impartial analysis of each proposed measure describing the measure and including a fiscal analysis of the measure showing the amount of any increase or decrease in revenue or cost to state or local government. Provides that if a proposed measure is estimated to result in increased cost to the state, the estimate of those costs be set out in boldface print in the ballot pamphlet. 4)Requires the ballot pamphlet to contain a section, prepared by the Legislative Analyst, located near the front of the pamphlet, that provides a concise summary of the general meaning and effect of "yes" and "no" votes on each state measure. FISCAL EFFECT : Unknown COMMENTS : 1)Purpose of the Bill : According to the author: AB 1021 would require greater transparency in the fiscal analysis of initiatives by adding advisories to the fiscal impact statement for petitions and the ballot pamphlet if the measure does not provide adequate funding or corresponding reductions to fund implementation. The democratic process requires transparency and an honest evaluation of the cost of government. Accordingly, this bill aims to give voters a better understanding of the fiscal impact of initiatives proposed for or placed on a ballot. The initiative process was added to the California Constitution in 1911. Since that time, more than 1,400 initiatives have been circulated for signature, approximately 360 have qualified for the ballot, and about 130 have been approved by the voters. As surveys consistently conclude, the initiative process is supported by the public, but the public also supports reforming the process? Voters need to know the consequences of their vote. When the Legislature passes a bill that has a fiscal impact, the measure must be reviewed by the Appropriations Committees in both the Assembly and Senate. These committees examine AB 1021 Page 4 the fiscal impact of the measure and determine whether the measure includes revenue, provides another means of funding, and if not whether the state can afford the change in law. Initiatives do not have to go through a prior fiscal review. Voters are provided a fiscal impact analysis that explains the estimated cost of the measure. However, the analysis does not clearly and concisely state that in order for government to meet the measure's mandate there would need to be reduced services or new revenue. The state is at a critical juncture. It is facing serious fiscal challenges and we need to have an honest conversation with voters. This measure would fill a void and enable voters to make a fully informed decision about the merits of an initiative. 2)Initiative Spending : Since the implementation of the initiative process, there have been a number of approved measures which have required a certain portion of General Fund spending be dedicated to a specific purpose. These measures restrict the Legislature's ability to alter the relative shares of General Fund spending provided to program areas in any given year. For instance, Proposition 98 of 1988, provided for a minimum level of total spending (General Fund and local property taxes combined) on K-14 education in any given year. Proposition 98 accounts for over 40 percent of annual state General Fund spending. Proposition 49 of 2002, requires that the state spend a certain amount on after-school programs, which exceeded $540 million in the 2009-10 fiscal year. 3)Say It Again : Current law already requires that the fiscal impact of a proposed measure be analyzed and included in both the circulating title and summary and in the analysis printed in the state ballot pamphlet. This bill requires additional information to be included, for measures that would exceed one million dollars in cost for the creation of a new program, to specify that the fiscal impacts of the proposed measure would have an impact on current programs, if passed. Given that fiscal impacts are already being discussed in the analysis of proposed measures, it is unclear whether the additional information required by this bill would be redundant. However, given the impacts that approved initiatives have had AB 1021 Page 5 on the state's general fund, it may be beneficial to clarify to the electorate, prior to voting, that the costs of proposed measures will have an impact on the continuation of current programs. 4)Political Reform Act of 1974 : California voters passed an initiative, Proposition 9, in 1974 that created the Fair Political Practices Commission and codified significant restrictions and prohibitions on candidates, officeholders, and lobbyists. That initiative is commonly known as the Political Reform Act (PRA). Amendments to the PRA that are not submitted to the voters must further the purposes of the initiative and require a two-thirds vote of both houses of the Legislature, unless the amendments are to specified provisions to add information to the ballot pamphlet. This bill would require additional information to be included in the ballot pamphlet, and therefore requires a majority vote. 5)Related Legislation : AB 65 (Gatto) requires information about the 5 highest contributors in support or opposition to a measure being voted on be included in the statewide ballot pamphlet. AB 65 is pending on the Assembly Floor. AB 732 (Buchanan) requires the statewide ballot pamphlet to include a simple and easy to understand graph, chart, or report card, prepared by the Legislative Analyst, for each state bond measure submitted to the voters, to illustrate the cost of that measure to the state and local governments. AB 732 is pending in this committee. 6)Previous Legislation : ACA 3 (Blakeslee) of 2009, would have required an initiative measure that would authorize the issuance of state general obligation bonds of $1 billion or more to identify a funding source. ACA 3 died on the Assembly Third Reading File. ACA 5 (Charles Calderon) of 2009, would have required initiative bond measures to be approved by 66 percent of voters in order to take effect. ACA 5 died on the Assembly Third Reading file. SCA 14 (Ducheny) of 2009, would have required all state initiative measures that would result in a net increase in state or local government costs, instead of just bond measures, to identify a funding source. SCA 14 died on the Senate Third Reading file. AB 1021 Page 6 REGISTERED SUPPORT / OPPOSITION : Support California School Boards Association California State Association of Counties Opposition None on file. Analysis Prepared by : Maria Garcia / E. & R. / (916) 319-2094