The Attorney General issued the title and summary for the spending limit proposal yesterday emphasizing the proposal’s goal of not only controlling government spending but also cutting down the “wall of debt” Governor Jerry Brown rightly criticizes as burden to state government and its taxpayers.
The Investors Business Daily posted an editorial recently on the spending limit proposal saying it offers an alternative to voters considering the many tax increase plans that are also proposed for the ballot.
Below are both the title and summary as released by the Attorney General followed by the editorial from Investors Business Daily.
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The Attorney General of California has prepared the following title and summary of the chief purpose and points of the proposed measure:
GOVERNMENT SPENDING LIMITS. INITIATIVE CONSTITUTIONAL
AMENDMENT.
Resets state spending limit to fiscal year 2010-11 level. Requires state and
local governments spend tax revenue exceeding limit to repay debt when debt is 5% or more of their spending limit. When state debt is less than 5% of state spending limit, splits excess revenue between schools and budget reserves or taxpayer refunds, depending on amount. When local government debt is less than 5% of applicable spending limit, returns excess revenue to taxpayers. Requires constitutional amendment to change terms. Forecloses Legislature’s
imposition, authorization, or submission to voters of tax increase absent two-thirds vote.
Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: For state government, a much greater likelihood that spending will be constrained by the constitutional spending limit. Consequently, state spending for ongoing programs—such as schools, community colleges, universities, health and social
services, and corrections—may have to be reduced in certain years, potentially by billions of dollars. In addition, the measure could result in more state funding for reduction of bond debt, particularly in the near term, and in the future, more one-time funding for schools and community colleges, budget reserves, and taxpayer refunds.
Spending Cap Plan Gives California Real Choice in ’12
A wave of tax-hike initiatives is making its way to the November 2012 ballot in California. But another proposal — to control government growth — could end up trumping them all.
Once the cradle of the tax revolt, California has long since devolved into a progressive policy lab and a public-worker’s paradise. But you never know what may happen next.
The California electorate doesn’t always follow the party line. Tax increases especially can be a tough sell, and the sheer number of similar tax-increase proposals headed for next year’s general election ballot could backfire by confusing voters.
So far, there are three look-alike tax initiatives — including one pushed by Gov. Jerry Brown — aimed mainly at funding schools. Progressive commentator Harold Meyerson, writing in the Los Angeles Times, calls this a recipe for “mutually assured destruction.”
Unlike Meyerson, we wouldn’t want to discourage the governor or anyone else from making a pitch to the public. In fact, the more the tax-hike theme dominates the ballot, the better. That would just make another, much different initiative look all the more refreshing.
This is the Government Spending Limit Act of 2012. With backing from the well-funded California Taxpayers Association, it has a clear path to the ballot. Once there, it offers Californians a true alternative to all those other propositions that just ask for more money.
The measure is about restraint, a rare thing in California over the past two decades. In that way it’s new. It’s also a revival of a spending-cap strategy that worked well in the decade after voters passed Proposition 13, the mother of all tax-cutting initiatives, in 1978.
One year after Prop. 13, the public passed a spending-limit measure by a 74% margin. Developed by Prop. 13 co-author Paul Gann (and supported by Brown, then in his first incarnation as governor), the initiative capped state and local spending growth to increases in population and the cost of living.
It wasn’t until 1987, after several years of strong growth in the California economy, that the Gann limit, as it was called, had to be imposed. At that point, after excess revenue to taxpayers, the public-spending lobbies complained and voters made a couple of bad mistakes. They passed one initiative in 1998 that eased the limit for schools, and another in 2000 that exempted highway funding and made the cap formula less strict.
Since then, the limit has been on the books but the state, through all its gyrations of revenue and spending, has stayed under it. Gann has been a limit in name only.