Plot Thickens on Spending Limit

No sooner had word leaked out that the governor and Republican legislators were working on a five year spending cap as a compliment to the five year tax extension plan than Jon Coupal of the Howard Jarvis Taxpayers Association filed a proposed initiative with the Attorney General’s office for a hard spending limit. Spending is limited under the HJTA plan, but the term of the law is not.

The effectiveness of a five year spending limit is suspect. Projections are that the state will not have a lot of excess revenue over the next five years. The goal of a spending limit, beyond the obvious effort to control spending, is to reassure Wall Street and the bonding agencies that California is taking concrete steps to deal with it’s budget problems in the long term.

The HJTA approach does that.

Of immediate importance, however, is what will the HJTA initiative mean to the negotiations between the governor and the Republican legislators?

One spending cap measure doesn’t necessarily cancel out the other. If the governor manages to put a limited spending cap on the ballot and it passes, the voters could still extend the spending cap idea in a future election and make it permanent.