BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SCA 2 HEARING: 6/27/12
AUTHOR: Wyland FISCAL: Yes
VERSION: 2/15/11 TAX LEVY: No
CONSULTANT: Ewing
REVISED BIENNIAL SESSION
Requires the Legislature to adopt budget bills for two
consecutive fiscal years. Limits legislative activity
during the first year of a two-year legislative session.
Background and Existing Law
The California Constitution requires the Legislature to
convene in regular session at noon on the first Monday in
December of each even-numbered year and adjourn sine die at
midnight on November 30 of the following even-numbered
year.
The Constitution authorizes the Legislature to determine
how best to organize itself, including how and when to
establish and eliminate committees.
The Constitution directs the Governor to submit to the
Legislature, within the first 10 days of each calendar
year, a budget for the ensuring fiscal year. The
Legislature is required to pass the budget by midnight on
June 15 of each year. Failure to pass the budget results
in legislators not being paid (Proposition 25, 2011).
Some observers assert that the time spent passing the
budget each year leaves the Legislature with insufficient
time for oversight and undermines focus on long-term fiscal
issues. To improve oversight and long-term focus, calls
have been made for biennial budgets.
Biennial budgeting involves adopting a single budget that
spans two fiscal years or the simultaneous passage of
separate budgets for each of two fiscal years. Proponents
of biennial budgeting suggest that by consolidating the
budget process for two years into a shorter period at the
beginning of the first year of a two-year session,
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policymakers can spend more time on oversight during the
remainder of a session.
In 1940, 44 states utilized a multi-year budget approach.
In 2011, 19 states continued to use a multi-year approach
for all or part of their budgets. Michigan and North
Dakota adopt a single budget for two fiscal years, while
most biennial budgets involve adopting budgets for each of
two fiscal years, as is the case in Washington and Oregon.
Kansas and Arizona have a hybrid approach where a two-year
budget is adopted for select agencies, with a single-year
budget adopted for others.
Published research indicates that the shift among the
states, away from multi-year budgeting toward annual
budgets, coincided with the growth in the size and
complexity of state budgets, greater access to federal
funding, and increased volatility in other sources of state
revenue.
While some research suggests that multi-year budgeting
creates more time for oversight and improved understanding
of out-year fiscal issues, other research has found that
the budget calendar does not determine whether oversight
can occur or whether policymakers have a long-term focus.
The National Conference of State Legislatures has reported
that multi-year or annual budget calendars do not appear to
be the causes of significant differences in budget
decisions.
Proposed Law
Senate Constitutional Amendment 2, beginning December 3,
2012, does the following:
Requires the Governor, within the first 10 days of
each odd-numbered year, to submit to the Legislature a
separate budget for each of the two subsequent fiscal
years.
Requires the Legislature, by midnight of June 15 of
each odd-numbered year, to pass budget bills for each
of the two subsequent fiscal years.
Establishes the first year of a two-year
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legislative session as a budget session, authorizing
the Legislature to conduct business only for:
ü Oversight and review of revenues and
expenditures,
ü Consideration of budget bills and budget
implementation bills,
ü Examination of state incentives for economic
investment and job creation,
ü Consideration of legislation to improve job
creation or economic development, and
ü Urgency bills.
Establishes even-numbered years of a two-year
session as general sessions.
Requires the Legislature to convene a joint
committee, during odd-numbered years, to conduct
hearings and develop policy recommendations to improve
California's business climate.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . SCA 2 restructures the
legislative calendar by requiring legislators to adopt
budgets for two consecutive years at the beginning of a
two-year session, freeing them to focus on oversight, job
creation, and ensuring the efficient and effective use of
public resources. SCA 2 limits the Legislature to working
only on fiscal, oversight, economic development and other
urgent issues during the first year of a two-year term,
while allowing other issues to be addressed during the
second year. This measure will ensure that urgent issues
are prioritized over less pressing matters.
2. Uncertain future . There is no evidence suggesting that
adopting budgets for two consecutive fiscal years, absent
reforms focused on oversight or long-term planning, would
improve oversight or better fiscal decisions. Experience
in other states suggests that uncertainties in multi-year
revenue and expenditure forecasts will simply result in the
need to revise out-year budgets. Policy makers in Maine
found the need to pass multiple supplemental budgets when
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speculative revenue and expenditure forecasts proved
unreliable.
3. Enhanced oversight . SCA 2 requires the Legislature to
focus on the budget, the economy, and oversight during the
first year of a two-year session, but the measure does not
specify how best to improve oversight. Some states, and
the federal government, have established specific
requirements for executive branch agencies to provide the
legislative branch with information, to support oversight.
The Committee may wish to consider amendments that:
1) Establish a minimum timeframe for the periodic review of
each state program or department, such as once every four
years to coincide with a gubernatorial administration.
2) Require, with limited exceptions, departments to
document the outcomes or goals of public programs and
report their progress toward those goals.
3) Require the state's annual spending plan, including
information on revenues, expenditures, along with program
goals and progress toward those goals, to be publicly
available in the most accessible format, including a
machine-readable format to encourage wide dissemination.
4. Limits on discretion . SCA 2 requires the establishment
of a joint committee and hearings on California's business
climate during the first year of a two-year session. It
requires a focus on the budget and the economy, but limits
the Legislature's authority to focus on other pressing
issues during the first year that are not urgency measures,
including public safety, health, environmental issues,
water, education and all others. The Legislature may
already create the joint committee called for in SCA 2, at
its discretion, and has established numerous committees
with similar jurisdiction. Placing this requirement in the
Constitution, and limiting the Legislature's authority and
discretion during the first year of a two-year session, may
hinder its ability to address other pressing issues. The
Committee may wish to consider amendments that would
eliminate the requirement to establish a joint committee
and preserve the Legislature's authority to determine its
priorities through the two-year session.
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5. Timing matters . The major provisions of SCA 2 would
take effect December 3, 2012. State statute requires
constitutional amendments submitted to the people by the
Legislature to appear on the ballot of the first statewide
election occurring at least 131 days following chaptering.
The deadline for meeting this requirement for the November
2012 ballot is June 28, 2012. Absent a statutory waiver,
if chaptered after June 28, 2012, SCA 2 would appear on the
June 2014 ballot or an earlier special election. The
Committee may wish to consider amending SCA 2 to waive the
131 day submission requirements to allow it to appear on
the November 2012 ballot. Or SCA 2 could be amended to
delay the effective date in recognition of the timing of
the next eligible statewide ballot.
6. Double-referral . Because SCA 2 is a constitutional
amendment, the Senate Rules Committee double-referred the
measure, first to Senate Governance & Finance Committee,
and then to Senate Elections and Constitutional Amendments.
7. Related measures . SB 15 (DeSaulnier, 2012) would have
required the Governor to submit to the Legislature, within
the first 10 days of each calendar year, a budget for each
of two fiscal years. SB 15 passed out of Senate Governance
& Finance Committee (8-0). That specific language was
amended out of SB 15 prior to chaptering.
SCA 6 (Emmerson, 2011), ACA 3 (Jeffries, 2011) and ACA 28
(Garrick, 2012) would require the Governor to submit a
separate budget for each of two subsequent years at the
start of a biennial session. They would establish the
first year of a two-year session as a budget session and
the second year as a general session.
Government Performance and Accountability Act (GPAA). The
GPAA is currently undergoing signature verification for
inclusion on the November 2012 ballot. Among other
provisions, this measure would require the Governor to
submit to the Legislature, within the first 10 days of an
odd-numbered calendar year, a budget for the ensuring two
fiscal years, which includes a separate budget for the
budget year and a budget for the succeeding fiscal year.
The GPAA also requires the Legislature to establish an
oversight process for evaluating and improving the
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performance of state programs.
Support and Opposition (6/21/12)
Support : Unknown.
Opposition : Unknown.