Initiatives tax state budget

APRIL 13, 2010

By JOHN SEILER

Drastic times call for innovative measures. California’s budget problem this year certainly is so serious that new solutions are in order. One could be to look at the budget initiatives over the past 20 years that have mandated higher state spending.

The question: If mandated spending for all these initiatives were suspended for a year, how much could be shifted to reduce the general-fund deficit?

The answer comes from a study made last August by the Legislative Analyst’s Office, “Budget Flexibility and Restrictions.” It was intended for a slightly different purpose, to identify constraints on the state budget.

So the study includes some initiatives that are (perhaps arbitrarily) beyond the scope of this investigation, such as Proposition 98 (Passed in 1988), which requires that about 40 percent of general-fund spending go to K-14 education; and Proposition 42 (2002), which dedicates $1.4 billion in sales tax to transportation.

Both the education and transportation spending areas were not new (as with the initiatives under study here), but continuing.

And the LAO study includes federal restrictions on state spending, which also are outside the scope of this article.

But LAO found the following five initiatives, with spending in annual amounts:

Ballot measures that dedicate tax revenues:

1. Proposition 99 (1988), $300 million for anti-tobacco education.

2. Proposition 172 (1993), $3 billion for local police and fire spending.

3. Proposition 10 (1998), $600 million for programs for children (this is Rob Reiner’s initiative).

4. Proposition 63 (2004), $1 billion for mental health programs.

Ballot measure that locks in state spending:

5. Proposition 49 (2002), $550 million for after-school programs. This initiative was sponsored by Arnold Schwarzenegger and catapulted him into statewide politics.

Total: $5.45 billion.

That comes to about one quarter of the current budget deficit of $20 billion. It wouldn’t be a whole solution to the deficit, but a hefty partial solution.

Propositions galore

“This is a fundamental problem with the way the state conducts its fiscal affairs,” Esmail Adibi told me of the current budget inflexibility; he’s he’s director of the A. Gary Anderson Center for Economic Research and Anderson Chair of Economic Analysis.

“After Proposition 13, California became the Land of Propositions.” He was referring to the 1978 property tax limitation initiative. “Many ballot initiatives require more spending. An initiative’s purpose might sound good, but when you put the whole thing together, it causes problems for the budget. All of these constrain policy on the budget.”

Adibi concluded that, with the budget situation so severe, “at some point, we will have to revisit these initiatives.”

Roadblocks to suspension

Two major roadbocks exist to suspending these initiatives for a year. The first is the special interest groups that put these initiatives on the ballot in the first place. Gov. Schwarzenegger won’t want to suspend the Prop. 49 spending on his after-school programs.

Police and fire unions won’t like cutting out the Prop. 172 money that helps city budgets fund the lavish pensions that have been spiked upward since then.

And so on. But the state budget crisis may be so big that the special interests might be pushed aside.

The second obstacle is the California Constitution. Jack Pitney, a professor of American politics at Claremont McKenna College, pointed me to Article 2, Section 10:

(c) The Legislature may amend or repeal referendum statutes.  It may amend or repeal an initiative statute by another statute that becomes effective only when approved by the electors unless the initiative statute permits amendment or repeal without their approval.

And he pointed to this Supreme Court decision (Word document):

The Legislature may not amend an initiative statute without subsequent voter approval unless the initiative permits such amendment, “and then only upon whatever conditions the voters attached to the Legislature’s amendatory powers.”  (Proposition 103 Enforcement Project v. Quackenbush (1998)

That’s a mighty big obstacle as well. Any new initiative to allow the temporary suspension of the spending from the earlier initiatives would need to be passed by voters, the earliest election date being the November general election.

Such a reform might seem unlikely.  But, currently, it seems impossible to reduce the state’s massive and continuing budget deficit. And as Sherlock Holmes said, “When you remove the impossible, whatever remains, however improbable, must be the truth.”

John Seiler, an editorial writer for 19 years at The Orange County Register, currently is a reporter and analyst for Calwatchdog.com. His email: [email protected].