Opponents of Proposition 1A need to stop watching Saturday morning cartoons long enough to read a copy of the ballot measure. The budget reform on the May special election ballot is not Proposition 58 redux; it is in fact the fix to Prop 58 that the Legislature refused to enact in 2004 – but which Republicans insisted as their price for agreeing to this year’s budget solution.
Proposition 58 did not place a limit on spending. Proposition 1A caps revenue growth to the average growth of revenues over the past 10 years – which will provide an effective damper on state spending increases. Don’t take my word for it, ask the California Budget Project, a liberal think tank, which recently reported that “the revenue forecast established by Proposition 1A, which limits spending from the state’s existing tax base, would be significantly below the Governor’s ‘baseline’ spending forecast.” Any revenues that exceed that trend are automatically deposited into the rainy-day fund.
The revenue limit cannot be increased above the trend except when taxes are increased under the current law. (Nor can the revenue limit be increased when fees are increased, ever.) So the Prop 13 requirement for a two-thirds legislative vote remains the law of the state. Remember, since the passage of Prop 13 – up to and including this year – the Legislature has never increased taxes to grow government. Every tax increase passed by the Legislature – including the increases from last month – have been temporary and used only to plug a deficit hole or respond to an emergency (like an earthquake).
Proposition 58 created a sham budget reserve – money deposited into the reserve at the front end could be shoveled out the back door with a nod from the Governor. Proposition 1A only allows money deposited into the budget reserve to be removed when state revenues have dropped or when the budget reserve has reached 12.5 percent of revenues. The Governor’s discretion has been removed.
Proposition 58 merely suggested that the Legislature cut the budget during a fiscal emergency. Proposition 1A gives the Governor unilateral authority to cut state operations by seven percent, and suspend automatic cost-of-living adjustments and rate increases for up to four months.
Proposition 1A is the best opportunity for a legitimate and sustainable spending restraint since the Gann Limit was eviscerated by Proposition 98 in 1988 and Proposition 111 in 1990. If opponents turned off their Nickelodeon, they would recognize this as a potentially stunning achievement.