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 








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          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.









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          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.  








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          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 








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               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.