BILL NUMBER: ACA 4	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  OCTOBER 7, 2010
	AMENDED IN ASSEMBLY  MAY 10, 2010
	AMENDED IN ASSEMBLY  APRIL 12, 2010
	AMENDED IN ASSEMBLY  MARCH 17, 2010

INTRODUCED BY   Assembly Members  Feuer,  
  John A. Perez,   
 and Bass   Gatto   and Niello 
   (Coauthor: Senator  Steinberg   Ashburn 
)

                        DECEMBER 3, 2008

   A resolution to propose to the people of the State of California
an amendment to the Constitution of the State, by amending 
Sections 8 and 9 of Article II thereof, by amending Sections 8, 10,
and 12 of Article IV thereof, by amending Section 3 of Article XIII
    A thereof, by adding Section 21
to Article XVI thereof, and by adding Section 3.5 to Article XVIII
thereof, relating to state finance.   Section 12 of
Article IV thereof, and by amending Section 20 of, and adding Section
21 to, Article XVI thereof, relating to state finance. 


	LEGISLATIVE COUNSEL'S DIGEST


   ACA 4, as amended,  Feuer   Gatto  .
State finance  reform  . 
   Existing provisions of the California Constitution require the
Governor to submit to the Legislature, within the first 10 days of
each calendar year, a proposed budget for the ensuing fiscal year
containing itemized statements for recommended state expenditures and
estimated state revenues. In addition, the Constitution prohibits
the Legislature from passing, and the Governor from signing, a Budget
Bill that would appropriate from the General Fund a total amount
that, when combined with all appropriations from the General Fund for
that fiscal year made as of the date of the Budget Bill's passage,
and the amount of any General Fund moneys transferred to a reserve
account, exceeds estimated General Fund revenues for that fiscal
year. The estimate of General Fund revenues is required to be set
forth in the Budget Bill.  
   This measure would require the Governor, in his or her proposed
budget, to identify estimated total state resources available to meet
recommended state expenditures and, further, to identify the amount
of those resources that are anticipated to be one-time resources. The
measure would prohibit passage of a Budget Bill that appropriates an
amount that, when combined with prior appropriations and transfers
to the reserve account, exceeds the estimate of General Fund
revenues, transfers, and balances available from the prior fiscal
year. The measure would require the estimate of General Fund
revenues, transfers, and balances to be set forth in the Budget Bill.
 
   Existing provisions of the California Constitution establish the
Budget Stabilization Account in the General Fund and currently
require the Controller, no later than September 30 of each year, to
transfer from the General Fund to the account a sum equal to 3% of
the estimated amount of General Fund revenues for the current fiscal
year. This transfer of moneys is not required, unless otherwise
directed by the Legislature by statute, in any fiscal year to the
extent that the resulting balance in the account would exceed 5% of
the General Fund revenues estimate set forth in the Budget Bill for
that fiscal year, as enacted, or $8,000,000,000, whichever is
greater. This transfer of moneys also may be suspended or reduced for
a fiscal year as specified by an executive order issued by the
Governor no later than June 1 of the preceding fiscal year. Of the
moneys transferred to the account in each fiscal year, 50%, up to an
aggregate amount of $5,000,000,000 for all fiscal years, is deposited
in the Deficit Recovery Bond Retirement Sinking Fund Subaccount and
continuously appropriated to the Treasurer for the purpose of
retiring state deficit recovery bonds. All other moneys transferred
to the account in a fiscal year are not deposited in the sinking fund
subaccount and may, by statute, be transferred back to the General
Fund.  
   This measure would rename this account the Budget Stabilization
Fund. This measure would also provide that the transfer of moneys
from the General Fund to the Budget Stabilization Fund is not
required in any fiscal year to the extent that the resulting balance
in the fund would exceed 10% of the General Fund revenues estimate
set forth in the Budget Bill for that fiscal year, as enacted, and
would delete the alternative $8,000,000,000 limit on the fund. This
measure would provide that, apart from a transfer made for the
purpose of responding to an emergency declared by the Governor, as
defined, or a loan to meet General Fund cash requirements which would
be repaid within a fiscal year, the total amount that may be
transferred from the Budget Stabilization Fund to the General Fund
for any fiscal year shall not exceed the lesser of the shortfall
amount for the current fiscal year, as defined, or 50% of the balance
of the Budget Stabilization Fund, depending upon specified criteria.
 
   In addition, this measure would create in the General Fund the
Supplemental Budget Stabilization Account and would direct the
Controller to transfer, on October 1 of each year beginning in 2013,
from the Budget Stabilization Fund to the Supplemental Budget
Stabilization Account a sum equal to 1.5% of the estimated amount of
General Fund revenues for the current fiscal year, except that this
transfer would not be made in a fiscal year for which the Governor
issues an executive order to suspend or reduce the transfer of moneys
from the General Fund to the Budget Stabilization Fund. The measure
would permit appropriations to be made from the Supplemental Budget
Stabilization Account only for capital outlay purposes or to retire
bonded indebtedness of the state.  
   This measure would require the Director of Finance, on or before
May 29 of each year beginning in 2014, to report to the Legislature
and the Governor (1) an estimate of the amount of General Fund
revenues, transfers, and balances available from the prior fiscal
year for the current fiscal year, (2) the revenue forecast amount, as
defined, for the current fiscal year, and (3) an estimate of
specified General Fund obligations for the public schools. The
measure would provide that if, pursuant to a formula based on those
figures, there are unanticipated revenues in the current fiscal year,
beginning in the 2013-14 fiscal year, those revenues may be used
only for specified purposes, and in a specified order of priority.
 
   (1) Under the existing California Constitution, the initiative is
the power of the electors to propose statutes and amendments to the
state constitution and to adopt or reject them.  
   This measure would require that an initiative measure that would
result in a net increase in state or local government costs, other
than costs attributable to the issuance, sale, or repayment of bonds
authorized by the measure, or a net decrease in state revenue, which
net increase or net decrease exceeds $25,000,000 annually, as
adjusted for inflation, as jointly determined by the Legislative
Analyst and Director of Finance, may not be submitted to the electors
or have any effect unless and until the Legislative Analyst and the
Director of Finance jointly determine that the initiative measure
provides for additional revenues in an amount that meets or exceeds
the net increase in costs.  
   The California Constitution generally vests the legislative power
of the state in the California State Legislature.  
   This measure would make void a statute that would result either in
a net increase in qualified state costs or a net decrease in state
revenue in excess of $25,000,000 annually, as defined by statute and
as adjusted for inflation, unless the statute also contains
provisions that would result in state program reductions or
additional state revenue as defined by statute in an amount that is
equal to or greater than the net increase in qualified state costs or
net decrease in state revenue subject to exceptions for the Budget
Act, and statutes required to fund increased costs for education as
required by the Constitution.  
   The California Constitution provides that the Legislature may
propose to the electors both amendments and revisions to the
California Constitution, and may enact statutes by passing bills.
 
   This measure would prohibit a constitutional amendment or revision
from being submitted to the electors or having any effect if that
measure would create a new state program or agency or expand the
scope of an existing state program or agency and cause either a net
increase in state costs or a net decrease in state revenues in excess
of $25,000,000 annually, as adjusted for inflation, unless the
measure identifies additional revenue in an amount that is equal to
or greater than the increased costs or decrease in revenue. 

   (2) Existing provisions of the California Constitution provide
that if, following the enactment of a Budget Bill, the Governor
determines that, for the fiscal year addressed by the Budget Bill,
General Fund revenues will decline substantially below the estimate
of General Fund revenues upon which the Budget Bill was based, or
General Fund expenditures will increase substantially above that
estimate of General Fund revenues, or both, the Governor may issue a
proclamation declaring a fiscal emergency and cause the Legislature
to assemble in special session. If the Legislature fails to pass and
send to the Governor a bill or bills to address the fiscal emergency
by the 45th day following the issuance of the proclamation, the
Legislature may not act on any other bill or adjourn for joint
recess, until a bill or bills addressing the fiscal emergency has
been passed and sent to the Governor.  
   This measure additionally would provide that, if the Legislature
has not passed and sent to the Governor a bill or bills addressing a
fiscal emergency by the 45th day following the proclamation declaring
the emergency, the Governor may, by executive order, reduce or
eliminate any unexpended appropriation in the Budget Act for the
fiscal year that is not required by the California Constitution or
federal law, in an amount not exceeding the amount of the budget
discrepancy identified by the Governor. The measure would authorize
the Legislature to override those actions of the Governor by a 2/3
vote of the membership of each house.  
   (3) The California Constitution requires the Governor to submit to
the Legislature by January 10 of each year a budget for the ensuing
fiscal year, accompanied by a Budget Bill itemizing recommended
expenditures. The Legislature is required to pass the Budget Bill by
June 15. The Constitution requires that specified bills, including
bills making a change in state taxes for the purpose of raising
revenue, bills containing an urgency clause, and bills, including the
Budget Bill, that make certain appropriations from the General Fund,
be passed in each house of the Legislature by a 2/3 vote. 

   This measure would require the Governor to submit to the
Legislature by January 10 of each year a budget for the ensuing
fiscal year, known as the budget year, and for the succeeding fiscal
year. The measure would require the budget to contain specified
information, including performance measurement standards for state
agencies and programs, and a projection for anticipated state
revenues. The Governor would be required to include in the budget an
estimate of the amount of state funds available for the proposed
expenditures, and to include revenue and expenditure projections for
the budget year and the succeeding fiscal year. If the Governor
proposes to create a new state program or agency, or to expand the
scope of an existing state program or agency, which would increase
state costs during the budget year or the succeeding fiscal year, or
proposes to reduce a state tax the effect of which would reduce state
revenue in the budget year or the succeeding fiscal year, the
measure would require the Governor to identify state program
reductions or additional revenues that are equal to or greater than
the increase in costs or decrease in revenue. Under the measure, the
Governor additionally would be required to provide the Legislature,
on specified dates set by statute, with updated projections of state
revenue and expenditures for the budget and succeeding fiscal years.
 
   This measure would require that each house of the Legislature, on
or before May 1 of each year, refer the Budget Bill and bills
implementing the Budget Bill to a joint committee of the Legislature,
which must report recommendations to each house by June 20. This
measure would require the Legislature, by June 25, to pass and
present to the Governor the Budget Bill. The measure also would
provide that, if a Budget Bill is not passed and presented to the
Governor by June 25, Members of the Legislature would forfeit any
salary and travel and living expenses from that date until the date
the Budget Bill is passed and presented to the Governor. 

   The measure also would limit the use of unanticipated revenues, as
defined, pursuant to annual determinations made by the Director of
Finance, for specified purposes.  
   Appropriations in a Budget Bill, as defined, would be exempted
from the 2/3-vote requirement that applies to appropriations from the
General Fund. A Budget Bill, and any budget implementation bills,
would go into effect immediately upon their enactment. 

   Under the existing California Constitution, the referendum is the
power of the electors to approve or reject statutes except urgency
statutes, statutes calling elections, and statutes providing for tax
levies or appropriations for usual current expenses of the state.
 
   This measure would expressly include statutes enacting the Budget
Bill among those exceptions to the power of referendum. Additionally,
with respect to a referendum measure pertaining to a statute enacted
by a budget implementation bill, as defined, the operation of the
statute would be stayed on the date of the submission of the
referendum petition to the Attorney General, subject to compliance
with existing referendum procedures.  
   (4) The existing California Constitution requires the approval of
2/3 of the membership of each house of the Legislature to pass a bill
that would make a change in state taxes for the purposes of
increasing revenues derived from those taxes.  
   This measure would further require that a bill imposing a fee that
would fund a specific program, service, or activity previously
funded by a tax, which was either repealed or reduced in the same
fiscal year or the immediately preceding fiscal year, be passed by a
2/3 vote of both legislative houses.  
   (5) This measure provides that it would become operative on
January 1, 2011. 
   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 2009-10 Regular Session
commencing on the first day of December 2008, 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: 
  First--  That Section 12 of Article IV thereof is amended to read:
      SEC. 12.  (a) Within the first 10 days of each calendar year,
the Governor shall submit to the Legislature, with an explanatory
message, a budget for the ensuing fiscal year containing itemized
statements for recommended state expenditures and estimated 
total  state  revenues   resources
available to meet those expenditures  . If recommended
expenditures exceed estimated  revenues 
resources  , the Governor shall recommend the sources from which
the additional  revenues   resources 
should be provided.  The itemized statement of estimated total
state resources available to meet recommended expenditures submitted
pursuant to this subdivision shall identify the amount, if any, of
those resources that are anticipated to be one-time resources. 
   (b) The Governor and the Governor-elect may require a state
agency, officer, or employee to furnish whatever information is
deemed necessary to prepare the budget.
   (c) (1) The budget shall be accompanied by a budget bill itemizing
recommended expenditures.
   (2) The budget bill shall be introduced immediately in each house
by the persons chairing the committees that consider the budget.
   (3) The Legislature shall pass the budget bill by midnight on June
15 of each year.
   (4) Until the budget bill has been enacted, the Legislature shall
not send to the Governor for consideration any bill appropriating
funds for expenditure during the fiscal year for which the budget
bill is to be enacted, except emergency bills recommended by the
Governor or appropriations for the salaries and expenses of the
Legislature.
   (d) No bill except the budget bill may contain more than one item
of appropriation, and that for one certain, expressed purpose.
Appropriations from the General Fund of the State, except
appropriations for the public schools, are void unless passed in each
house by rollcall vote entered in the journal, two-thirds of the
membership concurring.
   (e) The Legislature may control the submission, approval, and
enforcement of budgets and the filing of claims for all state
agencies.
   (f) For the 2004-05 fiscal year, or any subsequent fiscal year,
the Legislature may not send to the Governor for consideration, nor
may the Governor sign into law, a budget bill that would appropriate
from the General Fund, for that fiscal year, a total amount that,
when combined with all appropriations from the General Fund for that
fiscal year made as of the date of the budget bill's passage, and the
amount of any General Fund moneys transferred to the Budget
Stabilization  Account   Fund  for that
fiscal year pursuant to Section 20 of Article XVI, exceeds General
Fund revenues  , transfers, and balances available from the prior
fiscal year  for that fiscal year estimated as of the date of
the budget bill's passage. That estimate of General Fund revenues
 , transfers, and balances  shall be set forth in the budget
bill passed by the Legislature.
  Second--  That Section 12 of Article IV thereof, as amended by
Proposition 25 at the November 2, 2010, statewide general election,
is amended to read:
      SEC. 12.  (a) Within the first 10 days of each calendar year,
the Governor shall submit to the Legislature, with an explanatory
message, a budget for the ensuing fiscal year containing itemized
statements for recommended state expenditures and estimated 
total  state  revenues   resources
available to meet those expenditures  . If recommended
expenditures exceed estimated  revenues  
resources  , the Governor shall recommend the sources from which
the additional  revenues   resources 
should be provided.  The itemized statement of estimated total
state resources available to meet recommended expenditures submitted
pursuant to this subdivision shall identify the amount, if any, of
those resources that are anticipated to be one-time resources. 
   (b) The Governor and the Governor-elect may require a state
agency, officer, or employee to furnish whatever information is
deemed necessary to prepare the budget.
   (c) (1) The budget shall be accompanied by a budget bill itemizing
recommended expenditures.
   (2) The budget bill shall be introduced immediately in each house
by the persons chairing the committees that consider the budget.
   (3) The Legislature shall pass the budget bill by midnight on June
15 of each year.
   (4) Until the budget bill has been enacted, the Legislature shall
not send to the Governor for consideration any bill appropriating
funds for expenditure during the fiscal year for which the budget
bill is to be enacted, except emergency bills recommended by the
Governor or appropriations for the salaries and expenses of the
Legislature.
   (d) No bill except the budget bill may contain more than one item
of appropriation, and that for one certain, expressed purpose.
Appropriations from the General Fund of the State, except
appropriations for the public schools and appropriations in the
budget bill and in other bills providing for appropriations related
to the budget bill, are void unless passed in each house by rollcall
vote entered in the journal, two-thirds of the membership concurring.

   (e) (1) Notwithstanding any other provision of law or of this
Constitution, the budget bill and other bills providing for
appropriations related to the budget bill may be passed in each house
by rollcall vote entered in the journal, a majority of the
membership concurring, to take effect immediately upon being signed
by the Governor or upon a date specified in the legislation. Nothing
in this subdivision shall affect the vote requirement for
appropriations for the public schools contained in subdivision (d) of
this section and in subdivision (b) of Section 8 of this article.
   (2) For purposes of this section, "other bills providing for
appropriations related to the budget bill" shall consist only of
bills identified as related to the budget in the budget bill passed
by the Legislature.
   (f) The Legislature may control the submission, approval, and
enforcement of budgets and the filing of claims for all state
agencies.
   (g) For the 2004-05 fiscal year, or any subsequent fiscal year,
the Legislature may not send to the Governor for consideration, nor
may the Governor sign into law, a budget bill that would appropriate
from the General Fund, for that fiscal year, a total amount that,
when combined with all appropriations from the General Fund for that
fiscal year made as of the date of the budget bill's passage, and the
amount of any General Fund moneys transferred to the Budget
Stabilization  Account   Fund  for that
fiscal year pursuant to Section 20 of Article XVI, exceeds General
Fund revenues  , transfers, and balances available from the prior
fiscal year  for that fiscal year estimated as of the date of
the budget bill's passage. That estimate of General Fund revenues
 , transfers, and balances  shall be set forth in the budget
bill passed by the Legislature.
   (h) Notwithstanding any other provision of law or of this
Constitution, including subdivision (c) of this section, Section 4 of
this article, and Sections 4 and 8 of Article III, in any year in
which the budget bill is not passed by the Legislature by midnight on
June 15, there shall be no appropriation from the current budget or
future budget to pay any salary or reimbursement for travel or living
expenses for Members of the Legislature during any regular or
special session for the period from midnight on June 15 until the day
that the budget bill is presented to the Governor. No salary or
reimbursement for travel or living expenses forfeited pursuant to
this subdivision shall be paid retroactively.
  Third--  That Section 20 of Article XVI thereof is amended to read:

      SEC. 20.  (a) The  Budget Stabilization Fund and the
Supplemental  Budget Stabilization Account  is 
 are  hereby created in the General Fund.
   (b) In each fiscal year as specified in paragraphs (1) to (3),
inclusive, the Controller shall transfer from the General Fund to the
Budget Stabilization  Account   Fund  the
following amounts:
   (1) No later than September 30, 2006, a sum equal to 1 percent of
the estimated amount of General Fund revenues for the 2006-07 fiscal
year.
   (2) No later than September 30, 2007, a sum equal to 2 percent of
the estimated amount of General Fund revenues for the 2007-08 fiscal
year.
   (3) No later than September 30, 2008, and annually thereafter
 ,   through 2012,  a sum equal to 3
percent of the estimated amount of General Fund revenues for the
current fiscal year. 
   (4) On September 23, 2013, and on September 23 annually
thereafter, a sum equal to 3 percent of the estimated amount of
General Fund revenues for the current fiscal year. 
   (c) The transfer of moneys shall not be required by subdivision
(b) in any fiscal year to the extent that the resulting balance in
the  account   Budget Stabilization Fund 
would exceed  5   10  percent of the
General Fund revenues estimate set forth in the budget bill for that
fiscal year, as enacted  , or eight billion dollars
($8,000,000,000), whichever is greater  . The Legislature
may, by statute, direct the Controller, for one or more fiscal years,
to transfer into the  account   Budget
Stabilization Fund  amounts in excess of the levels prescribed
by this subdivision.
   (d) Subject to any restriction imposed by this section, funds
transferred to the  Budget Stabilization Fund or the Supplemental
 Budget Stabilization Account shall be deemed to be General
Fund revenues for all purposes of this Constitution.
   (e) The transfer of moneys from the General Fund to the Budget
Stabilization  Account   Fund  may be
suspended or reduced for a fiscal year as specified by an executive
order issued by the Governor no later than  June 1 of the
preceding fiscal year   the date of the transfer set
forth in subdivision (b)  .  For a fiscal year commencing on
or after July 1, 2013, this subdivision shall be operative only if a
transfer of moneys from the Budget Stabilization Fund to the General
Fund is authorized pursuant to paragraph (1) of subdivision (g).

   (f) (1) Of the moneys transferred to the  account
  Budget Stabilization Fund  in each fiscal year,
50 percent, up to the aggregate amount of five billion dollars
($5,000,000,000) for all fiscal years, shall be deposited in the
Deficit Recovery Bond Retirement Sinking Fund Subaccount, which is
hereby created in the  account   Budget
Stabilization Fund  for the purpose of retiring deficit recovery
bonds authorized and issued as described in Section 1.3, in addition
to any other payments provided for by law for the purpose of
retiring those bonds. The moneys in the sinking fund subaccount are
continuously appropriated to the Treasurer to be expended for that
purpose in the amounts, at the times, and in the manner deemed
appropriate by the Treasurer. Any funds remaining in the sinking fund
subaccount after all of the deficit recovery bonds are retired shall
be transferred to the  account   Budget
Stabilization Fund  , and may be transferred to the General Fund
pursuant to paragraph (2).
   (2) All other funds transferred to the  account 
 Budget Stabilization Fund  in a fiscal year shall not be
deposited in the sinking fund subaccount and may  , by
statute,  be transferred to the General Fund by statute
pursuant to subdivision (g) or (h)  . 
   (g) (1) Subject to paragraph (2), the total amount that may be
transferred from the Budget Stabilization Fund to the General Fund
pursuant to this subdivision for any fiscal year shall not exceed the
lesser of the following:  
   (A) The shortfall amount for the current fiscal year.  
   (B) Fifty percent of the balance of the Budget Stabilization Fund.
 
   (2) If a transfer was made pursuant to this subdivision in both
the prior fiscal year and the fiscal year immediately preceding that
year, the total amount that may be transferred from the Budget
Stabilization Fund to the General Fund pursuant to this subdivision
for the current fiscal year shall not exceed the shortfall amount for
the current fiscal year.  
   (3) For purposes of this subdivision, the "shortfall amount for
the current fiscal year" is the amount derived by subtracting the
General Fund revenues, transfers, and balances available from the
prior fiscal year for that fiscal year from the expenditure forecast
amount for the current fiscal year.  
   (4) For purposes of this subdivision, "General Fund revenues,
transfers, and balances available from the prior fiscal year for that
fiscal year" does not include revenues transferred from the General
Fund to the Budget Stabilization Fund pursuant to subdivision (b) for
that fiscal year.  
   (5) For purposes of this subdivision, Section 21, and Section 12
of Article IV, "balances available from the prior fiscal year for
that fiscal year" means the funds in the Special Fund for Economic
Uncertainties, or a successor fund, as of June 30 of the prior fiscal
year. "The prior fiscal year" means the immediately preceding fiscal
year.  
   (6) For purposes of this subdivision and Section 21, the
"expenditure forecast amount" for the current fiscal year is the
total General Fund expenditures for the prior fiscal year adjusted
for the change in population of the State, as defined in Section 8 of
Article XIII B, and the change in the cost of living for the State,
as measured by the California Consumer Price Index, between the prior
fiscal year and the current fiscal year.  
   (7) For purposes of this subdivision, "total General Fund
expenditures for the prior fiscal year" does not include the
expenditure of funds transferred pursuant to subdivision (h), or the
expenditure of unanticipated revenues pursuant to paragraph (3) or
(4) of subdivision (c) of Section 21.  
   (h) Any funds necessary for the purpose of responding to an
emergency declared by the Governor may be transferred from the Budget
Stabilization Fund to the General Fund by statute. For purposes of
this subdivision, "emergency" has the same meaning as set forth in
paragraph (2) of subdivision (c) of Section 3 of Article XIII B.
 
   (i) In addition to any transfer authorized by this section, funds
in the Budget Stabilization Fund or the Supplemental Budget
Stabilization Account may be loaned to meet General Fund cash
requirements on the condition that the funds are repaid within the
same fiscal year in which the loan is made.  
   (j) (1) Except as provided in paragraph (3), on October 1, 2013,
and on October 1 annually thereafter, the Controller shall transfer
from the Budget Stabilization Fund to the Supplemental Budget
Stabilization Account a sum equal to 1.5 percent of the estimated
amount of General Fund revenues for the current fiscal year. 

   (2) Funds in the Supplemental Budget Stabilization Account may be
appropriated only for the purposes set forth in subparagraphs (B) and
(C) of paragraph (4) of subdivision (c) of Section 21.  
   (3) Paragraph (1) shall not be operative in a fiscal year for
which the Governor issues an executive order pursuant to subdivision
(e) to suspend or reduce the transfer of moneys from the General Fund
to the Budget Stabilization Fund. 
  Fourth--  That Section 21 is added to Article XVI thereof, to read:

      SEC. 21.  (a) On or before May 29, 2014, and on or before May
29 of each year thereafter, the Director of Finance shall do all of
the following, reporting the result in each case to the Legislature
and the Governor:
   (1) Separately estimate General Fund revenues, transfers, and
balances available from the prior fiscal year for the current fiscal
year.
   (2) Determine the revenue forecast amount for the current fiscal
year in the manner set forth in subdivision (d).
   (3) Estimate the amount, as of that date, of any General Fund
obligations arising under Section 8 for the current fiscal year,
including any maintenance factor allocation for the current fiscal
year required pursuant to subdivision (e) of Section 8, that are
attributable to unanticipated revenues in the current fiscal year.
   (b) (1) Except as provided in paragraph (2), "unanticipated
revenues" for a fiscal year, for purposes of this section, shall be
the lesser of the following:
   (A) Estimated General Fund revenues for the current fiscal year
reported pursuant to paragraph (1) of subdivision (a) minus the
revenue forecast amount for the current fiscal year.
   (B) Estimated General Fund revenues, transfers, and balances
available from the prior fiscal year for the current fiscal year
reported pursuant to paragraph (1) of subdivision (a) minus the
expenditure forecast amount for the current fiscal year determined
pursuant to paragraph (6) of subdivision (g) of Section 20.
   (2) If the amount determined pursuant to paragraph (1) is less
than zero, the amount of unanticipated revenues shall be zero.
   (c) Unanticipated revenues, as determined pursuant to this
section, may be used only as follows:
   (1) Unanticipated revenues shall be appropriated to satisfy any
General Fund obligations arising under Section 8 for the current
fiscal year, as estimated pursuant to paragraph (3) of subdivision
(a).
   (2) Any unanticipated revenues that remain after deducting, in
accordance with paragraph (1), the amount of the estimate required by
paragraph (3) of subdivision (a) shall be transferred by the
Controller no later than June 27 of the current fiscal year to the
Budget Stabilization Fund, not exceeding the amount needed to
increase the balance in the fund to an amount equal to 10 percent of
the General Fund revenues estimate set forth in the budget bill for
that fiscal year, as enacted. Notwithstanding any other provision of
this Constitution:
   (A) If the Director of Finance determines at any time that the
total amount of General Fund obligations arising under Section 8 for
a fiscal year, including any maintenance factor allocation for that
fiscal year required pursuant to subdivision (e) of Section 8,
exceeds the total amount of those General Fund obligations as
calculated for that fiscal year for purposes of the estimate required
by paragraph (3) of subdivision (a), he or she shall so report to
the Legislature, the Governor, and the Controller. The Controller
shall thereupon transfer funds in the amount of that difference from
the Budget Stabilization Fund to the General Fund, and the funds so
transferred shall be appropriated only for purposes of funding the
additional amount of General Fund obligations under Section 8
determined pursuant to this paragraph.
   (B) If the Director of Finance determines at any time that the
total amount of General Fund obligations arising under Section 8 for
a fiscal year, including any maintenance factor allocation for that
fiscal year required pursuant to subdivision (e) of Section 8, is
less than the total amount of those General Fund obligations as
calculated for that fiscal year for purposes of the estimate required
by paragraph (3) of subdivision (a), he or she shall so report to
the Legislature, the Governor, and the Controller. The Controller
shall thereupon transfer funds in the amount of that difference from
the General Fund to the Budget Stabilization Fund, not exceeding the
amount needed to increase the balance in the latter fund to an amount
equal to 10 percent of the estimate of General Fund revenues as set
forth in the enacted budget bill for that fiscal year.
   (3) Any unanticipated revenues remaining after any appropriations
and transfers described in paragraphs (1) and (2) shall be
appropriated to retire outstanding budgetary obligations. For
purposes of this paragraph, "budgetary obligations" means any of the
following:
   (A) Unfunded General Fund obligations pursuant to Section 8 for
one or more prior fiscal years.
   (B) Any repayment obligations created by the suspension of
subparagraph (A) of paragraph (1) of subdivision (a) of Section 25.5
of Article XIII.
   (C) Any repayment obligations created by the suspension of
subdivision (a) of Section 1 of Article XIX B.
   (D) Bonded indebtedness authorized pursuant to Section 1.3.
   (4) Any unanticipated revenues remaining after any appropriations
and transfers described in paragraphs (1), (2), and (3) are made to
retire all outstanding budgetary obligations shall be used for one or
more of the following purposes:
   (A) Transfer by statute to the Budget Stabilization Fund.
   (B) Appropriation for one-time infrastructure or other capital
outlay purposes.
   (C) Appropriation to retire, redeem, or defease outstanding
general obligation or other bonded indebtedness of the State.
   (D) Return to taxpayers within the current or immediately
following fiscal year by a one-time revision of tax rates, or by
rebates.
   (E) Appropriation for unfunded liabilities for vested nonpension
benefits for state annuitants.
   (d) For the 2013-14 fiscal year, and for each fiscal year
thereafter, the revenue forecast amount shall be determined as
follows:
   (1) The General Fund revenues for the current fiscal year shall be
forecast by extrapolating from the trend line derived by a linear
regression of General Fund revenues as a function of fiscal year for
the period of the 20 preceding fiscal years. For purposes of this
paragraph, General Fund revenues shall exclude both of the following:

   (A) The General Fund revenue effect of a change in state taxes
that affects General Fund revenues for less than the entire period of
the 20 preceding fiscal years.
   (B) Any proceeds of bonds authorized by subdivision (a) of Section
1.3.
   (2) The amount forecast pursuant to paragraph (1) shall be
increased or decreased, as applicable, to reflect the net current
fiscal year General Fund revenue effect of a change in state taxes
for which General Fund revenue effects were excluded pursuant to
subparagraph (A) of paragraph (1).
  Fifth--  That if Proposition 25 is not approved by the voters at
the November 2, 2010, statewide general election, the amendments to
Section 12 of Article IV of the California Constitution proposed by
the first section of this measure, and not the amendments to Section
12 of Article IV proposed by the second section of this measure,
shall be submitted to the electors by the Secretary of State. If
Proposition 25 is approved by the voters at the November 2, 2010,
statewide general election, the amendments to Section 12 of Article
IV of the California Constitution proposed by the second section of
this measure, and not the amendments to Section 12 of Article IV
proposed by the first section of this measure, shall be submitted to
the electors by the Secretary of State. 
   Resolved by the Assembly, the Senate concurring, That the
Legislature of the State of California at its 2009-10 Regular Session
commencing on the first day of December 2008, 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:
  First--  The People of the State of California find and declare all
of the following:
   (a) Throughout its history, California has led the way in
technology, education, and quality of life. California thrives
because its people value innovation, diversity, and creativity in how
they work, think, and live.
   (b) California's future as a world leader depends on continuing to
improve public services that are vital to its people: outstanding
public schools; reliable police, fire, and emergency services;
affordable and available healthcare; and modern infrastructure.
   (c) This task is not the job of any one political party or
ideology. It is the shared responsibility of every Californian. In
particular, California's elected leaders have an obligation to
continually evaluate the effectiveness of these services and to
strive to deliver the best possible results while minimizing waste,
fraud, and abuse of taxpayer dollars.
   (d) The adoption of a state budget should play a key role in
setting priorities, making choices about how tax dollars are spent,
and ensuring that the people and their elected leaders understand the
objectives and the consequences of budget decisions.
   (e) In recent years, however, this process has become bogged down
by political bickering and special interests seeking undue influence.

   (f) California needs to change the state budget process to give
policymakers the tools needed to restore and maintain public trust,
and to hold them accountable by requiring them to forfeit their pay
when they fail to approve a budget on time.
   (g) The changes to the state budget process proposed by this
measure will ensure the long-term fiscal health of California by
requiring the Governor and the Legislature to use the best practices
of other states and successful businesses to improve results and
create accountability as follows:
   (1) Planning ahead: The state will be guided by plans that
consider long-term costs and revenue forecasts so that decisionmakers
and the public understand the future implications of today's fiscal
choices.

           (2) Focusing on priorities and results: Budget decisions
will be guided by what programs are trying to achieve and changes
needed to reach specific goals, including changes to strategy,
management, and resources.
   (3) Creating a culture of accountability: Lawmakers will spend
more time reviewing what the public is getting for its money and
making changes to policies and programs to improve results.
   (4) Ending partisan budget gridlock: A simple majority vote to
pass the budget--while preserving the two-thirds vote to raise taxes
and ensuring that higher fees are not used to supplant tax
revenue--will both prevent costly delays in enacting a budget and
increase accountability for budget decisions.
   (5) Managing volatile revenue: Temporary spikes in revenue cannot
be relied upon to expand basic services but instead must be used,
after meeting the minimum funding guarantee for education, for
one-time purposes, such as paying down debt or saving for periods of
declining revenue.
   (6) Paying our own way: In hard economic times, it is incumbent
upon the people of California to make sure that the state has the
money to pay for new programs before committing to them. Under this
measure, major new and expanded programs will be financed through
efficiencies--dollars redirected from lower priorities or new
revenue. Policymakers will be required to link a policy choice over a
new program or tax cut with the decision about how to pay for it.
  Second--  That Section 8 of Article II thereof is amended to read:
      SEC. 8.  (a) The initiative is the power of the electors to
propose statutes and amendments to the Constitution and to adopt or
reject them.
   (b) An initiative measure may be proposed by presenting to the
Secretary of State a petition that sets forth the text of the
proposed statute or amendment to the Constitution and is certified to
have been signed by electors equal in number to 5 percent in the
case of a statute, and 8 percent in the case of an amendment to the
Constitution, of the votes for all candidates for Governor at the
last gubernatorial election.
   (c) The Secretary of State shall then submit the measure at the
next general election held at least 131 days after it qualifies or at
any special statewide election held prior to that general election.
The Governor may call a special statewide election for the measure.
   (d) An initiative measure embracing more than one subject may not
be submitted to the electors or have any effect.
   (e) An initiative measure may not include or exclude any political
subdivision of the State from the application or effect of its
provisions based upon approval or disapproval of the initiative
measure, or based upon the casting of a specified percentage of votes
in favor of the measure, by the electors of that political
subdivision.
   (f) An initiative measure may not contain alternative or
cumulative provisions wherein one or more of those provisions would
become law depending upon the casting of a specified percentage of
votes for or against the measure.
   (g) An initiative measure that would result in a net increase in
state or local government costs, other than costs attributable to the
issuance, sale, or repayment of bonds authorized by the measure, or
a net decrease in state revenues, which net increase or net decrease
exceeds twenty-five million dollars ($25,000,000) annually, as
adjusted for inflation pursuant to the California Consumer Price
Index, as jointly determined by the Legislative Analyst and the
Director of Finance, may not be submitted to the electors or have any
effect unless and until the Legislative Analyst and the Director of
Finance jointly determine that the initiative measure provides for
additional revenues in an amount that meets or exceeds the net
increase in costs.
  Third--  That Section 9 of Article II thereof is amended to read:
      SEC. 9.  (a) The referendum is the power of the electors to
approve or reject statutes or parts of statutes except urgency
statutes, statutes calling elections, statutes enacting the budget
bill, and statutes providing for tax levies or appropriations for
usual current expenses of the State.
   (b) (1) A referendum measure may be proposed by presenting to the
Secretary of State, within 90 days after the enactment date of the
statute, a petition certified to have been signed by electors equal
in number to 5 percent of the votes for all candidates for Governor
at the last gubernatorial election, asking that the statute or part
of it be submitted to the electors. In the case of a statute enacted
by a bill passed by the Legislature on or before the date the
Legislature adjourns for a joint recess to reconvene in the second
calendar year of the biennium of the legislative session, and in the
possession of the Governor after that date, the petition may not be
presented on or after January 1 next following the enactment date
unless a copy of the petition is submitted to the Attorney General
pursuant to subdivision (d) of Section 10 before January 1.
   (2) If a copy of a referendum petition is submitted to the
Attorney General pursuant to subdivision (d) of Section 10 as to a
statute enacting a budget implementation bill, other than such a
statute that is exempt from the power of referendum pursuant to
subdivision (a), which submittal occurs within 90 days following that
enactment but not later than the January 1 following the enactment,
the operation of the statute shall be immediately stayed. The
operation of such a statute enacted by a budget implementation bill
shall resume on the 91st day after enactment unless a referendum
petition as to the statute has been presented to the Secretary of
State in accordance with paragraph (1).
   (c) The Secretary of State shall then submit the measure at the
next general election held at least 31 days after it qualifies or at
a special statewide election held prior to that general election. The
Governor may call a special statewide election for the measure.
  Fourth--  That Section 8 of Article IV thereof is amended to read:
      SEC. 8.  (a) At regular sessions no bill other than the budget
bill may be heard or acted on by committee or either house until the
31st day after the bill is introduced unless the house dispenses with
this requirement by rollcall vote entered in the journal,
three-fourths of the membership concurring.
   (b) The Legislature may make no law except by statute and may
enact no statute except by bill. No bill may be passed unless it is
read by title on three days in each house except that the house may
dispense with this requirement by rollcall vote entered in the
journal, two-thirds of the membership concurring. No bill may be
passed until the bill with amendments has been printed and
distributed to the Members. No bill may be passed unless, by rollcall
vote entered in the journal, a majority of the membership of each
house concurs.
   (c) (1) Except as provided in paragraphs (2) and (3), a statute
enacted at a regular session shall go into effect on January 1 next
following a 90-day period from the date of enactment of the statute
and a statute enacted at a special session shall go into effect on
the 91st day after adjournment of the special session at which the
bill was passed.
   (2) A statute, other than a statute establishing or changing
boundaries of any legislative, congressional, or other election
district, enacted by a bill passed by the Legislature on or before
the date the Legislature adjourns for a joint recess to reconvene in
the second calendar year of the biennium of the legislative session,
and in the possession of the Governor after that date, shall go into
effect on January 1 next following the enactment date of the statute
unless, before January 1, a copy of a referendum petition affecting
the statute is submitted to the Attorney General pursuant to
subdivision (d) of Section 10 of Article II, in which event the
statute shall go into effect on the 91st day after the enactment date
unless the petition has been presented to the Secretary of State
pursuant to subdivision (b) of Section 9 of Article II.
   (3) Statutes calling elections, statutes providing for tax levies
or appropriations for the usual current expenses of the State,
urgency statutes, and statutes enacting a budget bill or a budget
implementation bill shall go into effect immediately upon their
enactment.
   (d) Urgency statutes are those necessary for immediate
preservation of the public peace, health, or safety. A statement of
facts constituting the necessity shall be set forth in one section of
the bill. In each house the section and the bill shall be passed
separately, each by rollcall vote entered in the journal, two-thirds
of the membership concurring. An urgency statute may not create or
abolish any office or change the salary, term, or duties of any
office, or grant any franchise or special privilege, or create any
vested right or interest.
   (e) (1) A statute that would result in either a net increase in
qualified state costs or a net decrease in state revenue in excess of
twenty-five million dollars ($25,000,000) annually, as defined by
statute, as adjusted for inflation pursuant to the California
Consumer Price Index, is void unless the statute having that fiscal
effect also contains provisions that would result in state program
reductions or additional state revenue, or both, as defined by
statute, in an amount that is equal to or greater than the net
increase in qualified state costs or net decrease in state revenue.
   (2) Paragraph (1) does not apply to the following:
   (A) The budget act or a statute enacting a budget implementation
bill.
   (B) An appropriation that is in satisfaction of the requirements
of Section 8 of Article XVI.
   (C) An emergency declared by the Governor. As used in this
subparagraph, "emergency" means the existence, as declared by the
Governor, of conditions of disaster or of extreme peril to the safety
of persons and property within the State, or parts thereof, caused
by such conditions as attack or probable or imminent attack by an
enemy of the United States, fire, flood, drought, storm, civil
disorder, earthquake, or volcanic eruption.
  Fifth--  That Section 10 of Article IV thereof is amended to read:
      SEC. 10.  (a) Each bill passed by the Legislature shall be
presented to the Governor. It becomes a statute if it is signed by
the Governor. The Governor may veto it by returning it with any
objections to the house of origin, which shall enter the objections
in the journal and proceed to reconsider it. If each house then
passes the bill by rollcall vote entered in the journal, two-thirds
of the membership concurring, it becomes a statute.
   (b) (1) Any bill, other than a bill which would establish or
change boundaries of any legislative, congressional, or other
election district, passed by the Legislature on or before the date
the Legislature adjourns for a joint recess to reconvene in the
second calendar year of the biennium of the legislative session, and
in the possession of the Governor after that date, that is not
returned within 30 days after that date becomes a statute.
   (2) Any bill passed by the Legislature before September 1 of the
second calendar year of the biennium of the legislative session and
in the possession of the Governor on or after September 1 that is not
returned on or before September 30 of that year becomes a statute.
   (3) Any other bill presented to the Governor that is not returned
within 12 days becomes a statute.
   (4) If the Legislature by adjournment of a special session
prevents the return of a bill with the veto message, the bill becomes
a statute unless the Governor vetoes the bill within 12 days after
it is presented by depositing it and the veto message in the office
of the Secretary of State.
   (5) If the 12th day of the period within which the Governor is
required to perform an act pursuant to paragraph (3) or (4) is a
Saturday, Sunday, or holiday, the period is extended to the next day
that is not a Saturday, Sunday, or holiday.
   (c) Any bill introduced during the first year of the biennium of
the legislative session that has not been passed by the house of
origin by January 31 of the second calendar year of the biennium may
no longer be acted on by the house. No bill may be passed by either
house on or after September 1 of an even-numbered year except bills
that would take effect immediately upon enactment and bills passed
after being vetoed by the Governor.
   (d) The Legislature shall not present any bill to the Governor
after November 15 of the second calendar year of the biennium of the
legislative session.
   (e) The Governor may reduce or eliminate one or more items of
appropriation while approving other portions of a bill. The Governor
shall append to the bill a statement of the items reduced or
eliminated with the reasons for the action. The Governor shall
transmit to the house originating the bill a copy of the statement
and reasons. Items reduced or eliminated shall be separately
reconsidered and may be passed over the Governor's veto in the same
manner as bills.
   (f) (1) If, following the enactment of the budget bill for the
2004-05 fiscal year or any subsequent fiscal year, the Governor
determines that, for that fiscal year, General Fund revenues will
decline substantially below the estimate of General Fund revenues
upon which the budget bill for that fiscal year, as enacted, was
based, or General Fund expenditures will increase substantially above
that estimate of General Fund revenues, or both, the Governor may
issue a proclamation declaring a fiscal emergency and shall thereupon
cause the Legislature to assemble in special session for this
purpose. The proclamation shall identify the nature of the fiscal
emergency, including the amount of the budget discrepancy, and shall
be submitted by the Governor to the Legislature, accompanied by
proposed legislation to address the fiscal emergency. When the
Governor issues a proclamation declaring a fiscal emergency, the
Legislature shall pass and present to the Governor a bill or bills to
address the fiscal emergency.
   (2) If the Legislature fails to pass and send to the Governor a
bill or bills to address the fiscal emergency by the 45th day
following the issuance of the proclamation, the Legislature shall not
act on any other bill, nor may the Legislature adjourn for a joint
recess, until that bill or those bills have been passed and sent to
the Governor.
   (3) A bill addressing the fiscal emergency declared pursuant to
this section shall contain a statement to that effect. For purposes
of this subdivision, a bill that contains the statement required by
this paragraph shall thereby be deemed to address the fiscal
emergency.
   (4) If the Legislature has not passed and sent to the Governor a
bill or bills to address a fiscal emergency by the 45th day following
the issuance of the proclamation, the Governor may, by executive
order, reduce or eliminate any unexpended appropriation in the budget
act for that fiscal year to the extent that the appropriation is not
required by this Constitution or by federal law. The total amount of
the reduction or elimination of appropriations shall not exceed the
amount of the budgetary discrepancy identified by the Governor
pursuant to paragraph (1).
   (5) If the Legislature is in session when the Governor issues an
executive order pursuant to paragraph (4), it may, within 20 days
following the date the order is issued, override all or part of the
executive order by a resolution passed by rollcall vote entered in
the journal, two-thirds of the membership of each house concurring.
If the Legislature is not in session when the Governor issues the
executive order, the Legislature may, within 30 days following the
date the order is issued, reconvene and override all or part of the
executive order by resolution in the manner described above. An
executive order, or a part thereof, that is not overridden by the
Legislature shall take effect the day after the period to override
the executive order has expired.
  Sixth--  That Section 12 of Article IV thereof is amended to read:
      SEC. 12.  (a) (1) Within the first 10 days of each calendar
year, the Governor shall submit to the Legislature a budget for both
the ensuing fiscal year, known as the budget year, and for the
succeeding fiscal year. The budget shall contain itemized statements,
provisional language, performance measurement standards for state
agencies and programs, recommended state expenditures, and a
projection of anticipated state revenues, including revenues
anticipated to be one-time revenue. The budget shall also contain an
estimate of the total resources available for the state expenditures
recommended for the budget year and the succeeding fiscal year. If,
for the budget year and the succeeding fiscal year, recommended
expenditures exceed estimated revenues, the Governor shall recommend
reductions in expenditures or the sources from which the additional
revenues should be provided, or both. Together with the budget, the
Governor shall submit to the Legislature any legislation necessary to
implement appropriations contained in the budget.
   (2) If the Governor's budget proposes to create a new state
program or agency, or to expand the scope of an existing state
program or agency, as defined by statute, which would result in a net
increase in state costs during the budget year or the succeeding
fiscal year, or proposes to reduce a state tax, which would result in
a net decrease in state revenue in the budget year or the succeeding
fiscal year, the proposal shall be accompanied by a statement
identifying state program reductions or sources of additional state
revenue, or both, in an amount that is equal to or greater than the
net increase in state costs or net decrease in state revenue.
   (3) After submitting a budget for the budget year and the
succeeding fiscal year, the Governor shall submit to the Legislature,
no later than a date or dates specified by statute, updated
projections of state revenue and state expenditures for each of those
fiscal years
   .
   (b) The Governor and the Governor-elect may require a state
agency, officer, or employee to furnish whatever information is
deemed necessary to prepare the budget.
   (c) (1) The budget shall be accompanied by a budget bill itemizing
recommended expenditures for the budget year.
   (2) The budget bill and any legislation necessary to implement
appropriations contained in the budget bill shall be introduced
immediately in each house by the persons chairing the committees that
consider the budget.
   (3) On or before May 1 of each year, after the appropriate
committees of each house of the Legislature have considered the
budget bill and bills implementing the budget bill, each house of the
Legislature shall refer the budget bill and bills implementing the
budget bill to a joint committee of the Legislature. The joint
committee shall report its recommendations to each house no later
than June 20 of each year. This paragraph does not preclude the
referral of one or more of these bills to policy committees in
addition to the joint committee.
   (4) No later than June 25 of each year, the Legislature shall pass
the budget bill and bills implementing the budget bill, and shall
present these bills to the Governor. Notwithstanding any other
provision of this Constitution, including Sections 4 and 8 of Article
II and Section 4 and subdivision (c) of Section 12 of this article,
in any year in which the budget bill is not passed by the Legislature
and presented to the Governor by midnight on June 25, Members of the
Legislature shall forfeit any salary or reimbursement for travel or
living expenses during any regular or special session for the period
from midnight on June 25 until the day that the budget bill is passed
and presented to the Governor. No salary or reimbursement for travel
or living expenses forfeited pursuant to this paragraph shall be
paid retroactively.
   (5) Until the budget bill has been enacted, the Legislature shall
not send to the Governor for consideration any bill appropriating
funds for expenditure during the budget year, except emergency bills
recommended by the Governor or appropriations for the salaries and
expenses of the Legislature.
   (d) No bill except a budget bill may contain more than one item of
appropriation, and that for one certain, expressed purpose.
Appropriations from the General Fund of the State, except
appropriations for the public schools or appropriations made in a
budget bill, are void unless passed in each house by rollcall vote
entered in the journal, two-thirds of the membership concurring.
   (e) The Legislature may control the submission, approval, and
enforcement of budgets and the filing of claims for all state
agencies.
   (f) For the 2004-05 fiscal year, or any subsequent fiscal year,
the Legislature shall not send to the Governor for consideration, nor
shall the Governor sign into law, a budget bill that would
appropriate from the General Fund, for that fiscal year, a total
amount that, when combined with all appropriations from the General
Fund for that fiscal year made as of the date of the budget bill's
passage, and the amount of any General Fund moneys transferred to the
Budget Stabilization Account for that fiscal year pursuant to
Section 20 of Article XVI, exceeds General Fund revenues for that
fiscal year estimated as of the date of the budget bill's passage.
That estimate of General Fund revenues shall be set forth in the
budget bill passed by the Legislature.
   (g) The Legislature shall establish an oversight process for
evaluating and improving the performance of all programs undertaken
by the State, or by local entities on behalf of the State, based on
performance standards established pursuant to statute. Within one
year of the operative date of the measure adding this subdivision,
the Legislature shall establish a schedule of review for all state
programs, whether managed by a state or local agency. The review
schedule shall be designed so that the relationship between similar
state programs may be examined. The review process shall result in
recommendations in the form of legislation that improves or
terminates programs. Each state program shall be reviewed at least
once every 10 years.
   (h) For purposes of this section and Section 8:
   (1) A "budget bill" is a bill that makes appropriations for the
support of the government of the State for an entire fiscal year,
including a bill that contains only provisions amending or augmenting
an enacted bill that made appropriations for the support of the
government of the State for an entire fiscal year.
   (2) (A) A "budget implementation bill" is a bill enacted by a
statute that is identified in the budget bill as containing only
changes in law necessary to implement a specific provision of the
budget bill.
                                         (B) A budget implementation
bill shall not create or abolish any office or change the salary,
term, or duties of any office, or grant any franchise or special
privilege, or create any vested right or interest.
  Seventh--  That Section 3 of Article XIII A thereof is amended to
read:
      Section 3.  From and after the effective date of this article,
any changes in state taxes enacted for the purpose of increasing
revenues collected pursuant thereto whether by increased rates or
changes in methods of computation, or imposition of a new tax, must
be imposed by an act passed by not less than two-thirds of all
Members elected to each of the two houses of the Legislature, except
that no new ad valorem taxes on real property, or sales or
transaction taxes on the sales of real property may be imposed. In
addition, any bill that imposes a fee shall be passed by not less
than two-thirds of all Members elected to each of the two houses of
the Legislature if revenue from the fee would be used to fund a
specific program, service, or activity that was previously funded by
revenue from a tax that is repealed or reduced in the same fiscal
year or in the immediately preceding fiscal year.
  Eighth--  That Section 21 is added to Article XVI thereof, to read:

      SEC. 21.  (a) On or before May 31 of each year the Director of
Finance shall do all of the following:
   (1) Estimate General Fund revenues for the current fiscal year and
report that estimate to the Legislature and to the Governor.
   (2) Estimate the current-year General Fund revenue impact of tax
legislation adopted subsequent to the enactment of the budget bill
and not included in the estimate required pursuant to subdivision (f)
of Section 12 of Article IV. The director shall report that estimate
to the Legislature and to the Governor.
   (3) Estimate the amount of the General Fund reserve for economic
uncertainty as of June 30 of the current fiscal year and report that
estimate to the Legislature and to the Governor. If the amount of the
reserve for economic uncertainty is a negative number, an amount of
any unanticipated revenues equal to that negative amount shall remain
in the General Fund and shall not be expended pursuant to
subdivision (c).
   (b) "Unanticipated revenues" are the lesser of the following
amounts:
   (1) The estimate of General Fund revenues reported pursuant to
paragraph (1) of subdivision (a) minus the estimate of General Fund
revenues for the current fiscal year set forth in the budget bill
pursuant to subdivision (f) of Section 12 of Article IV, which result
shall be augmented by the amount estimated pursuant to paragraph (2)
of subdivision (a).
   (2) The amount reported pursuant to paragraph (3) of subdivision
(a).
   (c) Unanticipated revenues may be used only as follows, in the
order specified:
   (1) First, unanticipated revenues shall be appropriated to satisfy
any additional obligation created by Section 8 resulting from the
unanticipated revenues.
   (2) Second, any remaining unanticipated revenues shall be
transferred to the Budget Stabilization Account in an amount
sufficient to fully fund the applicable maximum amount set forth in
subdivision (c) of Section 20.
   (3) Third, any remaining unanticipated revenues shall be
appropriated to retire outstanding budgetary indebtedness. For
purposes of this paragraph, "budgetary indebtedness" means any of the
following:
   (A) Unfunded prior fiscal year General Fund obligations pursuant
to Section 8.
   (B) Any repayment obligation created by the suspension of
subparagraph (A) of paragraph (1) of subdivision (a) of Section 25.5
of Article XIII.
   (C) Any repayment obligation created by the suspension of
subdivision (a) of Section 1 of Article XIX B.
   (D) Unfunded obligations for reimbursements required by Section 6
of Article XIII B.
   (E) Repayment of bonded indebtedness authorized pursuant to
Section 1.3.
   (4) Fourth, any remaining unanticipated revenues shall be used for
any of the following one-time purposes:
   (A) Returned to taxpayers within the current or immediately
following fiscal year by a one-time revision of tax rates or fee
schedules.
   (B) Appropriated for one-time infrastructure or other capital
outlay purposes.
   (C) Appropriated to retire outstanding general obligation
indebtedness.
  Ninth--  That Section 3.5 is added to Article XVIII thereof, to
read:
      SEC. 3.5.  A constitutional amendment or revision proposed by
the Legislature that would create a new state program or agency, or
expand the scope of an existing state program or agency, as defined
by statute, which would result in either a net increase in state
costs or a net decrease in state revenue in excess of twenty-five
million dollars ($25,000,000) annually, as defined by statute and
adjusted for inflation pursuant to the California Consumer Price
Index, shall not be submitted to the electors or have any effect
unless the constitutional amendment or revision also contains
provisions that would result in additional revenue in an amount that
is equal to or greater than the net increase in state costs or net
decrease in state revenue.
  Tenth--  That the amendments to the California Constitution made by
this measure shall become operative on January 1, 2011.
  Eleventh--  That if any of the provisions of this measure or the
applicability of any provision of this measure to any person or
circumstance is found to be unconstitutional or otherwise invalid,
the finding shall not affect the remaining provisions or applications
of this measure to other persons or circumstances, and to that
extent the provisions of this measure are deemed to be severable.