BILL ANALYSIS Ó SENATE COMMITTEE ON ELECTIONS AND CONSTITUTIONAL AMENDMENTS Senator Lou Correa, Chair BILL NO: AB 1021 HEARING DATE:6/21/11 AUTHOR: GORDON ANALYSIS BY:Frances Tibon Estoista AMENDED: 5/19/11 FISCAL: YES SUBJECT Ballot measures: fiscal analysis DESCRIPTION Existing law establishes a process for the Attorney General (AG) to prepare a summary of the chief purposes and points of a proposed initiative measure. Existing law requires the AG to provide a copy of the title and summary to the Secretary of State (SOS) 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 Department of Finance (DOF) and the Joint Legislative Budget Committee (JLBC). Existing law 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. Existing law 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. Existing law 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. Existing law 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. This bill requires additional fiscal information be included in the circulating title and summary prepared by the AG and the summary statements prepared by the Legislative Analyst for a proposed initiative measure. Specifically, this bill requires the JLBC and the 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 in any 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. This bill 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, its costs would have to be paid from one or more of the following: 1. Reductions to existing state programs. 2. Revenue increases. 3. State reserves, if available. This bill requires a paragraph be added to the summary statements prepared by the Legislative Analyst, contained in the ballot pamphlet , for a measure that has qualified AB 1021 (GORDON) Page 2 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 in any 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. This bill 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, its costs would have to be paid from one or more of the following: 1. Reductions to existing state programs. 2. Revenue increases. 3. State reserves, if available. This bill requires the Legislative Analyst to utilize a uniform method in each analysis to describe the estimated increase or decrease in revenue or cost of a measure so that the average voter may draw comparisons among the fiscal impacts of measures. This bill requires the condensed statement of the fiscal impact summary for the measure prepared by the AG to appear on the ballot followed immediately by the uniform estimate of increase or decrease in revenue or cost of the measure. This bill makes other conforming changes. BACKGROUND 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 AB 1021 (GORDON) Page 3 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. COMMENTS 1. According to the author , The democratic process requires transparency, an honest evaluation of the cost of government, and an understanding of the consequences of a vote. AB 1021 would add two simple sentences to the fiscal impact statement for petitions and the ballot pamphlet, if a proposed measure would establish or expand a program that costs more than $1 million in any year without providing new revenues or reductions. Voters need to understand the fiscal impact 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 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. 2. 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. AB 1021 (GORDON) Page 4 However, given the impacts that approved initiatives have had 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. 3. Related Legislation . 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 also before this committee today. 4. Previous Legislation . SCA 4 (DeSaulnier) requires all state initiative measures that would result in a net increase in state or local government costs to identify a funding source before being submitted to the voters. SCA 4 is currently on the Senate Third Reading File. SCA 14 (Ducheny) of 2009 was identical to SCA 4. SCA 14 died on the Senate Third Reading File. 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. PRIOR ACTION Assembly Elections and Redistricting Committee: 5-2 Assembly Appropriations Committee: 12-5 Assembly Floor: 55-24 POSITIONS Sponsor: Author Support: California School Boards Association California State Association of Counties Oppose: None received AB 1021 (GORDON) Page 5 AB 1021 (GORDON) Page 6