BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  SCA 6
          Author:   DeSaulnier (D) and Wolk (D)
          Amended:  As introduced
          Vote:     27

           
           SENATE ELECTIONS & CONSTITUTIONAL AMEND. COMM.  :  3-1, 3/19/13
          AYES:  Correa, Hancock, Yee
          NOES:  Anderson
          NO VOTE RECORDED:  Padilla

           SENATE APPROPRIATIONS COMMITTEE  :  5-2, 5/23/13
          AYES:  De León, Hill, Lara, Padilla, Steinberg
          NOES:  Walters, Gaines


           SUBJECT  :    Initiative measures:  funding source

           SOURCE  :     Author


           DIGEST  :    This bill, if approved by the voters, prohibits  
          future initiatives from being placed on the ballot if the  
          measure results in a net increase in state or local government  
          costs as determined by the Legislative Analyst Office (LAO) and  
          the Director of the Department of Finance (DOF).

           ANALYSIS  :    

          Existing law:

          1. Requires the Attorney General (AG), upon receipt of a draft  
             of a petition for a proposed initiative measure, to draft a  
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             title and summary of the proposed measure.

          2. Provides that if the AG determines that a proposed measure  
             will affect state or local revenues or expenditures, he/she  
             must include in the title and summary either the estimate of  
             the amount of change in state or local revenues or costs, or  
             an opinion as to whether or not a substantial net change in  
             state or local finances will result if the proposed  
             initiative is adopted.

          3. Requires the DOF and the Joint Legislative Budget Committee  
             (JLBC) to jointly prepare the fiscal estimate that is  
             included in the title and summary.

          4. Allows an initiative measure to propose changes to law that  
             will result in a net increase in state government or local  
             government costs. 

          This bill provides that when an initiative measure results in a  
          net increase in state or local government costs, as jointly  
          determined by the LAO and Director of DOF, it may not be  
          submitted to the electors or have any effect unless and until  
          the LAO and the Director of DOF jointly determine that the  
          initiative measure provides for additional revenues in an amount  
          that meets or exceeds the net increase in costs.  This  
          requirement does not apply to costs attributable to the  
          issuance, sale, or repayment of bonds authorized by the  
          initiative measure.

           Background
           
           Current Procedure for Determining Initiative Fiscal Impact  .   
          While the DOF and the 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 AG's office, the actual process differs.  When the DOF  
          and JLBC receive notice from the AG requesting a fiscal  
          analysis, the LAO usually always takes the lead and begins the  
          process of investigative research, including how programs are  
          affected and how possible passage and implementation impacts 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.

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           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% of the state's budget.  Proposition  
          49 of 2002 required that the state spend a specified amount on  
          after-school programs. 

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

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


          According to the Senate Appropriations Committee:


           One time ballot printing/mailing costs of approximately  
            $198,000 - $264,000 depending on the number of pages and based  
            on an estimated cost per page of $66,000. (General)

           Unknown potentially significant future savings in state and  
            local government costs.

           SUPPORT  :   (Verified  5/23/13)

          Rural County Representatives of California

           OPPOSITION  :    (Verified  5/23/13)

          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  

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          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.

          This bill 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.

          A number of states limit or forbid initiatives that appropriate  
          money for any purpose.  However, 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.

          In recent years, propositions were approved that have  
          appropriated a certain portion of General Fund spending to be  
          dedicated to a specific purpose.  These measures restrict the  
          Legislature's ability to adjust the General Fund spending in any  
          given year, in order to carry out the purpose of the measure.  

          This bill is identical to SCA 4 (DeSaulnier) of 2011 and SCA 14  
          (Ducheny) of 2009 both of which were approved by this committee  
          but failed passage on the Senate floor.

           ARGUMENTS IN OPPOSITION  :    According to the California  
          Taxpayers Association, "SCA 6's "pay-as-you-go" provisions are  
          biased:  Initiatives must identify new revenue to support new  
          expenditures, while ballot measures proposed by the Legislature  
          are not held to the same standard.  A problem with the  
          "pay-as-you-go" approach is that proponents of an initiative  
          would not have an official fiscal analysis of their initiative  
          until after it enters circulation.  If the initiative failed to  
          meet the "pay-as-you-go" requirements, it likely would be too  
          late to submit another version for a title and summary to the  

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          attorney general, collect signatures, and then submit signatures  
          to election officials for certification - a lengthy process that  
          requires months of planning.  If SCA 6 had been in effect nearly  
          25 years ago, it would have removed from the ballot Proposition  
          98, "Jessica's Law", and "Three Strikes Law," among others.

          "Although requiring a mechanism to pay for new programs is  
          appealing, giving power to either a legislative appointee (the  
          legislative analyst) and/or gubernatorial appointee (the  
          director of finance) to remove an initiative from the ballot  
          sets a dangerous precedent.  It has the potential to disregard  
          important policy measures for manipulative political purposes.

          The initiative process is intended to be a resource for the  
          people - a means of checks and balances when the legislative  
          process falls short.  Further, if a measure 





























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          is removed from the ballot, an initiative's proponents would be  
          given the nearly impossible task of refuting empirical evidence  
          and statistical modeling provided by state officials."


          RM:d  2/19/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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