BILL ANALYSIS �
------------------------------------------------------------
|SENATE RULES COMMITTEE | SCA 4|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SCA 4
Author: DeSaulnier (D)
Amended: As introduced
Vote: 27
SENATE ELECTIONS & CONST. AMEND. COMMITTEE : 3-2, 5/3/11
AYES: Correa, De Le�n, Lieu
NOES: La Malfa, Gaines
SENATE APPROPRIATIONS COMMITTEE : 6-3, 5/26/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Walters, Emmerson, Runner
SUBJECT : Initiative measures: funding source
SOURCE : Author
DIGEST : This Constitutional Amendment prohibits an
initiative measure that will result in a net increase in
state or local government costs other than costs
attributable to the issuance, sale, or repayment of bonds,
from being submitted to the electors or having an 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.
ANALYSIS : The California Constitution provides that the
electors may propose statutes or amendments to the state
constitution through the initiative process by presenting
CONTINUED
SCA 4
Page
2
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 a
certain number of electors.
Background
Current Procedure for Determining Initiative fiscal Impact .
While the Director of Finance (DOF) and the Joint
Legislative Budget Committee (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 Attorney General's (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 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.
CONTINUED
SCA 4
Page
3
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.
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.
CONTINUED
SCA 4
Page
4
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
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.
Related Legislation
This Constitutional Amendment is identical to SCA 14
(Ducheny) of 2009 which was approved by the Senate
Elections and Constitutional Amendments Committee and the
Senate Committee on Appropriations but was placed on the
Senate inactive file by the author's office. This
Constitutional Amendment is also similar to ACA 6 (Gatto)
which failed passage on the Assembly Floor and ACA 7
(Feuer) which is pending in the Assembly Elections and
Redistricting Committee.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 1/3/12)
CONTINUED
SCA 4
Page
5
California State Association of Counties
OPPOSITION : (Verified 1/3/12)
California Taxpayers Association
Howard Jarvis Taxpayers Association
ARGUMENTS IN SUPPORT : According to the author's office,
in 1911, Californians created the state initiative process
by 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.
This Constitutional Amendment 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.
ARGUMENTS IN OPPOSITION : Opponents believe this
Constitutional Amendment would "eliminate the power of the
voters to reform government and change perceived
inequalities" and that they support the current initiative
process the way it is.
DLW:do 1/3/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED
SCA 4
Page
6
CONTINUED