BILL ANALYSIS �
SENATE COMMITTEE ON ELECTIONS
AND CONSTITUTIONAL AMENDMENTS
Senator Lou Correa, Chair
BILL NO: SCA 4 HEARING DATE:
5/3/11
AUTHOR: DeSAULNIER ANALYSIS BY:
Darren Chesin
AMENDED: AS INTRODUCED
FISCAL: YES
SUBJECT
Initiative measures: funding source
DESCRIPTION
Existing law requires the Attorney General (AG), upon
receipt of a draft of a petition for a proposed initiative
measure, to draft a title and summary of the proposed
measure.
Existing law provides that if the AG determines that a
proposed measure would affect state or local revenues or
expenditures, he or she must include in the title and
summary either the estimate of the amount of change in
state or local revenues or costs, or an opinion as to
whether or not a substantial net change in state or local
finances would result if the proposed initiative is
adopted.
Existing law requires the Department of Finance (DOF) and
the Joint Legislative Budget Committee (JLBC) to jointly
prepare the fiscal estimate that is included in the title
and summary.
Existing law , pursuant to the California Constitution,
places certain restrictions on the content of initiative
measures. Specifically:
An initiative measure embracing more than one subject may
not be submitted to the electors or have any effect.
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.
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.
No initiative that names any individual to hold any
office, or names or identifies any private corporation to
perform any function or to have any power or duty, may be
submitted to the electors or have any effect.
Existing law does not prohibit an initiative measure from
proposing changes to law that would result in a net
increase in state government.
This bill would provide that when an initiative measure
would result in a net increase in state or local government
costs, as jointly determined by the Legislative Analyst and
Director of Finance, it 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. This requirement would not apply to
costs attributable to the issuance, sale, or repayment of
bonds authorized by the initiative measure,
BACKGROUND
Current Procedure for Determining Initiative Fiscal Impact .
While the DOF and the JLBC are required to prepare the
joint estimate of the fiscal impact on state and local
government that's included in all initiative titles and
summaries submitted to the AG's office, the actual process
differs. When the DOF and JLBC receive notice from the AG
requesting a fiscal analysis, the Legislative Analyst's
Office (LAO) usually always takes the lead and begins the
process of investigative research, including how programs
SCA 4 (DeSAULNIER) Page
2
would be affected and how possible passage and
implementation would impact the state as a whole. Once the
LAO has completed this investigative analysis, the DOF is
then contacted for review and concurrence. After the DOF
has signed off on the LAO's work, the estimate is then
returned to the AG for inclusion in the title and summary.
Initiative Spending . According to the LAO, in recent
years, there have been a number of approved propositions
which have guaranteed that a certain portion of General
Fund spending be dedicated to a specific purpose. These
measures restrict the Legislature's ability to alter the
relative shares of General Fund spending provided to
program areas in any given year. For instance, Proposition
98 of 1988 provided for a minimum level of total spending
(General Fund and local property taxes combined) on K-14
education in any given year. The required General Fund
contribution is roughly 40 percent of the state's budget.
Proposition 49 of 2002 required that the state spend a
certain amount (currently $550 million) on after-school
programs.
Other States . According to the National Conference of
State Legislatures (NCSL), as of 2006 the following eleven
states have restrictions on the use of the initiative with
regard to appropriations and funding mechanisms.
Alaska: No dedication of revenues or making or repealing
appropriations.
Arizona: If an initiative requires a reduction in
government revenue or a reallocation from currently
funded programs, the initiative text must identify the
program(s) whose funding must be cut or eliminated to
implement the initiative. If the identified revenue
source provided fails in any fiscal year to fund the
entire mandated expenditure for that fiscal year, the
legislature may reduce the expenditure of state revenues
for that purpose in that fiscal year to the amount of
funding supplied by the identified revenue source.
Florida: Measures that propose a tax or fee not in place
in November, 1994 require a 2/3 vote to pass.
SCA 4 (DeSAULNIER) Page
3
Maine: Expenditures in an amount in excess of available
and unappropriated state funds remain inoperative until
45 days after the regular legislative session, unless the
measure provides for raising new revenues adequate for
its operation.
Massachusetts: May not be used to make a specific
appropriation from the treasury. However, if such a law,
approved by the people, is not repealed, the legislature
must raise by taxation or otherwise and appropriate such
money as may be necessary to carry such law into effect.
Mississippi: Sponsor must identify in the text of the
initiative the amount and source of revenue required to
implement the initiative. Initiatives requiring a
reduction in government revenue or a reallocation from
currently funded programs must identify the program(s)
whose funding must be reduced or eliminated to implement
the initiative.
Missouri: May not appropriate money other than new
revenues created and provided for by the initiative.
Montana: May not appropriate money.
Nebraska: No measure may interfere with the
legislature's ability to direct taxation of necessary
revenues for the state and its governmental subdivisions.
Nevada: No appropriations or other expenditures of money
unless such statute or amendment also imposes a
sufficient tax or otherwise constitutionally provides for
raising the necessary revenue.
North Dakota: No appropriations for the support and
maintenance of state departments and institutions.
Wyoming: No dedication of revenues or making or repealing
appropriations.
The NCSL further comments that initiative measures which
mandate the expenditures of large amounts of public revenue
without including a new dedicated revenue source (such as
taxes or fees) can make it difficult for the legislature to
SCA 4 (DeSAULNIER) Page
4
continue to fund existing state services and programs. In
addition, initiatives that increase or create new taxes to
fund new or existing programs negatively affect the
legislature's ability to impose reasonable taxes to fund
necessary programs for citizens.
COMMENTS
1. According to the author , in 1911, Californians created
the state initiative process by approving a
constitutional amendment placed on the ballot by
Progressives in the State Legislature. Since 1911,
Californians - by way of the initiative process - have
dramatically changed the landscape of their state
government by passing various ballot measures.
Budget experts say that fiscal measures that pass on the
ballot constrain the hands of the Legislature,
especially during difficult budget times. Over the last
30 years, California voters have approved measures to
not only dedicate tax revenues in certain ways, they've
also approved initiatives that lock in state spending -
which restricts the Legislature from altering
significant portions of General Fund spending.
A number of states limit or forbid initiatives that
appropriate money for any purpose. Still others - such
as Arizona, Maine, Mississippi, Missouri and Nevada -
allow for new programs that cost money, but only if the
initiative creates and provides for the added resources.
SCA 4 allows voters to continue to approve measures that
cost state and local dollars to implement, but it
requires such measures to identify the dollars needed
for implementation.
2. Related Legislation . This bill is identical to SCA 14
(Ducheny) of 2009 which was approved by this committee
and the Senate Committee on Appropriations but was
placed on the Senate inactive file by the author. This
bill is also similar to ACA 6 (Gatto) and ACA 7 (Feuer)
which are pending in the Assembly Committee on Elections
and Redistricting.
SCA 4 (DeSAULNIER) Page
5
3. But Wait, There's More . If approved by the voters,
conforming statutory changes would need to be made in
order to implement the requirements of this
Constitutional Amendment.
POSITIONS
Sponsor: Author
Support: California Common Cause
California State Association of Counties
Oppose: California Taxpayers Association
Howard Jarvis Taxpayers Association
SCA 4 (DeSAULNIER) Page
6