California Legislature—2015–16 Regular Session

Assembly Constitutional Amendment No. 10

Introduced by Assembly Member Melendez

February 19, 2016

Assembly Constitutional Amendment No. 10—A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by amending Section 20 of Article XVI thereof, relating to the state budget.

LEGISLATIVE COUNSEL’S DIGEST

ACA 10, as introduced, Melendez. Budget Stabilization Account.

Existing provisions of the California Constitution, approved by the electors on November, 4, 2014, establish the Budget Stabilization Account in the General Fund and require the Controller, on or before October 1 of the 2015-16 fiscal year and each fiscal year thereafter, to transfer from the General Fund to the Budget Stabilization Account amounts that include a sum equal to 1.5% of the estimated amount of General Fund revenues for that fiscal year. These existing provisions prohibit for each fiscal year transfers to the Budget Stabilization Account that would cause the balance in the account to exceed 10% of the amount of General Fund proceeds of taxes for the fiscal year as estimated by the Department of Finance.

This measure would increase from 1.5% to 3% the percentage of estimated General Fund proceeds of taxes required to be transferred from the General Fund to the Budget Stabilization Account for each fiscal year. This measure would also increase the maximum balance of the Budget Stabilization Account for each fiscal year from 10% to 15% of the amount of General Fund proceeds of taxes for the fiscal year as estimated by the Department of Finance.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

Resolved by the Assembly, the Senate concurring, That the
Legislature of the State of California at its 2015-16 Regular
Session commencing on the first day of December 2014, two-thirds
of the membership of each house concurring, hereby proposes to
the people of the State of California, that the Constitution of the
State be amended as follows:

  

That Section 20 of Article XVI thereof is amended to read:

SEC. 20.  

(a) (1) The Budget Stabilization Account is hereby
created in the General Fund.

(2) For the 2015-16 fiscal year and each fiscal year thereafter,
based on the Budget Act for the fiscal year, the Controller shall
transfer from the General Fund to the Budget Stabilization Account,
no later than October 1, a sum equal to begin delete 1.5 end delete begin insert 3 end insert percent of the
estimated amount of General Fund revenues for that fiscal year.

(b) (1) For the 2015-16 fiscal year and each fiscal year
thereafter, based on the Budget Act for the fiscal year, the
Department of Finance shall provide to the Legislature all of the
following information:

(A) An estimate of the amount of General Fund proceeds of
taxes that may be appropriated pursuant to Article XIII B for that
fiscal year.

(B) (i) An estimate of that portion of the General Fund proceeds
of taxes identified in subparagraph (A) that is derived from personal
income taxes paid on net capital gains.

(ii) The portion of the estimate in clause (i) that exceeds 8
percent of the estimate made under subparagraph (A).

(C) That portion of the state’s funding obligation under Section
8 that results from including the amount calculated under clause
(ii) of subparagraph (B), if any, as General Fund proceeds of taxes.

(D) The amount of any appropriations described in clause (ii)
of subparagraph (B) of paragraph (1) of, or subparagraph (C) of
paragraph (2) of, subdivision (c), that are made from the revenues
described in clause (ii) of subparagraph (B) of this paragraph.

(E) The amount resulting from subtracting the combined values
calculated under subparagraphs (C) and (D) from the value
calculated under clause (ii) of subparagraph (B). If less than zero,
the amount shall be considered zero for this purpose.

(F) The lesser of the amount calculated under subparagraph (E)
or the amount of transfer resulting in the balance in the Budget
Stabilization Account reaching the limit specified in subdivision
(e).

(2) In the 2016-17 fiscal year, with respect to the 2015-16 fiscal
year only, and in the 2017-18 fiscal year and each fiscal year
thereafter, separately with respect to each of the two next preceding
fiscal years, the Department of Finance shall calculate all of the
following, using the same methodology used for the relevant fiscal
year, and provide those calculations to the Legislature:

(A) An updated estimate of the amount of General Fund
proceeds of taxes that may be appropriated pursuant to Article
XIII B.

(B) (i) An updated estimate of that portion of the General Fund
proceeds of taxes identified in subparagraph (A) that is derived
from personal income taxes paid on net capital gains.

(ii) That portion of the updated estimate in clause (i) that exceeds
8 percent of the updated estimate made under subparagraph (A).

(C) The updated calculation of that portion of the state’s funding
obligation under Section 8 that results from including the updated
amount calculated under clause (ii) of subparagraph (B), if any,
as General Fund proceeds of taxes.

(D) The amount of any appropriations described in clause (ii)
of subparagraph (B) of paragraph (1) of, or subparagraph (C) of
paragraph (2) of, subdivision (c), that are made from the revenues
described in clause (ii) of subparagraph (B) of paragraph (1).

(E) The amount resulting from subtracting the combined values
calculated under subparagraphs (C) and (D) from the value
calculated under clause (ii) of subparagraph (B). If less than zero,
the amount shall be considered zero for this purpose.

(F) The amount previously transferred for the fiscal year by the
Controller from the General Fund to the Budget Stabilization
Account pursuant to subdivisions (c) and (d).

(G) The lesser of (i) the amount, not less than zero, resulting
from subtracting, from the amount calculated under subparagraph
(E), the value of any suspension or reduction of transfer pursuant
to paragraph (1) of subdivision (a) of Section 22 previously
approved by the Legislature for the relevant fiscal year, and the
amount previously transferred for that fiscal year by the Controller
as described in subparagraph (F), or (ii) the amount of transfer
resulting in the balance in the Budget Stabilization Account
reaching the limit as specified in subdivision (e).

(c) (1) (A) By October 1 of the 2015-16 fiscal year and each
fiscal year thereafter to the 2029-30 fiscal year, inclusive, based
on the estimates set forth in the annual Budget Act pursuant to
paragraphs (2) and (3) of subdivision (h), and the sum identified
in paragraph (2) of subdivision (a), the Controller shall transfer
amounts from the General Fund and the Budget Stabilization
Account, pursuant to a schedule provided by the Director of
Finance, as provided in subparagraph (B).

(B) Notwithstanding any other provision of this section, in the
fiscal year to which the Budget Act identified in subparagraph (A)
applies:

(i) Fifty percent of both the amount identified in paragraph (2)
of subdivision (a), and the amount resulting from subtracting the
value calculated under subparagraph (C) of paragraph (1) of
subdivision (b) from the value calculated under clause (ii) of
subparagraph (B) of paragraph (1) of subdivision (b), shall be
transferred from the General Fund to the Budget Stabilization
Account.

(ii) The remaining 50 percent shall be appropriated by the
Legislature for one or more of the following obligations and
purposes:

(I) Unfunded prior fiscal year General Fund obligations pursuant
to Section 8 that existed on July 1, 2014.

(II) Budgetary loans to the General Fund, from funds outside
the General Fund, that had outstanding balances on January 1,
2014.

(III) Payable claims for mandated costs incurred prior to the
2004-05 fiscal year that have not yet been paid, and that pursuant
to paragraph (2) of subdivision (b) of Section 6 of Article XIII B
are permitted to be paid over a term of years, as prescribed by law.

(IV) Unfunded liabilities for state-level pension plans and
prefunding other postemployment benefits, in excess of current
base amounts as established for the fiscal year in which the funds
would otherwise be transferred to the Budget Stabilization Account.
For the purpose of this subclause, current base amounts are those
required to be paid pursuant to law, an approved memorandum of
understanding, benefit schedules established by the employer or
entity authorized to establish those contributions for employees
excluded or exempted from collective bargaining, or any
combination of these. To qualify under this subclause, the
appropriation shall supplement and not supplant funding that would
otherwise be made available to pay for the obligations described
in this subclause for the fiscal year or the subsequent fiscal year.

(2) (A) By October 1 of the 2030-31 fiscal year and each fiscal
year thereafter, based on the estimates set forth in the annual
Budget Act pursuant to paragraphs (2) and (3) of subdivision (h),
the Controller shall transfer amounts from the General Fund to the
Budget Stabilization Account, pursuant to a schedule provided by
the Director of Finance, as provided in subparagraph (B).

(B) In the fiscal year to which the Budget Act identified in
subparagraph (A) applies, both the amount identified in paragraph
(2) of subdivision (a), and the amount resulting from subtracting
the value calculated under subparagraph (C) of paragraph (1) of
subdivision (b) from the value calculated under clause (ii) of
subparagraph (B) of paragraph (1) of subdivision (b), shall be
transferred from the General Fund to the Budget Stabilization
Account.

(C) Notwithstanding any other provision of this section, the
Legislature may appropriate up to 50 percent of both the amount
identified in paragraph (2) of subdivision (a), and of the amount
resulting from subtracting the value calculated under subparagraph
(C) of paragraph (1) of subdivision (b) from the value calculated
under clause (ii) of subparagraph (B) of paragraph (1) of
subdivision (b), for one or more of the obligations and purposes
described in clause (ii) of subparagraph (B) of paragraph (1).

(3) The transfers described in this subdivision are subject to
suspension or reduction pursuant to paragraph (1) of subdivision
(a) of Section 22.

(d) By October 1 of the 2016-17 fiscal year and each fiscal year
thereafter, based on the estimates set forth in the annual Budget
Act pursuant to paragraphs (4) and (5) of subdivision (h), the
Controller shall transfer amounts between the General Fund and
the Budget Stabilization Account pursuant to a schedule provided
by the Director of Finance, as follows:

(1) If the amount in subparagraph (G) of paragraph (2) of
subdivision (b) is greater than zero, transfer that amount from the
General Fund to the Budget Stabilization Account, subject to any
suspension or reduction of this transfer pursuant to paragraph (1)
of subdivision (a) of Section 22.

(2) If the amount described in subparagraph (F) of paragraph
(2) of subdivision (b) is greater than the amount calculated under
subparagraph (E) of paragraph (2) of subdivision (b), transfer that
excess amount from the Budget Stabilization Account back to the
General Fund.

(e) Notwithstanding any other provision of this section, the
amount of a transfer to the Budget Stabilization Account pursuant
to paragraph (2) of subdivision (a) and subdivisions (c) and (d) for
any fiscal year shall not exceed an amount that would result in a
balance in the account that, when the transfer is made, exceeds begin delete 10 end delete
begin insert 15 end insert percent of the amount of General Fund proceeds of taxes for
the fiscal year estimated pursuant to subdivision (b). For any fiscal
year, General Fund proceeds of taxes that, but for this paragraph,
would have been transferred to the Budget Stabilization Account
may be expended only for infrastructure, as defined by Section
13101 of the Government Code, as that section read on January
1, 2014, including deferred maintenance thereon.

(f) The funds described in subdivision (b) as General Fund
proceeds of taxes are General Fund proceeds of taxes for purposes
of Section 8 for the fiscal year to which those proceeds are
attributed, but are not deemed to be additional General Fund
proceeds of taxes on the basis that the funds are thereafter
transferred from the Budget Stabilization Account to the General
Fund.

(g) The Controller may utilize funds in the Budget Stabilization
Account, that he or she determines to currently be unnecessary for
the purposes of this section, to help manage General Fund daily
cashflow needs. Any use pursuant to this subdivision shall not
interfere with the purposes of the Budget Stabilization Account.

(h) The annual Budget Act shall include the estimates described
in all of the following:

(1) Paragraph (2) of subdivision (a).

(2) Clause (ii) of subparagraph (B) of paragraph (1) of
subdivision (b).

(3) Subparagraph (F) of paragraph (1) of subdivision (b).

(4) Clause (ii) of subparagraph (B) of paragraph (2) of
subdivision (b).

(5) Subparagraph (G) of paragraph (2) of subdivision (b).