BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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                                 THIRD READING


          Bill No:  SCA 4
          Author:   DeSaulnier (D)
          Amended:  As introduced
          Vote:     27

           
           SENATE ELECTIONS & CONST. AMEND. COMMITTEE :  3-2, 5/3/11
          AYES:  Correa, De León, Lieu
          NOES:  La Malfa, Gaines

           SENATE APPROPRIATIONS COMMITTEE  :  6-3, 5/26/11
          AYES:  Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
          NOES:  Walters, Emmerson, Runner


           SUBJECT  :    Initiative measures:  funding source

           SOURCE  :     Author


           DIGEST  :    This Constitutional Amendment prohibits an 
          initiative measure that will result in a net increase in 
          state or local government costs other than costs 
          attributable to the issuance, sale, or repayment of bonds, 
          from being submitted to the electors or having an effect 
          unless and until the Legislative Analyst and the Director 
          of Finance jointly determine that the initiative measure 
          provides for additional revenues in an amount that meets or 
          exceeds the net increase in costs.

           ANALYSIS  :    The California Constitution provides that the 
          electors may propose statutes or amendments to the state 
          constitution through the initiative process by presenting 
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          to the Secretary of State a petition that sets forth the 
          text of the proposed statute or amendment to the 
          Constitution and is certified to have been signed by a 
          certain number of electors.

           Background
           
          Current Procedure for Determining Initiative fiscal Impact  . 
           While the Director of Finance (DOF) and the Joint 
          Legislative Budget Committee (JLBC) are required to prepare 
          the joint estimate of the fiscal impact on state and local 
          government that's included in all initiative titles and 
          summaries submitted to the Attorney General's (AG's) 
          office, the actual process differs.  When the DOF and JLBC 
          receive notice from the AG requesting a fiscal analysis, 
          the Legislative Analyst's Office (LAO) usually always takes 
          the lead and begins the process of investigative research, 
          including how programs would be affected and how possible 
          passage and implementation would impact the state as a 
          whole.  Once the LAO has completed this investigative 
          analysis, the DOF is then contacted for review and 
          concurrence.  After the DOF has signed off on the LAO's 
          work, the estimate is then returned to the AG for inclusion 
          in the title and summary.

           Initiative Spending  .  According to the LAO, in recent 
          years, there have been a number of approved propositions 
          which have guaranteed that 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.  The required General Fund 
          contribution is roughly 40 percent of the State's Budget.  
          Proposition 49 of 2002 required that the state spend a 
          certain amount (currently $550 million) on after-school 
          programs. 

           Other States  .  According to the National Conference of 
          State Legislatures (NCSL), as of 2006 the following eleven 
          states have restrictions on the use of the initiative with 
          regard to appropriations and funding mechanisms. 

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                 Alaska:  No dedication of revenues or making or 
               repealing appropriations.

                 Arizona:  If an initiative requires a reduction in 
               government revenue or a reallocation from currently 
               funded programs, the initiative text must identify the 
               program(s) whose funding must be cut or eliminated to 
               implement the initiative.  If the identified revenue 
               source provided fails in any fiscal year to fund the 
               entire mandated expenditure for that fiscal year, the 
               legislature may reduce the expenditure of state 
               revenues for that purpose in that fiscal year to the 
               amount of funding supplied by the identified revenue 
               source. 

                 Florida:  Measures that propose a tax or fee not in 
               place in November, 1994 require a 2/3 vote to pass. 

                 Maine:  Expenditures in an amount in excess of 
               available and unappropriated state funds remain 
               inoperative until 45 days after the regular 
               legislative session, unless the measure provides for 
               raising new revenues adequate for its operation.

                 Massachusetts:  May not be used to make a specific 
               appropriation from the treasury.  However, if such a 
               law, approved by the people, is not repealed, the 
               legislature must raise by taxation or otherwise and 
               appropriate such money as may be necessary to carry 
               such law into effect.

                 Mississippi:  Sponsor must identify in the text of 
               the initiative the amount and source of revenue 
               required to implement the initiative. Initiatives 
               requiring a reduction in government revenue or a 
               reallocation from currently funded programs must 
               identify the program(s) whose funding must be reduced 
               or eliminated to implement the initiative.

                 Missouri:  May not appropriate money other than new 
               revenues created and provided for by the initiative.

                 Montana:  May not appropriate money.

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                 Nebraska:  No measure may interfere with the 
               legislature's ability to direct taxation of necessary 
               revenues for the state and its governmental 
               subdivisions.

                 Nevada:  No appropriations or other expenditures of 
               money unless such statute or amendment also imposes a 
               sufficient tax or otherwise constitutionally provides 
               for raising the necessary revenue.

                 North Dakota: No appropriations for the support and 
               maintenance of state departments and institutions.

                 Wyoming: No dedication of revenues or making or 
               repealing appropriations.

          The NCSL further comments that initiative measures which 
          mandate the expenditures of large amounts of public revenue 
          without including a new dedicated revenue source (such as 
          taxes or fees) can make it difficult for the legislature to 
          continue to fund existing state services and programs.  In 
          addition, initiatives that increase or create new taxes to 
          fund new or existing programs negatively affect the 
          legislature's ability to impose reasonable taxes to fund 
          necessary programs for citizens.

           Related Legislation
           
          This Constitutional Amendment is identical to SCA 14 
          (Ducheny) of 2009 which was approved by the Senate 
          Elections and Constitutional Amendments Committee and the 
          Senate Committee on Appropriations but was placed on the 
          Senate inactive file by the author's office.  This 
          Constitutional Amendment is also similar to ACA 6 (Gatto) 
          and ACA 7 (Feuer) which are pending in the Assembly 
          Committee on Elections and Redistricting.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No

           SUPPORT  :   (Verified  5/26/11)

          California State Association of Counties

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           OPPOSITION  :    (Verified  5/26/11)

          California Taxpayers Association
          Howard Jarvis Taxpayers Association

           ARGUMENTS IN SUPPORT  :    According to the author's office, 
          in 1911, Californians created the state initiative process 
          by approving a constitutional amendment placed on the 
          ballot by Progressives in the State Legislature.  Since 
          1911, Californians by way of the initiative process have 
          dramatically changed the landscape of their state 
          government by passing various ballot measures.   Budget 
          experts say that fiscal measures that pass on the ballot 
          constrain the hands of the Legislature, especially during 
          difficult budget times.  Over the last 30 years, California 
          voters have approved measures to not only dedicate tax 
          revenues in certain ways, they've also approved initiatives 
          that lock in state spending which restricts the Legislature 
          from altering significant portions of General Fund 
          spending.  A number of states limit or forbid initiatives 
          that appropriate money for any purpose.  Still others such 
          as Arizona, Maine, Mississippi, Missouri and Nevada allow 
          for new programs that cost money, but only if the 
          initiative creates and provides for the added resources.  
          This Constitutional Amendment allows voters to continue to 
          approve measures that cost state and local dollars to 
          implement, but it requires such measures to identify the 
          dollars needed for implementation. 

           ARGUMENTS IN OPPOSITION  :    Opponents believe this 
          Constitutional Amendment would "eliminate the power of the 
          voters to reform government and change perceived 
          inequalities" and that they support the current initiative 
          process the way it is.  
           

          DLW:do  5/27/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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