BILL ANALYSIS
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Date of Hearing: June 23, 2009
ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING
Paul Fong, Chair
ACA 3 (Blakeslee) - As Amended: June 16, 2009
SUBJECT : Initiatives: bond funding source.
SUMMARY : Requires an initiative measure that would authorize
the issuance of state general obligation (GO) bonds of $1
billion or more to identify a funding source. Specifically,
this measure :
1)Prohibits an initiative measure that would authorize the
issuance of state GO bonds in a total amount exceeding $1
billion from being submitted to the electors or having any
effect unless the measure expressly provides for either
additional tax or fee revenues, the elimination of one or more
existing programs, or both, as necessary to fully fund the
repayment of bonds, as determined by the Legislative Analyst.
2)Requires the revenue source or programs eliminated to pay for
an initiative measure that authorizes the issuance of state GO
bonds exceeding $1 billion, as required by this constitutional
amendment, to be clearly identified in the title and summary
of the measure prepared by the Attorney General (AG).
EXISTING LAW :
1)Allows electors to propose statutes and amendments to the
Constitution and to adopt or reject them through the
initiative process.
2)Requires the AG to prepare a title and summary of a proposed
state initiative measure prior to the circulation of an
initiative petition for signatures.
3)Requires any ballot measure that appears on the statewide
ballot to receive a majority of the votes cast on the measure
in order to be approved.
FISCAL EFFECT : Unknown
COMMENTS :
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1)Purpose of the Constitutional Amendment : According to the
author:
The state's current financial crisis is exacerbated by the
ballot-box budgeting promoted by ill-conceived measures
sold to voters who often do not receive adequate
information to understand the consequences of the
initiative.
Under current law, wealthy special interests are able to
fund sophisticated signature gathering campaigns to place
initiatives on the ballot using general obligation bonds to
fund their pet projects. If passed, these outside interests
are able to elevate their projects above every other
budgetary priority, threatening the Legislature's ability
to responsibly fund state essentials such as education,
transportation and public safety.
ACA 3 requires that, in order to qualify for the ballot
through the signature process, any proposed ballot
initiative that includes authorization of a general
obligation bond measure in excess of $1 billion must
include a clearly defined new revenue source either in the
forms of a new tax/fee or the reduction or elimination of
an existing program(s) of a comparable cost. This new
revenue source must be identified in the title and summary
prepared by the Attorney General.
Just [last] year, billionaire T. Boone Pickens spent over
$10 million to qualify and promote Proposition 10, an
initiative that would have directly benefited his business
interests. Anthony Rubenstein noted on the California
Progress Report that, "Billionaire T. Boone Pickens is
trying to steal Californian Kids' lunch money. Like a
grade-school bully, Pickens is using the sheer size of his
wallet to try to ram through a self-enriching ballot
initiative that the non-partisan California Legislative
Analyst has estimated will cost an entire generation of
Californians hundreds of millions of dollars annually -
over $330 annually for 30 years!"
As we work to address our state's budget crisis, California
cannot afford an initiative system that allows wealthy
special interests to supplant the Legislature's budgetary
authority and put their interest ahead of California's
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hardworking taxpayers.
2)Initiative Bond History : Since the creation of California's
initiative process in 1911, just 17 of the 331 initiative
measures that have appeared on the statewide ballot have
proposed to issue state GO bonds - about five percent. Of
those 17 initiatives, nine have been approved-a success rate
of slightly more than 50 percent. By comparison, about
one-third of statewide initiative measures that have appeared
on the ballot have been approved by voters. The following
table details the 17 initiative bond measures that have
appeared on the ballot since 1911.
--------------------------------------------------------
|Election|Prop. | Subject | Amount |Pass/Fa|
| | # | | | il |
|--------+------+--------------------+-----------+-------|
|Nov. | 11 |UC Construction |$1.8 |Pass |
|1914 | | |million | |
|--------+------+--------------------+-----------+-------|
|Nov. | 38 |Los Angeles State |$1.25 | Fail |
|1914 | |Building |million | |
|--------+------+--------------------+-----------+-------|
|Nov. | 9 |Highways |$40 | Pass |
|1920 | | |million | |
|--------+------+--------------------+-----------+-------|
|Nov. | 14 |Housing |$100 | Fail |
|1948 | | |million | |
|--------+------+--------------------+-----------+-------|
|Jun. | 70 |Parks |$776 | Pass |
|1988 | | |million | |
|--------+------+--------------------+-----------+-------|
|Jun. | 116 |Rail Transportation |$1.99 | Pass |
|1990 | | |billion | |
|--------+------+--------------------+-----------+-------|
|Nov. | 128 |Forestry |$300 | Fail |
|1990 | | |million | |
|--------+------+--------------------+-----------+-------|
|Nov. | 129 |Drug |$740 | Fail |
|1990 | |Enforcement/Prisons |million | |
|--------+------+--------------------+-----------+-------|
|Nov. | 130 |Forest Acquisition |$742 | Fail |
|1990 | | |million | |
|--------+------+--------------------+-----------+-------|
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|Nov. | 138 |Forests & Parks |$300 | Fail |
|1990 | | |million | |
|--------+------+--------------------+-----------+-------|
|Jun. | 180 |Parks |$1.998 | Fail |
|1994 | | |billion | |
|--------+------+--------------------+-----------+-------|
|Nov. | 50 |Water |$3.44 | Pass |
|2002 | | |billion | |
|--------+------+--------------------+-----------+-------|
|Nov. | 61 |Children's |$750 | Pass |
|2004 | |Hospitals |million | |
|--------+------+--------------------+-----------+-------|
|Nov. | 71 |Stem Cell Research |$3 billion | Pass |
|2004 | | | | |
|--------+------+--------------------+-----------+-------|
|Nov. | 84 |Water & Parks |$5.388 | Pass |
|2006 | | |billion | |
|--------+------+--------------------+-----------+-------|
|Nov. | 3 |Children's |$980 | Pass |
|2008 | |Hospitals |million | |
|--------+------+--------------------+-----------+-------|
|Nov. | 10 |Alternative Fuel |$5 billion |Fail |
|2008 | |Vehicles | | |
--------------------------------------------------------
3)Outstanding Initiative Bond Measures : According to
information from the State Treasurer's office, there are 71
authorized and outstanding GO bonds as of May 1, 2009. Of
those 71 bonds, only seven were placed on the ballot by
initiative - the remaining 64 bonds were placed on the ballot
by the Legislature. Those seven bonds account for about 12.5
percent of the total amount of bonded indebtedness authorized
by the voters, and for about 17.6 percent of the long term
bonds that have been authorized, but not yet issued.
4)Initiative Bond Measures Only : The requirement to identify a
funding source for an initiative measure pursuant to this
constitutional amendment would apply to initiative bond
measures only; there would be no similar requirement to
identify a funding source for costly initiative measures that
were not bond measures. The reason for this distinction is
unclear.
In fact, initiative bond measures make up a relatively small
portion of all bond measures and a very small portion of
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General Fund spending. In the 2009-10 budget year, the debt
service on initiative bond measures will be approximately $360
million - about 7.3 percent of the state's debt service for
all general obligation bonds for the fiscal year. The
remaining 92.7 percent of debt service for general obligation
bonds will be for bonds that were placed on the ballot by the
Legislature.
Initiative bond measures also make up a relatively small portion
of spending on initiative measures that have been enacted by
the voters. Although a comprehensive accounting of the amount
of money that is spent annually to implement initiatives that
were approved by the voters is not available, the amount of
annual spending required by initiative measures that were not
bond measures clearly dwarfs the amount of spending required
by initiative bond measures. In fact, the spending required
by Proposition 49 for after school programs will exceed $540
million in the 2009-10 fiscal year - more than the debt
service for all of the initiative bond measures in the fiscal
year.
Given these facts, it is unclear whether it is desirable to
require proponents of an initiative bond measure to identify a
funding source for the initiative without also imposing a
similar requirement on the proponents of all initiative
measures.
5)Related Measures : ACA 5 (Charles Calderon), which is also
being heard in this committee today, would require initiative
bond measures to be approved by 66 percent of voters in order
to take effect.
SCA 14 (Ducheny), which is pending in the Senate Appropriations
Committee, would require all state initiative measures that
would result in a net increase in state or local government
costs, instead of just bond measures, to identify a funding
source.
6)Approval of Voters : As a constitutional amendment, this
measure requires the approval of the voters to take effect.
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REGISTERED SUPPORT / OPPOSITION :
Support
Small School Districts' Association
Opposition
None on file.
Analysis Prepared by : Ethan Jones / E. & R. / (916) 319-2094