Bill Text: CA SCA10 | 2011-2012 | Regular Session | Amended
Bill Title: Government finance.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2012-06-27 - From committee with author's amendments. Read second time and amended. Re-referred to Com. on GOV. & F. [SCA10 Detail]
Download: California-2011-SCA10-Amended.html
BILL NUMBER: SCA 10 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 27, 2012
AMENDED IN SENATE APRIL 9, 2012
INTRODUCED BY Senator Strickland
MARCH 15, 2011
A resolution to propose to the people of the State of California
an amendment to the Constitution of the State, by adding Section 23
to Article IV thereof, and by amending Sections 1, 1.5, 2, 8, 9, and
10.5 of, and adding Sections 1.9 and 9.5 to, Article XIII B thereof,
relating to government finance.
LEGISLATIVE COUNSEL'S DIGEST
SCA 10, as amended, Strickland. Government finance.
Existing provisions of the California Constitution place
limitations on the authority of the state or an entity of local
government to expend the proceeds of taxes, as defined. These
provisions require the state or an entity of local government to
establish an appropriations limit for each fiscal year, defined as
the total annual appropriations subject to limitation. These
provisions prohibit the total annual appropriations subject to
limitation from exceeding the appropriations limit of the government
entity for the prior year adjusted for a change in the cost of living
and the change in population, as defined. If the state incurs excess
revenues above its appropriations limit for 2 consecutive fiscal
years, the provisions require 50% of the excess revenues to be
transferred and allocated to the State School Fund for elementary,
high school, and community college purposes, and the remaining 50% of
the excess revenues to be returned to the taxpayers pursuant to a
revision of tax rates or fee schedules. If an entity of local
government incurs excess revenues above its appropriations limit for
2 consecutive fiscal years, the provisions require all of the excess
revenues to be returned to the taxpayers pursuant to a revision of
tax rates or fee schedules. Existing law provides that appropriations
for all qualified capital outlay projects are not appropriations
subject to limitation under these provisions. Qualified capital
outlay projects are defined by the Legislature.
This measure would revise and recast these provisions to provide,
on and after July 1, 2013, that the appropriations limit of the state
for the expenditure of the proceeds of taxes shall be the total
amount of appropriations subject to limitation in the 2010-11 fiscal
year.
The measure would require excess revenues to be allocated on an
annual basis rather than biennially. In fiscal years in which the
total amount of debt service exceeds a specified amount, any excess
revenues of the state or an entity of local government would be
appropriated for the reduction of debt, as defined. In fiscal years
in which the total amount of debt service is less than that specified
amount and excess revenues of the state are less than
$2,000,000,000, any excess revenues would be divided between the
State School Fund and the prudent state reserve fund. In fiscal years
in which the total amount of debt service is less than the specified
amount and excess revenues of the state exceed $2,000,000,000, any
excess revenues would be returned to the taxpayers pursuant to a
reduction of tax rates or fees, as specified. In fiscal years in
which the total amount of debt service is less than the specified
amount, any excess revenues of an entity of local government would be
returned to the taxpayers pursuant to a reduction of tax rates or
fees, as specified.
The measure would repeal the provision that authorizes the
Legislature to define qualified capital outlay projects that are not
appropriations subject to limitation under these provisions. The
measure would instead define a qualified capital outlay project for
purposes of these provisions. The measure would prohibit the
Legislature or the people through initiative from enacting a statute
that would exempt any proceeds of taxes from these provisions or
exempt an appropriation from the appropriations limit of the state or
entity of local government. The measure would require the Controller
to review the annual calculation of appropriations subject to
limitation as part of an annual financial audit.
The California Constitution requires that a change in state
statute, passed by the Legislature, that results in a taxpayer paying
a higher tax be imposed in an act that is passed with the approval
of not less than 2/3 of the membership of each house of the
Legislature.
This measure would, notwithstanding that provision, require any
change in state statute to be passed by not less than 2/3 of the
membership of each house of the Legislature if it imposes a new or
higher tax on any taxpayer, authorizes or enables the
imposition of a new or higher tax on any taxpayer by the state, or
authorizes or enables the imposition of a new or higher
tax on any taxpayer by any political subdivision of the state.
The measure would provide that any person shall have standing to
enforce its provisions. The measure would provide that it shall be
liberally construed. The measure would provide that its provisions
are severable.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
WHEREAS, This measure shall be known and may be cited as the
"Government Spending Limit Act of 2012"; and
WHEREAS, The Legislature finds and declares all of the following:
(a) The purpose of this constitutional amendment is to force
California politicians to balance the budget by spending only what
the state State can afford.
(b) It will repair California's broken budget system by rejecting
the failed pattern of wasteful government spending, enormous deficits
and debt, and higher taxes in favor of a reasonable spending limit
that will force state and local politicians to live within their
means, balance the budget, pay down our debt, and control spending
without wasting additional taxpayer dollars.
(c) By doing this, we will help create jobs and foster a healthy
economy; and
WHEREAS, The Legislature further finds and declares all of the
following:
(a) California politicians waste too much of our tax money. They
do not prioritize programs or cut waste. Instead, they threaten
massive tax hikes or cuts to critical programs like law enforcement
and schools, but they never seriously work to clean up the waste and
inefficiencies in government. This measure allows voters to take
control of government spending and forces the politicians to
prioritize programs and clean up the waste and abuses before they ask
us to pay more of our hard-earned dollars in new and higher taxes.
(b) More spending, debt, and higher taxes are not the answer to
California's budget problems. In the 10 years between 2000-01 and
2010-11, total state spending increased by over $39 billion. In 2009,
our state Legislature imposed one of the largest tax increases ever
enacted by any state in American history--over $12 billion.
(c) However, in spite of these eye-popping tax and spending
increases, California government continues to fail the people. The
politicians still cannot balance our state and local budgets, in good
or bad economic times. Instead, they use gimmicks and borrowing to
claim budgets are balanced when they know they are not. In fact, as
much as 85 percent of the Legislature's short-term budget "fixes" are
never achieved, leaving California taxpayers deeply in debt and the
budget unbalanced year after year. This has resulted in billions more
in deficits and long-term debt that our children and grandchildren
will have to pay back. Currently, California's debt is already
estimated in excess of $200 billion, including billions for excessive
pensions.
(d) All of these additional taxes, spending, and debt did not
improve the lives of everyday Californians. Today, our roads are
crumbling, our schools are failing, and our public universities are
becoming unaffordable. Our water system is broken, our prisons are
overflowing, and we have fewer police officers patrolling our
streets.
(e) As the past 10 years have proven, no amount of increased taxes
and spending will ever fix the problem because the special interests
who control our state and their politician friends will simply
divert any extra taxpayer dollars to their own benefit, like
unsustainable and overly generous public employee pensions.
California does not have a revenue problem, it has a spending
problem. The politicians no longer represent the taxpayers, only the
special interests who demand higher spending and taxes with no
accountability and no assurances the money is not wasted.
(f) Since the politicians can no longer be trusted to spend
taxpayer money wisely, it is time for Californians to once again take
back control of their government and limit what the politicians can
spend. In 1979, voters enacted a reasonable spending limit, but over
time the Legislature and special interests have demolished that limit
originally approved by the voters.
(g) A crucial component of controlling government spending is to
also control government's ability to extract additional revenues from
taxpayers. In 1978, voters enacted a reasonable requirement that no
tax could be imposed by the Legislature without a two-thirds vote.
Despite that clear and unambiguous standard, the Legislature and the
special interests have attempted to undermine the two-thirds vote
requirement for taxes by suggesting that it may be possible for the
Legislature to raise taxes on a simple majority vote in some
situations. Here, the voters again reaffirm the two-thirds vote
requirement for taxes and declare that all taxes, however constructed
or conceived, may only be authorized, adopted, or increased by the
Legislature through a two-thirds vote of each house of the
Legislature.
(h) The only effective way to control government spending, end
waste, pay off our debt, and protect taxpayers is to impose a
reasonable spending limit that will force California politicians to
once again live within our means and check the explosive and
ineffective growth of government spending once and for all; now,
therefore, be it
RESOLVED BY THE SENATE, THE ASSEMBLY CONCURRING, That the
Legislature of the State of California at its 2011-12 Regular Session
commencing on the sixth day of December 2010, two-thirds of the
membership of each house concurring, hereby proposes to the people of
the State of California that the Constitution of the State be
amended as follows:
First-- That Section 23 is added to Article IV thereof, to read:
SEC. 23. (a) Notwithstanding any other provision of this
Constitution or any other law, any change in state statute shall be
enacted by an act passed by not less than two-thirds of each house of
the Legislature if the change in state statute would do any of the
following:
(1) Impose a new or higher tax on any taxpayer.
(2) Authorize or enable the imposition of a new or
higher tax on any taxpayer by the State.
(3) Authorize or enable the imposition of a new or
higher tax on any taxpayer by any political subdivision of the State.
(b) As used in this section, the following terms have the
following meanings:
(1) "Change in state statute" includes, but is not limited to, all
of the following:
(A) Bills passed by the Legislature.
(B) An addition to, or amendment or repeal of, an initiative
statute that only becomes effective when approved by the electors.
(C) An addition, amendment, or repeal of statutory "in-lieu"
provisions or findings of statewide concern.
(D)
(C) Any and every other possible type of modification
to state law, whether by addition, amendment, or repeal, that is not
identified in subparagraphs (A) to (C), inclusive
and (B) .
(2) "Political subdivision" includes any "local government" and
any "special district" as those terms are defined in Section 1 of
Article XIII C.
(3) "Tax" is defined in subdivision (b) of Section 3 of Article
XIII A as applied to the State and subdivision (e) of Section 1 of
Article XIII C as applied to an entity of local government.
(c) To the extent that any other provision of this Constitution
could be read, whether expressly or impliedly, as authorizing the
Legislature to enact any change in state statute pursuant to
paragraphs (1) to (3), inclusive, of subdivision (a) without being
enacted by an act passed by not less than two-thirds of each house of
the Legislature, this section shall supersede that provision.
(d) (1) Any change in state statute enacted by the Legislature
between December 1, 2011, and the effective date of this section,
that would have been prohibited if this section were in effect on the
date the change in state statute was enacted, is hereby repealed as
of the date of its enactment.
(2) Notwithstanding paragraph (1), any change in state statute
that is repealed under paragraph (1) may be reenacted by the
Legislature and signed into law by the Governor in compliance with
the requirements of this section.
(e) Notwithstanding Section 32 of Article XIII, any person shall
have standing to challenge a violation of this section and enforce
compliance with this section. In a legal action to challenge a
violation of this section, the government bears the burden of proving
its compliance with this section by a preponderance of the evidence.
Second-- That Section 1 of Article XIII B thereof is amended to
read:
SECTION 1. (a) The total annual appropriations subject to
limitation of the State shall not exceed the appropriations limit for
the prior year adjusted for the change in the cost of living and the
change in population, except as otherwise provided in this article.
(b) The total annual appropriations subject to limitation of each
entity of local government shall not exceed the appropriations limit
for the prior year adjusted for the change in the cost of living and
the change in population, except as otherwise provided in this
article.
(c) Any person shall have standing to challenge a violation of
this article and enforce compliance with this article. In a legal
action to challenge a violation of this article, the government bears
the burden of proving its compliance with this article by a
preponderance of the evidence.
Third-- That Section 1.5 of Article XIII B thereof is amended to
read:
SEC. 1.5. The annual calculation of the appropriations limit
under this article for the State shall be reviewed as part of an
annual financial audit conducted by the Controller. The annual
calculation of the appropriations limit under this article for each
entity of local government shall be reviewed as part of an annual
financial audit.
Fourth-- That Section 1.9 is added to Article XIII B thereof, to
read:
SEC. 1.9. (a) If, in any fiscal year, the total amount of all
proceeds of taxes received by the State exceeds the amount that may
be appropriated by the State in compliance with this article and the
total amount of debt service of the State in that fiscal year is 5
percent or more of the appropriations limit, the excess revenue shall
be appropriated in the subsequent fiscal year for the reduction of
debt.
(b) If, in any fiscal year, the total amount of all proceeds of
taxes received by an entity of local government exceeds the amount
that may be appropriated by the entity of local government in
compliance with this article and the total amount of debt service of
the entity of local government in that fiscal year is 5 percent or
more of the appropriations limit, the excess revenue shall be
appropriated in the subsequent fiscal year for the reduction of debt.
Fifth-- That Section 2 of Article XIII B thereof is amended to
read:
SEC. 2. (a) If, in any fiscal year, the total amount of all
proceeds of taxes received by the State exceeds the amount that may
be appropriated by the State in compliance with this article by less
than two billion dollars ($2,000,000,000) and the total amount of
debt service of the State in that fiscal year is less than 5 percent
of the appropriations limit, the excess revenue shall be appropriated
as follows:
(1) Fifty percent of the excess revenue shall be transferred and
allocated, from a fund established for that purpose, pursuant to
Section 8.5 of Article XVI. Notwithstanding Article XVI, revenues
transferred and allocated pursuant to this paragraph shall only
supplement the funding guarantee for schools, and shall not change
the minimum funding formula or the maintenance factor.
(2) Fifty percent of the excess revenue shall be transferred to
the prudent state reserve fund required by Section 5.5.
Notwithstanding Sections 5 and 5.5, excess revenues transferred
pursuant to this paragraph shall not constitute an appropriation
subject to limitation.
(b) If, in any fiscal year, the total amount of all proceeds of
taxes received by the State exceeds the amount that may be
appropriated by the State in compliance with this article by two
billion dollars ($2,000,000,000) or more and the total amount of debt
service of the State in that fiscal year is less than 5 percent of
the appropriations limit, the excess revenue shall be refunded to the
taxpayers by a reduction of tax rates or fees within the next two
subsequent fiscal years.
(c) If, in any fiscal year, the total amount of all proceeds of
taxes received by an entity of local government exceeds the amount
that may be appropriated by the entity of local government in
compliance with this article and the total amount of debt service of
the entity of local government in that fiscal year is less than 5
percent of the appropriations limit, the excess revenue shall be
returned to the taxpayers by a reduction of tax rates or fees within
the next two subsequent fiscal years.
Sixth-- That Section 8 of Article XIII B thereof is amended to
read:
SEC. 8. As used in this article and except as otherwise
expressly provided herein:
(a) "Appropriations subject to limitation" of the State means any
authorization to expend during a fiscal year the proceeds of taxes
levied by or for the State, exclusive of state subventions for the
use and operation of local government (other than subventions made
pursuant to Section 6) and further exclusive of refunds of taxes,
benefit payments from retirement, unemployment insurance, and
disability insurance funds.
(b) "Appropriations subject to limitation" of an entity of local
government means any authorization to expend during a fiscal year the
proceeds of taxes levied by or for that entity and the proceeds of
state subventions to that entity (other than subventions made
pursuant to Section 6) exclusive of refunds of taxes.
(c) (1) With respect to the State, "proceeds of taxes" shall
include, but not be restricted to, all tax revenues and the proceeds
to the State from regulatory licenses, user charges, and user fees to
the extent that those proceeds exceed the costs reasonably borne by
the State in providing the regulation, product, or service, and
the any return on the investment of
those revenues and proceeds. "Proceeds of taxes" shall not include,
subventions to local governments, other than subventions made
pursuant to Section 6.
(2) With respect to any entity of local government, "proceeds of
taxes" shall include, but not be restricted to, all tax revenues and
the proceeds to an entity of local government from regulatory
licenses, user charges, and user fees to the extent that those
proceeds exceed the costs reasonably borne by the entity of local
government in providing the regulation, product, or service, and
subventions received from the State, other than pursuant to Section
6, and the investment any return on the
investment of those revenues, proceeds, and subventions.
(d) "Local government" or "entity of local government" means any
city, county, city and county, charter city, charter county, charter
city and county, school district, community college district, special
district, authority, or any other political subdivision of or within
the State.
(e) (1) "Change in the cost of living" for the State, a school
district, or a community college district means the percentage change
in California per capita personal income from the preceding year.
(2) "Change in the cost of living" for an entity of local
government, other than a school district or a community college
district, shall be either (A) the percentage change in California per
capita personal income from the preceding year, or (B) the
percentage change in the local assessment roll from the preceding
year for the jurisdiction due to the addition of local nonresidential
new construction. Each entity of local government shall select its
change in the cost of living pursuant to this paragraph annually by a
recorded vote of the entity's governing body.
(f) (1) "Change in population" of any entity of local government,
other than a school district or a community college district, shall
be determined by a method prescribed by the Legislature, provided
that the determination shall be revised, as necessary, to reflect the
periodic census conducted by the United States Department of
Commerce or any other department of the federal government that
should succeed to the duties of the United States Department of
Commerce.
(2) "Change in population" of a school district or a community
college district shall be the percentage change in the average daily
attendance of the school district or community college district from
the preceding fiscal year, as determined by a method prescribed by
the Legislature.
(3) "Change in population" of the State shall be determined by
adding (1) the percentage change in the State's population multiplied
by the percentage of the State's budget in the prior fiscal year
that is expended for other than educational purposes for kindergarten
and grades one to 12, inclusive, and the community colleges, and (2)
the percentage change in the total statewide average daily
attendance in kindergarten and grades one to 12, inclusive, and the
community colleges, multiplied by the percentage of the State's
budget in the prior fiscal year that is expended for educational
purposes for kindergarten and grades one to 12, inclusive, and the
community colleges.
Any determination of population pursuant to this paragraph, other
than that measured by average daily attendance, shall be revised, as
necessary, to reflect the periodic census conducted by the United
States Department of Commerce or any other department of the federal
government that should succeed to the duties of the United States
Department of Commerce.
(g) "Debt service" means appropriations required to pay the cost
of interest and redemption charges, including the funding of any
reserve or sinking fund required in connection therewith, on
indebtedness existing or legally authorized as of January 1, 1979, or
on bonded indebtedness thereafter approved according to law
by a vote of the electors of the issuing entity voting in an
election for that purpose .
(h) The "appropriations limit" of each entity of local government
and of the State for each fiscal year is that amount that total
annual appropriations subject to limitation may not exceed under
Sections 1 and 3.
(i) Except as otherwise provided in Section 5, "appropriations
subject to limitation" do not include local agency loan funds or
indebtedness funds, investment (or authorizations to invest) funds of
the State, or of an entity of local government in accounts at banks
or savings and loan associations or in liquid securities.
(j) "Debt" means the total amount of outstanding general
obligation bonds or other bonded indebtedness of the State or of an
entity of local government, including interest and redemption
charges, approved according to law by a vote of the electors
of the issuing entity .
Seventh-- That Section 9 of Article XIII B thereof is amended to
read:
SEC. 9. "Appropriations subject to limitation" for each entity
of local government and for the State do not include:
(a) Appropriations for debt service.
(b) Appropriations required to comply with mandates of the courts
or the federal government which, without discretion, require an
expenditure for additional services or that unavoidably make the
provision of existing services more costly.
(c) Appropriations of any special district that existed on January
1, 1978, and that did not as of the 1977-78 fiscal year levy an ad
valorem tax on property in excess of 121/2 cents ($0.125) per one
hundred dollars ($100) of assessed value; or the appropriations of
any special district then existing or thereafter created by a vote of
the people, which is totally funded by other than the proceeds of
taxes.
(d) Appropriations for all qualified capital outlay projects. As
used in this subdivision, an appropriation for a "qualified capital
outlay project" means an appropriation for a fixed asset, including
land and construction, with a useful life of 10 or more years and a
value that equals or exceeds one hundred thousand dollars ($100,000).
(e) Appropriations of revenue that are derived from any of the
following:
(1) That portion of the taxes imposed on motor vehicle fuels for
use in motor vehicles upon public streets and highways at a rate of
more than nine cents ($0.09) per gallon.
(2) Sales and use taxes collected on that increment of the tax
specified in paragraph (1).
(3) That portion of the weight fee imposed on commercial vehicles
that exceeds the weight fee imposed on those vehicles on January 1,
1990.
Eighth-- That Section 9.5 is added to Article XIII B thereof, to
read:
SEC. 9.5. Any statute enacted pursuant to Section 8 of Article
II or Article IV shall not do any of the following:
(a) Exempt or have the effect of exempting any appropriation from
the appropriations limit of the State or of an entity of local
government.
(b) Exempt or have the effect of exempting any proceeds of taxes
from this article.
Ninth-- That Section 10.5 of Article XIII B thereof is amended to
read:
SEC. 10.5. (a) For fiscal years beginning on or after July 1,
2013, the appropriations limit for the State shall be the total
amount of appropriations subject to limitation in the
fiscal year 2010-11 adjusted for changes in population and changes in
the cost of living from that fiscal year pursuant to this article.
(b) The appropriations limit of each entity of local government
shall be the appropriations limit for the 1986-87 fiscal year
adjusted for the changes made from that fiscal year pursuant to this
article, as amended by the measure adding this section, adjusted for
the changes required by Section 3.
Tenth-- This measure shall be liberally construed to promote its
objectives to the fullest extent possible. If this measure is found
to be inconsistent with any other provision of the California
Constitution, whether expressly or impliedly, this measure shall be
controlling.
Eleventh-- If any section, subdivision, paragraph, sentence,
clause, phrase, or word of this measure is for any reason held to be
invalid by a decision of any court of competent jurisdiction, that
decision shall not affect the validity of the remaining portions of
the measure. The People people of
California hereby declare that the people would have passed this
measure and each and every section, subdivision, paragraph, sentence,
clause, phrase, and word not declared invalid or unconstitutional
without regard to whether any portion of this measure would be
subsequently declared invalid.
