BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair SB 202 (Hancock) Hearing Date: 9/9/2011 Amended: 9/8/2011 Consultant: Maureen Ortiz Policy Vote: N/A _________________________________________________________________ ____ BILL SUMMARY: SB 202 provides that all initiatives or referendum measures that are certified for the ballot on or after July 1, 2011 will be placed on the ballot only at a November statewide general election or at a statewide special election. SB 202 also requires the Secretary of State to submit ACA 4 of the 2009-10 Regular Session to the voters at the November 4, 2014 statewide general election, and makes related changes. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2011-12 2012-13 2013-14 Fund Ballot initiatives ----unknown costs in general elections offset by savings in primary elections in even numbered years-- General _________________________________________________________________ ____ STAFF COMMENTS: SB 202 was referred to the Senate Appropriations Committee pursuant to Senate Rule 29.10. SB 202 will require all initiatives that qualify for the ballot after July 1, 2011 to be placed on the November general election, rather than on the state primary election resulting in a potential shift of printing and mailing expenses from June to November during years that elections are held. Shorter ballots for primary elections could be beneficial to counties since the implementation of the "top two" primary systems will require all candidates to be listed on the primary ballot. According to the Senate Floor Analysis of ACA 4 dated October 8, 2010, the following is noted: ACA 4 "results in increased funding in the state rainy day SB 202 (Hancock) Page 1 reserve account. It also increases state spending on repaying budgetary borrowing and debt, and infrastructure projects. Finally, the additional reserve reduces the extent of state cash borrowing, resulting in reduced external-borrowing costs." Assuming the passage of ACA 4 by the voters, SB 202 will delay the above noted impact for two years. Delaying the implementation of ACA 4 will have the benefit of allowing the economy to more fully recover from the U.S. recession of 2008 and 2009 before funds become more restricted. Revenues will retain current flexibility to be directed to existing budget obligations, or to be deposited into the rainy day reserve. Specifically, SB 202 does the following: 1. Defines "general election", for the purposes of provisions of the state constitution that specify when a qualified state initiative or referendum measure will appear on the ballot, as only the election held throughout the state on the first Tuesday after the first Monday in November of each even-numbered year with respect to an initiative or referendum measure that is certified for the ballot on or after July 1, 2011. 2. Repeals Section 1 of Chapter 732 of the Statutes of 2010 which would have required ACA 4 of the 2009-10 Regular Session to be submitted to the voters at the 2012 statewide presidential primary election, and also removes from statute the required text of the ballot label, and the ballot title and summary for ACA 4. 3. Requires the Secretary of State to submit ACA 4 of the 2009-10 Regular Session to the voters at the November 4, 2014, statewide general election. ACA 4 (Res. Chapter 174, Statutes of 2010) proposes various changes to the state budget process and to the state's Budget Stabilization Fund. As with all constitutional amendments, ACA 4 requires the approval of the voters. Among other provisions, AB 1619 (Chapter 732, Statutes of 2010) requires ACA 4 to be submitted to the voters at the 2012 statewide presidential primary election. This bill repeals that provision of AB 1619 and instead requires ACA 4 to be submitted to the voters at the November 4, 2014 statewide general election. SB 202 (Hancock) Page 2 In addition to specifying the election at which ACA 4 will appear on the ballot, AB 1619 also outlined the text to be used as the ballot label, title and summary for ACA 4 when it is placed on the ballot. Subsequent to the Legislature's enactment of AB 1619, the Court of Appeal of the State of California for the Third Appellate District ruled in Howard Jarvis Taxpayers Association v. Bowen (2011) 192 Cal. App. 4th 110, that the Political Reform Act (PRA) requires the Attorney General to prepare the ballot label and ballot title and summary for state ballot measures, and that an attempt by the Legislature to override that requirement for any particular measure was not a valid amendment of the PRA, without the approval of the voters. In light of this decision, the ballot label, and ballot title and summary language contained in AB 1619 is deemed to be invalid. SB 202 will, therefore, delete the following language from Chapter 732, Statutes of 2010, and the Attorney General will prepare the label, title and summary as provided in existing law. Ballot Label for ACA 4 : "'RAINY DAY' BUDGET STABILIZATION FUND. Changes the budget process. Could limit future deficits and spending by increasing the size of the state 'rainy day' fund and requiring above-average revenues to be deposited into it, for use during economic downturns and other purposes." Ballot Title and Summary for ACA 4 : "STATE BUDGET. CHANGES CALIFORNIA BUDGET PROCESS. LIMITS STATE SPENDING. INCREASES 'RAINY DAY' BUDGET STABILIZATION FUND. Increases amount of potential savings in the state 'rainy day' fund from 5% to 10% of the General Fund. Requires 3% of the general revenues to be deposited each year into the state 'rainy day' fund, except when revenues drop below last year's budget, adjusted for population and inflation. Requires unexpected revenues above historic trends to be deposited into the state 'rainy day' fund, limiting spending. In many years, there will be increased amounts of money in the state 'rainy day' fund. SB 202 (Hancock) Page 3 Limits spending of the state 'rainy day' fund to when state revenues drop below last year's budget, adjusted for population and inflation, and other limited purposes, including for a declared emergency. Once the state 'rainy day' fund becomes full, additional revenues can only be used for one-time expenses like infrastructure, debt repayment, or retained in the state 'rainy day' fund." History of Initiatives on Primary Election Ballots Since the initiative and referendum processes were created in 1911, the state Constitution has always provided that qualified measures will appear on the ballot at the next general election held after a specified time period, or at any special election called by the Governor held prior to that general election. In 1972, however, the Secretary of State (SOS) placed an initiative on the ballot at a primary election that was not consolidated with a statewide special election for the first time, and has since continued the practice of including initiatives on the ballot at primary elections. Although it appears that the courts have not been asked to consider a challenge to the SOS's practice of placing initiative and referendum measures on the ballot at primary elections, a dissenting opinion in a state Supreme Court case raised a question about whether such a practice was consistent with the state Constitution. In her dissenting opinion in Brosnahan v. Eu, (1982) 31 Cal.3d 1, Chief Justice Bird noted that the constitutionality of submitting initiatives to voters at primary elections "would appear to be an open question." In a footnote to her dissenting opinion, the Chief Justice wrote: An additional issue, not raised by parties here, apparently has never been resolved by this court. The Constitution requires that initiative and referendum measures be submitted to the voters "at the next general election" after the measures qualify, or at a special election called by the Governor. (Cal. Const., art. II, §8, subd. (c) and §9, subd. (c)?) The Elections Code defines a general election as "the election held throughout the state on the first Tuesday after the first Monday of November in each even-numbered year." (Elec. Code, §20.) A special SB 202 (Hancock) Page 4 election is an election the timing of which is not otherwise prescribed by law. (Elec. Code, §27.) The election scheduled for June of 1982 is a regularly scheduled "direct primary" (see Elec. Code, §23) - not a special election or a general election. Thus, the constitutionality of submitting an initiative to the voters at a June primary election would appear to be an open question. Subsequent to the Supreme Court's decision in Brosnahan v. Eu, the definition of "general election" was revised in AB 1466 (Statham, Chapter 405, Statutes of 1993) to include regularly scheduled statewide primary elections. According to information from the National Conference on State Legislatures, only four (Alaska, California, North Dakota, and Oklahoma) of the 24 states that have the initiative process allow initiatives to be placed on the ballot at a primary or special election. Staff notes that there are two initiative measures which have already qualified for and are scheduled to appear on the ballot at the June 2012 statewide primary election. Those measures, relating to term limits and cigarette taxes, will be unaffected by SB 202 because those measures were certified for the ballot in 2010. This bill provides that the change in the definition of "general election" applies to initiative or referendum measures that are certified for the ballot on or after July 1, 2011.