Proposition 1A, Budget Stabilization Act

[Maggie]

Proposition 1A will extend for as long as four years the approximately $16 billion tax increase that is part of the budget deal struck in Sacramento.[2],[3] It will also impose a limit on the amount the state can spend each year.[4]

Although six of the seven statewide ballot propositions on the May ballot (1A, 1B, 1C, 1D, 1E and 1F) are intended to close an approximately $42 billion budget gap, the California Legislative Analyst's Office, an agency of the state government, said in early March that tax revenues flowing into the state treasury are "well below" the projections it used earlier in the year, and that California's government now faces an additional $8 billion gap in addition to the earlier $42 billion gap.[5]

Ballotpedia

[Maggie]

Ballot information omits Proposition 1A tax extensions

By Kevin Yamamura
kyamamura@sacbee.com
Published: Thursday, Feb. 26, 2009 - 12:00 am | Page 3A

If voters rely solely on ballot arguments when deciding in May whether to pass a constitutional limit on state spending, they will miss the fact that the measure also would extend higher sales, vehicle and income taxes by up to two more years.

Legislative leaders so far have successfully omitted the fact that Proposition 1A will essentially trigger up to $14 billion in additional taxes from July 2011 to June 2013.

Although Republican legislators submitted ballot arguments against the proposal emphasizing billions of dollars in tax increases, Senate President Pro Tem Darrell Steinberg, D-Sacramento, chose a Democratic legislator to pen the opposing ballot statement, which ignores the tax hikes.

Campaign strategists said this month that the additional taxes are the measure's greatest vulnerability.

Under election law, Steinberg and Assembly Speaker Karen Bass, D-Los Angeles, are allowed to pick which legislators write opposing arguments. Steinberg chose Sen. Loni Hancock, D-Berkeley, while Bass did not designate anyone, according to Nicole Winger, a spokeswoman for the secretary of state's office.

Hancock ceded her right to three groups, the Congress of California Seniors, the California Faculty Association and the Consumer Federation of California. Their argument, backed by Hancock, emphasizes that the bill was "hastily drafted behind closed doors" and that a spending limit would hurt state services, but it does not mention any of the tax extensions.

"I think everyone will make the arguments that resonate with them," Hancock said.

Assemblyman Chuck DeVore, R-Irvine, and Sen. Bob Dutton, R-Rancho Cucamonga, submitted a ballot argument explaining that the proposal allows tax increases to continue for up to two more years. Because of how the budget was written, Proposition 1A enables a 1-cent sales tax hike to continue through 2012 and higher income and vehicle taxes to last through 2013.

"We have concerns about this whole thing being a setup, quite frankly," said Jon Coupal, president of the Howard Jarvis Taxpayers Association, who signed the argument with Dutton and DeVore that was not selected.

Through a budget bill, lawmakers classified Proposition 1A only as a "Budget Stabilization Fund" meant to limit future deficits, keeping the tax implications in a separate bill. That makes it unclear whether the legislative analyst's ballot review will mention the taxes.

"Our concern is that all of the ballot material will say nothing about the taxes," Coupal said.

http://www.sacbee.com/capitolandcalifornia...ry/1653962.html

[Maggie]

Daniel Weintraub: Why you ought to vote for 1A

By Daniel Weintraub
dweintraub@sacbee.com
Published: Sunday, Apr. 5, 2009 - 12:00 am | Page 1E

Five years ago, when Gov. Arnold Schwarzenegger first asked voters to help him control state spending, I was one of his biggest critics. The measure he was proposing, known as Proposition 58, was described as a "balanced budget amendment" but was riddled with loopholes. And while he claimed it would create a healthy rainy-day fund the state desperately needed, I concluded that it would do no such thing because it would be so easy for the Legislature to raid the new savings account.

So harsh was my critique that it was quoted at length in the official ballot argument against Proposition 58. In fact, you could almost say that I wrote the ballot argument, though I hadn't intended to do so.

Now Schwarzenegger is back with another proposal, Proposition 1A on the May 19 ballot. And once again he and his allies are saying the measure will ensure that the state never again will descend into the kind of serial deficits that have marked most of the past decade.

Should we support him?

This time, I say yes.

First, though, a note about process. Like Proposition 58, Proposition 1A was written behind closed doors, with little public input and far too little sunlight before its adoption by the Legislature. That sin was compounded when lawmakers rigged the ballot process to prevent a member of the public from writing the opposition argument, the kind of no-holds-barred critique that quoted my work five years ago. That stinks, and I think legislators and the governor should be ashamed of their behavior, which, in the long run, probably does nothing to help their cause anyway.

But now the measure is on the ballot, and voters ought to evaluate it on its merits. I've done that, and I think it's worth supporting.

I say that as a centrist who believes in prudent budgeting but is not aligned with either the tax cutters or the big spenders. I am willing to leave that debate for another day. But what I do want is a system that prevents, or at least reduces, the wild swings from boom to bust and back again that have marked California's budgeting since the early 1990s. Proposition 1A would do that.

This is not a strict spending limit, so hard-core fiscal conservatives won't love it. But that does not mean they should hate it. What it does do is valuable: It forces the Legislature to set aside tax windfalls in good years so that the extra money would be available when things go sour.

Anybody who lives on an unpredictable or seasonal income knows the value of this practice. Construction workers whose jobs grow scarce in winter, tax accountants whose business booms in April, small-business owners who do great at Christmas but suffer in the summer months, all must follow some form of the same habit. They average out their income and sock some away in good times so they can pay the bills when things get lean.

That's why this is a reform that should appeal across party lines. Fiscal conservatives should recognize that when lawmakers overspend in good times, they increase pressure for tax hikes when the economy slows, as we have seen in the past year. Smoothing out the spending won't reduce the size of government automatically, as some would like to do, but it would help reduce the pressure to raise taxes when deficits threaten to bankrupt the state.

Yet even as some conservatives are ripping the measure as too weak, some on the left are complaining that it would limit spending too much. It wouldn't. Proposition 1A allows the Legislature to spend every dime that comes into the treasury. It just changes when and how that money is spent.

If an economic boom brings in a windfall one year, some of that money is parked in the rainy-day fund and spent later, when revenues inevitably fall. If the fund grows to its maximum required level (12.5 percent of the budget), any additional money can still be spent, but only on one-time priorities, such as tax rebates, debt repayment and infrastructure. This ensures that short-term revenue spikes are not committed to long-term needs.

http://www.sacbee.com/opinion/story/1754155.html

[Maggie]

Jerry Brown backs Prop 1A

Attorney General Jerry Brown, a likely 2010 Democratic candidate for governor, has backed Proposition 1A, the tax and spending limit measure on the May 19 special election ballot.

He did so in an interview with CalBuzz, the new California politics Web site.

The site also has a longer interview posted with Brown where he speaks about what his priorities would be as governor (presuming he'd run, of course).

http://www.sacbee.com/static/weblogs/capit...est/021469.html

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Jerry Brown Backs Prop. 1A

This Just In: Attorney General Jerry Brown is supporting Proposition 1A, the linchpin measure on the May 19 special election ballot to impose a new spending cap on state government and extend $16 billion in tax increases, the former governor said in an interview with calbuzz.

The 2010 contender for governor was tepid in his endorsement of the measure, but credited Gov. Arnold Schwarzenegger and legislative leaders for their effort in crafting a compromise: “The budget thing is complicated and it is daunting,” he said. “They tried . . . and did the best they could to come up with something.”

“You can’t make the perfect the enemy of the possible,” Brown told calbuzz.

Brown is the final major candidate in the early gubernatorial field to take a public stand on Prop. 1A. His position aligns with that taken by two Democratic rivals, mayors Gavin Newsom of San Francisco and Antonio Villargairosa of Los Angeles. Lt. Gov. John Garamendi, also a Democrat, opposes the measure. On the Republican side, Insurance Commissioner Steve Poizner and former eBay CEO Meg Whitman oppose Prop. 1A, while moderate former U.S. Rep. Tom Campbell supports it.

The measure is one of five initiatives the governor and Legislature placed on the ballot to enact a February budget deal that purports to close a $42 billion projected deficit for the current and next fiscal years. Without passage of the measures, that deal falls apart and Schwarzenegger and Democratic leaders will be forced into further negotiations over the deficit. A statewide survey released late last month by the Public Policy Institute of California showed the initiative losing.

In the interview with calbuzz, Brown declined to take positions on the other ballot measures yet: “I have to read them” he said.

Tomorrow: check back for more calbuzz on Brown’s first extensive interview about the 2010 governor’s race.

http://calbuzzer.blogspot.com/2009/04/jerr...ks-prop-1a.html

[Maggie]

April 17, 2009

Villines makes his case for Prop. 1A

Assembly Republican Leader Mike Villines made his case for Proposition 1A in a letter sent Friday to members of the California Republican Party executive committee ahead of its weekend endorsement meeting.

Villines reminds Republicans that he "came up through the conservative ranks of our party." His argument is essentially that Republicans shouldn't let the perfect be the enemy of the good. While Proposition 1A has its flaws, he writes that the reality is that "liberals" control the Legislature and that "we have to fight to make important gains where gains can be made."

But as Flash Report editor and CRP vice chairman Jon Fleischman notes, a vote against Proposition 1A is "a virtual certainty."

Villines' letter follows after the jump:

April 17, 2009

Dear Fellow Republican,

As you probably know, I came up through the conservative ranks of our party, and I spent many weekends walking precincts for Republicans who, like me, believe that our party is the best hope for the American taxpayer.

And, now more than ever, Republicans need to stand firm on protecting taxpayers - which includes ending once and for all the spending binge that Sacramento has been on for the past decade. The fact is that the lessons over the past decade have taught us that we must attack the spending problem at its source. Going budget-to-budget in a piecemeal fashion has only resulted in more spending and debt.

Instead, we need wholesale changes that will provide a permanent solution to stop the spending madness and force our government to finally live within its means. Only then will taxpayers be truly protected, which is why many conservatives are joining me in supporting Proposition 1A.

Now, I know that we'll debate this issue at the upcoming Republican Party Executive Committee meeting. And I know that there are some Republicans who are unhappy because the passage of Proposition 1A also consummates the recently enacted budget deal that included temporary tax increases. The reality is that the liberals already have enough votes to continue their dominance in Sacramento, which means that Republicans cannot achieve a 100% victory. Instead, we have to fight to make important gains where gains can be made.

Proposition 1A represents a significant victory for taxpayers at a time when our state needs it most. Proposition 1A ties the hands of legislative liberals, and it forces our budget into a fixed formula and a hard spending cap. That means, for the first time in decades, that liberals will have to make tough spending choices and cut their pet projects.

It also means the taxpayers will no longer be treated like a giant ATM machine. Consider this fact: if we had Prop 1A in place today, our state would not be $31 billion in the red. Instead, our state would have a much more manageable $5.4 billion budget gap. That means that during the worst economic recession since the Great Depression, Proposition 1A would have ensured that our budget gap was manageable. That's the proof that Proposition 1A protects taxpayers.

Here's the bottom line: without Proposition 1A, taxpayers will continue to be subjected to the spending whims of the liberal majority, and based on past history, that means more debt&hellipand higher taxes. While some of my fellow conservatives decry that the solution is not perfect, we also need to remember that our ability to influence the process is not absolute.

Proposition 1A represents wholesale changes in our state's spending habits. And, believe me, in this tough economy, we can no longer afford the tax-and-spend mentality in Sacramento that has driven businesses from our state.

I hope you will join me in supporting Proposition 1A. Please take the time to understand this issue and consider the options - especially the consequences - if we don't pass a spending cap and if there's no change in Sacramento.

Proposition 1A gives taxpayers the protection we need. As Republicans, we need to grasp this opportunity to deliver real change.

Sincerely,

Mike Villines
Assemblyman 29th District

http://www.sacbee.com/static/weblogs/capit...est/021624.html

[Maggie]

Prop. 1A is lightning rod among May 19 measures

By Kevin Yamamura
kyamamura@sacbee.com
Published: Saturday, May. 2, 2009 - 12:00 am | Page 1A

One in a series of stories explaining the measures on the May 19 special election ballot

Is Proposition 1A a long-needed solution to set aside money in good economic times so the state doesn't have to slash programs and raise taxes in bad years?

Or is it essentially a way to get voters to approve $16 billion in additional tax hikes?

Depends on whom you ask.

Proposition 1A means vastly different things to different people, as reflected in the political alliances emerging on each side of the measure.

The multifaceted May 19 proposal is only one piece of the budget accord struck by Gov. Arnold Schwarzenegger and two-thirds of the state Legislature in February. Yet it has become a lightning rod for the entire election.

"Proposition 1A has been given most of the attention in this special election, and voters are paying more attention to it and pivoting off of it when deciding how to view the rest of the ballot," said Mark DiCamillo, Field Poll director.

Proponents have linked Proposition 1A to the current budget mess, but it would have no direct impact on the state's fiscal situation until 2011.

At that point, it would pump money into state coffers through temporary tax extensions, limit spending in robust economic years, place restrictions on the state's "rainy-day fund" and restore $9.3 billion in education funding if Proposition 1B passes.

Groups backing the plan say it would create a predictable stream of revenue less dependent on the economy. They compare it to families placing bonuses and windfalls in savings to use in emergencies.

"I don't know if any one thing is a magic bullet, but we think Proposition 1A is what works to get us out of the problems we've had," said Lou Paulson, California Professional Firefighters president. "We see it as budgeting consistency."

The measure originated with GOP legislative leaders, who demanded that a spending limit be part of any budget compromise they negotiated.

Under the plan, the state each May would establish a spending amount based on a trend line from the previous 10 years, ignoring temporary tax revenues or bond money. It also would set a spending number equal to the previous budget year, adjusted for inflation and population growth.

Whichever number is higher would be the limit for spending that year. Any extra revenues would go first toward schools to meet constitutional requirements and then into the state's rainy-day fund. The state would increase its reserve to 12.5 percent of the general fund, roughly $12 billion now.

The state also would continue to set aside 3 percent of its general fund revenues in the reserve each September. If Proposition 1B passes, half of that money would go toward schools until the state pays them $9.3 billion total. The governor could block transfers for the reserve, but not schools, in particularly bad years.

The state could tap the reserve fund in limited cases, primarily when revenues fall below the previous year's spending (with adjustments for population growth and inflation). It also could use the money in cases of natural disasters.

Once the reserve is full and schools receive repayment, the state would use additional money to pay down debt.

Michael Cohen, a deputy analyst with the nonpartisan Legislative Analyst's Office, said 1A's effect "is hard to predict in any particular year, but over the long term you should have a more smooth spending line."

He noted that in February, when lawmakers were grappling with a then-projected $40 billion deficit, a $12 billion reserve would not have solved the entire problem. "It's not going to get rid of all the volatility in the state's budgeting, but I think it definitely would require that more money be set aside than today's system."

Supporters include the California Teachers Association and the California Chamber of Commerce, two powerful lobbying groups that were at odds the last time voters considered a spending limit in 2005.

CTA, a statewide union that represents more than 340,000 school employees, backs the measure largely because it would allow schools to receive $9.3 billion over time, adding to their long-term base of funding (as long as Proposition 1B passes) and also contains specific protections for education.

http://www.sacbee.com/topstories/story/1828192.html

[Maggie]

Q&A: Why labor is divided on Proposition 1A

Published: Tuesday, May. 5, 2009 - 12:00 am | Page 3A

The staff members of The Bee's Capitol Bureau, including columnist Dan Walters, answer readers' questions about the state budget and the budget-related measures on the May 19 special election ballot.

Unions usually stand together. Why are some supporting Proposition 1A and some opposing it or staying neutral?

Labor unions have long opposed spending limits for fear that restraining the growth of state spending would mean fewer public services and jobs for the people they represent. But unions have split over Proposition 1A because they believe that it would affect them in different ways because of the way it was crafted.

The largest union to support Proposition 1A is the California Teachers Association. Proposition 1A offers two things for the CTA – it protects the state's minimum funding guarantee for schools under Proposition 98, and it provides a way to give schools supplemental payments totaling $9.3 billion starting in 2011-12. The school payments are part of Proposition 1B, but the Legislature made the success of that proposition contingent upon passage of Proposition 1A.

Other unions remain opposed. The largest is the Service Employees International Union California State Council, which says it represents more than 700,000 members in positions funded by state and local governments. The SEIU believes that a spending limit, over time, will reduce the amount of money available for health care, education and social services.

The SEIU does not have a constitutional guarantee similar to Proposition 98, so it is concerned that its members could be harmed in future years if lawmakers are required to set aside revenues in a "rainy-day fund" rather than use them for new programs.

The SEIU branch representing 95,000 state workers, SEIU Local 1000, has taken no position on Proposition 1A despite the state council's public opposition to the measure.

Local 1000 may be conflicted because the governor and Legislature hold considerable power over its members' jobs – including approval of a tentative contract – and both the governor and two-thirds of the Legislature want Proposition 1A to pass.

I believe that when all these propositions are defeated there will be election fraud to alter the outcome of the election. Are there any special safeguards to prevent this election from being hijacked by the Democrats who want all the propositions passed so they can continue their support of illegal immigrants and their spending spree?

Elections are essentially conducted by 58 different county officials, so fraud would require a huge, multiperson conspiracy that is, to put it mildly, unlikely.

http://www.sacbee.com/capitolandcalifornia...ry/1833717.html