SUPPORT
Proposition 56--State Budget, Related Taxes, and Reserve. Voting Requirements. Penalties.
(Budget Accountability Act)

DESCRIPTION

This constitutional amendment:

Reduces from two-thirds to 55 percent the number of votes required to pass the budget bill and other bills--including tax increase measures--related to the budget bill.

Establishes minimum requirements for putting money into and taking money out of the state reserve fund. Funds would be added to the reserve in any year in which state revenues exceed what is needed for "current service levels" defined as "levels of service as of June 30 of the prior fiscal year necessary to meet the constitutional statutory and contractual obligations of the state." Both Propositions 56 and 58 (California Balanced Budget Act) set rules for reserve funds.

• Proposition 56 limits the use of reserve funds to years where revenues are insufficient to fund current (not expanded) services levels or in response to an emergency declared by the Governor. Proposition 58 reserve funds could be used for any purpose.
• Proposition 56 requires the Legislature to put in the reserve at least 25 percent of any excess revenues (revenues exceeding what is needed for "current service levels") until the reserve reaches 5 percent of prior-year spending. Proposition 58 would require transfers to the reserve even in "bad" years, although the Governor could suspend or reduce the transfer in a proclamation issued no later than June 1 of the prior fiscal year; alternatively, the Legislature could by statute transfer funds out of reserve, which could then be appropriated pursuant to the existing vote requirements for spending (i.e., majority vote for education; two-thirds vote for all else).
• Neither measure changes the way revenues or expenditures are calculated for purposes of the Proposition 98 school spending guarantee.

Prohibits the Legislature and the Governor from collecting their salaries and expenses when the budget is late. Lost salaries and expenses could not be paid back later.

Requires the Legislature to stay in session and not act on any other legislative matter until the budget is adopted.

Requires the State Controller to prepare a two-page budget summary to be printed in the ballot pamphlet provided to voters at every statewide election; the summary must provide directions to an Internet Web site that includes voting records of legislators on budget-related bills.

Prohibits a legislator from punishing or threatening to punish another legislator for a vote related to the budget.

BACKGROUND

The state Constitution requires the Governor to submit a balanced budget to the Legislature within the first 10 days in January that contains itemized recommendations for state expenditures and estimated state revenues. A bill is then introduced in each house of the Legislature by the chairs of the budget committees. In mid-May the Governor submits an updated version of the budget (the May Revise) which takes into account updated information on revenue. The Legislature is required to pass the budget bill by June 15 each year, and until the budget is enacted may not send the Governor any other bill appropriating funds for the "fiscal year for which the budget bill is to be enacted, except emergency bills recommended by the Governor." The budget bill requires a 2/3 vote of the membership for passage, as do all appropriations bills or bills raising taxes. Taxes may be lowered by majority vote. Propositions 4 (Gann) of 1979 and modifications to Proposition 4 contained in Propositions 98, 99, 111, and 10 have added other provisions to the constitution, including an appropriations limit, and a requirement for an undefined "prudent reserve fund." Legislative staff are not paid when the budget has not been passed; lost salaries are paid back when the budget is passed.

When the budget is late school districts cannot plan for the upcoming school year and programs are left in jeopardy. Thousands of teachers, firefighters and public safety officers get pink slips and education and safety are at risk. Small business that provide services to the state are expected to continue without getting paid and are forced to take loans to survive.

COMMENT

The League supports the use of a simple majority to adopt revenue and other fiscal measures. Only two other states, Rhode Island and Arkansas, require a two-thirds vote to pass a budget. The idea of the two-thirds requirement may be that the importance of the budget calls for a greater degree of consensus than other issues and forces the majority to consider the opinions of the minority. The budget deadlocks in California have not had the effect of producing consensus so much as simply becoming an exercise in seeing who can hold out the longest and then "buying" the votes of a few members with a mixture of special interest provisions. It means that a minority as small as 1/3 of the Legislature can control the most important piece of legislation affecting the whole state each year.

The long delays work some hardships even in relatively good economic years, but delays in hard times mean that inaction can make the situation even worse; for instance, if new revenues are delayed, the funds finally collected will fall short. Late budgets and inability to raise needed revenues are hurting California's credit rating and thereby raising the cost of borrowing money.

Most of the provisions of Proposition 56 were recommendations from the California Citizens Budget Commission, A 21st Century Budget Process for California: Recommendations of the California Citizens Budget Commission, Los Angeles. Center for Governmental Studies, 1998.

IMPORTANT POINTS

• Proposition 56 holds legislators accountable to taxpayers in order to produce a responsible and timely state budget.
• For every day the budget is late, Proposition 56 would take legislators' salary and expenses away and require them to stay in session until they pass a budget.
• Currently the Governor and the Legislature have almost six months to adopt a budget. The Legislature has not met the constitutional deadline since 1986. Proposition 56 will hold our elected representatives accountable. If they are not doing their job, then they shouldn't get paid.
• Proposition 56 will put an end to partisan budget gridlock by reducing the vote threshold to adopt the state budget and related tax legislation from 2/3 to 55%.
• Under the current system, legislators hold out and refuse to compromise on the state budget. Some try to get more money for pet projects in their district or tax breaks for special interests while California's financial welfare hangs in the balance.
• Because political leaders cannot bring the parties together and compromise, we have budget gridlock which means late, irresponsible budgets.
• California is one of three states (Rhode Island and Arkansas are the others) which requires a 2/3 vote by the Legislature to pass a budget.
• Proposition 56 will end the political games.
• In the current political atmosphere, legislators are threatened and punished if they do not follow the party line.
• Proposition 56 allows legislators to vote their conscience. They should be accountable to their constituents for their votes on the budget, not to their party leadership.
• Proposition 56 encourages fiscal responsibility.
• Proposition 56 requires the Legislature to set aside a "rainy day" fund of at least 5% in good times to have a cushion so that extreme budget cuts and tax increases will be less likely in a weak economy.
• Expenditures from the reserve could be made only when there is an economic downturn and revenues fall below existing program levels or for expenses related to a disaster declared by the Governor.
• The current constitutional requirement establishes a "reasonable and necessary" prudent reserve, but no amount is specified. Proposition 56 encourages responsible budget planning.
• Proposition 56 will require that voters get the facts about the budget.
• Voters will be given access to information on how legislators voted through an easy-to-use Web site.
• The ballot pamphlet will show how our state's money is spent.
• Proposition 56 will force the Legislature to make the budget its top priority.
• If the budget is not passed by the Constitutional deadline, Proposition 56 requires the Legislature to remain in session and prohibits it from action on other legislation until the budget is adopted.

RESOURCES

Marion Taylor, LWVC Legislation Director, mtayl0r@sbcglobal.net

Trudy Schafer, LWVC Program Director/Advocate, 801 12th Street, Suite 220, Sacramento 95814. Phone: 916-442-9210, tschafer@lwvc.org

Campaign Web site: http://www.budgetaccountabilitynow.org/

HOW YOU CAN HELP

You can help the campaign to pass Proposition 56 by

• Writing a letter to the editor of your local newspaper(s).

• Encouraging friends and colleagues to write letters to the editor.

• Attending an activist training session and participating in a speakers' bureau. For information call Jessica Reynolds, Outreach/Speakers coordinator for the campaign. 510-450-0101, jessica@kaufmancampaigns.com

• Joining a Yes on 56 coalition as part of a regional team. To get involved call a regional coordinator: Northern California, Tai Milder, 916-443-7187; Southern California, Tracy Zeluss, 312-738-8405.

SAMPLE LETTER TO THE EDITOR

Note: Please adapt this letter to your own community and check your local paper's word limit for published letters.

Editor:

When the state budget is late, real people in California suffer. It doesn't really matter who the Governor is when it comes to late, irresponsible budgets. In the last 25 years, California has had 17 late budgets under both Republican and Democratic Governors. The real problem here is that the budget process is broken. But Proposition 56 would fix all that.

Proposition 56, a ballot initiative called The Budget Accountability Act, will appear on the March '04 statewide ballot. It reduces the vote threshold for legislators to pass a budget from two-thirds to 55%. The two-thirds vote requirement was intended to promote consensus, but that is not what is happening. Under the current system, legislators hold out and refuse to compromise on the state budget. Some try to get more money for pet projects in their district while California's financial welfare hangs in the balance.

Proposition 56 will also withhold the Governor's and legislators' salary and expense per diem pay when they don't pass a budget on time and will force them to stay in session and work only on the budget until it's done. No budget, no pay and no vacation or action on other bills.

These important and common-sense reforms are long overdue, and it is essential that we work together to pass the Budget Accountability Act in March 2004.

Sincerely,

(your name)