CA: Bipartisan Budget Reserve And Spending Limit Introduced ( Nov 20 2003 )

SACRAMENTO – Assemblyman Tom Harman (R- Huntington Beach) has announced that he has joined a bipartisan group of 11 legislators in the introduction into the fifth special session of the Assembly a bill identified as ACAX5 1. The bill is being proposed as a budget reserve, spending limit, balanced budget proposal that would help solve California's long-term fiscal problems. The proposal is aimed at solving the State´s year-to-year structural deficit and to prevent future deficits.

Limits spending growth to percentage increase in personal income plus increase in population;

Creates the Revenue Estimating Conference – including the governor, the state legislative analyst and the controller – to estimate actual and anticipated revenue;

Distributes excess revenue among infrastructure, education and a sales-tax reduction.
ACAX5 1 was submitted to the Legislative Analysts Office for immediate review. The authors will work closely with the LAO staff and consider their recommendations. The language will also be distributed to statewide constituency groups for their input.

Other legislators in addition to Harman that are supporting of the measure include: Assemblymembers Joe Canciamilla (D-Pittsburg), Keith Richman (R- Northridge), Patricia Bates (R- Laguna Niguel), John Benoit (R- Riverside), Patty Berg (D- Eureka), Lou Correa (D- Santa Ana), Shirley Horton (R- Chula Vista), Carol Liu (D- La Canada Flintridge), Ken Maddox (R- Garden Grove), and Lois Wolk (D- Davis).

ACAX5 1 will now make its way through the legislative process. The measure must be approved by December 5, 2003 in order to be placed on the ballot in March, 2004.

Found it!

_____________________________________________________

BILL NUMBER: ACAX5 1 INTRODUCED
BILL TEXT

INTRODUCED BY Assembly Members Canciamilla, Richman, Bates, Benoit,
Berg, Correa, Harman, Shirley Horton, Liu, Maddox, and Wolk

NOVEMBER 18, 2003

Assembly Constitutional Amendment No. 1--A resolution to propose
to the people of the State of California an amendment to the
Constitution of the State, by amending Section 12 of, and adding
Sections 25 and 26 to, Article IV thereof, by adding Section 15 to
Article V thereof, by repealing and adding Article XIII B thereof,
and by amending Sections 1, 8, and 8.5 of, and adding Section 20 to,
Article XVI thereof, relating to state finance.

LEGISLATIVE COUNSEL'S DIGEST

   ACA 1, as introduced, Canciamilla. State finance.
   (1) Existing provisions of the California Constitution require the
Governor to submit annually to the Legislature a budget for the
ensuing year, and prescribe procedures for the Legislature to pass a
budget bill, as specified.
   This measure would, for the 2005-06 and subsequent fiscal years,
prohibit the budget bill and other bills as passed by the Legislature
from appropriating for a fiscal year more than an unspecified amount
based on estimated General Fund revenues for that fiscal year. The
measure would also prohibit appropriations in excess of estimated
General Fund revenues and would provide that an appropriation made in
violation of that provision would be null and void. This measure
would impose related duties on the Legislative Analyst.
   This measure would establish the Revenue Estimating Conference,
consisting of the Governor and the Controller, or their designees,
and the Legislative Analyst, which would be required to annually
prepare and publish estimates of General Fund revenue for the ensuing
fiscal year relative to determinations required under designated
provisions of the California Constitution.
   This measure would, on and after July 1, 2005, authorize the
Governor, at the end of any fiscal quarter, to propose reductions in
appropriations to bring estimated General Fund revenues and
expenditures for the fiscal year into balance. The proposed
reductions would become effective 30 calendar days after transmittal
to the Legislature unless the revenue shortfall is addressed by the
enactment of an appropriation from the Budget Reserve Fund, as
discussed below.
   (2) Existing provisions of the California Constitution require the
Legislature to establish a prudent state reserve fund, as specified.

   This measure would, on July 1, 2005, instead establish the Budget
Reserve Fund in the State Treasury, and require the annual deposit
into that fund of a specified percentage of General Fund revenues for
each fiscal year. The measure would also establish, on July 1,
2005, the Infrastructure Investment Fund for the construction and
maintenance of state capital outlay purposes pursuant to a designated
formula. The measure would prescribe conditions under which
deposits are to be made to, and appropriations may be made from,
those funds.
   (3) Existing provisions of the California Constitution prohibit
the creation of debts in excess of $300,000, except as specified.
   This measure would specify that this provision does not prohibit
the State from incurring obligations in anticipation of the receipt
of revenues that are due and payable within one year and within the
amounts of existing appropriations to which the resulting proceeds
are to be applied.
   (4) Existing provisions of the California Constitution prohibit
the annual appropriations subject to limitation, as defined, of any
entity of state or local government from exceeding the adjusted
annual appropriations limit applicable to that entity. These
provisions also require 50% of the excess revenues received by the
state in a fiscal year and the fiscal year immediately following it
to be transferred and allocated, from a fund established for that
purpose, to the State School Fund, and the remaining 50% of those
excess revenues to be returned by a revision of tax rates or fee
schedules within the next 2 subsequent fiscal years.
   This measure would, on July 1, 2005, repeal those provisions and
instead would impose separate limits on the expenditure of state
General Fund revenues and special fund revenues. The measure would
require excess General Fund revenues to be allocated in prescribed
amounts to the Infrastructure Investment Fund, to the State School
Fund, and to persons paying sales and use taxes.
   (5) Existing provisions of the California Constitution provide
that, whenever the Legislature or any state agency mandates a new
program or higher level of service on any local government, the state
is required to provide a subvention of funds to reimburse the local
government for the costs of the program or increased level of
service, with specified exceptions.
   This measure would, on and after July 1, 2005, prohibit the filing
of a claim for reimbursement for any mandate if no claim for that
reimbursement is filed within a 2-year period following the effective
date of the mandate.
   (6) Existing provisions of the California Constitution require
that from all state revenues there shall first be set apart the
moneys to be applied for support of public schools and higher
education institutions.
   This measure would require that from all state revenues there
shall be set apart second those moneys sufficient to service state
general obligation bonded indebtedness, and third those moneys
required to fund the Budget Reserve Fund as described above.
   Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.

   Resolved by the Assembly, the Senate concurring, That the
Legislature of the State of California at its 2003-04 Regular Session
commencing on the second day of December 2002, 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 12 of Article IV thereof is amended to read:
      SEC. 12. (a) Within the first 10 days of each calendar year,
the Governor shall submit to the Legislature, with an explanatory
message, a budget for the ensuing fiscal year containing itemized
statements for recommended state expenditures and estimated state
revenues. If recommended expenditures exceed estimated revenues, the
Governor shall recommend the sources from which the additional
revenues should be provided.
   (b) The Governor and the Governor-elect may require a state
agency, officer , or employee to furnish whatever
information is deemed necessary to prepare the budget.
   (c) (1) The budget shall be accompanied by a budget
bill itemizing recommended expenditures.   The

   (2) The budget bill shall be introduced immediately in each
house by the persons chairing the committees that consider
appropriations. The   the budget.
   (3) The Legislature shall pass the budget bill by midnight
on June 15 of each year.   Until
   (4) For the 2005-06 fiscal year, the budget bill as passed by the
Legislature may not appropriate from the General Fund, for that
fiscal year, a total amount that, combined with all appropriations
from the General Fund for that fiscal year enacted as of the date of
the budget bill's passage, would exceed an amount equal to 99 percent
of the General Fund revenues estimated for that fiscal year unless,
prior to the enactment of the budget bill, the transfer of moneys to
the Budget Reserve Fund for that fiscal year is suspended pursuant
subdivision (d) of Section 20 of Article XVI.
   (5) For the 2006-07 fiscal year, and each subsequent fiscal year,
the budget bill as passed by the Legislature may not appropriate from
the General Fund, for that fiscal year, a total amount that,
combined with all appropriations from the General Fund for that
fiscal year enacted as of the date of the budget bill's passage,
would exceed an amount equal to 97 percent of the General Fund
revenues estimated for that fiscal year unless, prior to the
enactment of the budget bill, the transfer of moneys to the Budget
Reserve Fund for that fiscal year is suspended pursuant subdivision
(d) of Section 20 of Article XVI.
   (6) Commencing July 1, 2005, upon the enactment of the budget
bill, and on a quarterly basis thereafter, the Legislative Analyst,
or his or her successor, shall submit to the Governor, the
Legislature, and the Controller statements of estimates, as
applicable, of the amounts of General Fund revenues as the
Legislative Analyst deems necessary for the Revenue Estimating
Conference to make the determinations required by Section 25.
   (7) Until the budget bill has been enacted, the Legislature
shall not send to the Governor for consideration any bill
appropriating funds for expenditure during the fiscal year for which
the budget bill is to be enacted, except emergency bills recommended
by the Governor or appropriations for the salaries and expenses of
the Legislature.
   (d) No bill except the budget bill may contain more than one item
of appropriation, and that for one certain, expressed purpose.
Appropriations from the General Fund of the State, except
appropriations for the public schools, are void unless passed in each
house by rollcall vote entered in the journal, two thirds
  two-thirds of the membership concurring.
   (e) The Legislature may control the submission, approval, and
enforcement of budgets and the filing of claims for all state
agencies.
   (f) (1) Commencing July 1, 2005, a bill appropriating General Fund
revenues from an account or fund, as the case may be, in the State
Treasury for any fiscal year may not be enacted if the appropriation
made by the bill as enacted, combined with all other General Fund
appropriations from that respective account or fund, enacted to date
for the same fiscal year, would exceed the General Fund revenues
estimated to be deposited in the account or fund for that fiscal
year, including any reserve funds pursuant to Section 20 of Article
XVI, as certified by the Revenue Estimating Conference. An
appropriation made in violation of this paragraph is null and void.
   (2) Paragraph (1) does not apply to appropriations that are
necessary in order to service state general obligation bonded
indebtedness.
  Second--That Section 25 is added to Article IV thereof, to read:
      SEC. 25. (a) There is hereby created the Revenue Estimating
Conference, which consists of the following persons:
   (1) The Governor, or his or her designee.
   (2) The Legislative Analyst, or his or her successor.
   (3) The Controller, or his or her designee.
   (b) By a majority vote of its membership, the conference shall
publish an estimate of total General Fund revenue for the ensuing
fiscal year, by account and fund, as necessary to meet the
requirements of the Constitution, including the publication of an
estimate between 20 and 40 days prior to June 15 of each year. The
conference shall designate in each estimate the amount of General
Fund revenue that is recurring and the amount that is nonrecurring.
   (c) The conference shall meet as often as necessary to perform its
functions.
   (d) The most recent estimate of General Fund revenue published by
the conference shall be used for purposes of all of the following:
   (1) The General Fund revenue estimate for purposes of paragraphs
(4) and (5) of subdivision (c) of Section 12.
   (2) Calculations for the purposes of subdivision (f) of Section
12.
   (3) The calculations made pursuant to Section 15 of Article V.
   (4) The calculations made pursuant to Article XIII B.
   (5) The calculations made pursuant to Sections 8, 8.5, and 20 of
Article XVI, including the calculation of the amount of funds that
are "General Fund proceeds of taxes" under Section 8 of Article XVI.

   (6) The calculation of the amount of revenues available for
transfer pursuant to Article XIX B.
  Third--That Section 26 is added to Article IV thereof, to read:
      SEC. 26. (a) As used in this section:
   (1) "Department of Finance" means the Department of Finance or a
successor agency.
   (2) "Excess revenues" means revenues transferred from the General
Fund to the Infrastructure Investment Fund pursuant to subdivision
(a) of Section 4 of Article XIII B.
   (b) The Infrastructure Investment Fund is hereby established in
the State Treasury for the purpose of funding capital outlay expenses
out of excess revenues.
   (c) Moneys transferred to the Infrastructure Investment Fund in
each fiscal year shall be appropriated and allocated by the
Legislature in accordance with the percentages set forth in
subdivisions (d) and (e) after consideration of a five-year plan for
funding infrastructure that shall be submitted annually by the
Governor to the Legislature.
   (d) Moneys shall be appropriated from the Infrastructure
Investment Fund for capital outlay purposes, as follows:
   (1) Fifty percent for acquisition, construction, rehabilitation,
modernization, or renovation of infrastructure that is owned, or is
to be acquired by, the State.
   (2) Twenty-five percent for acquisition, construction,
rehabilitation, modernization, or renovation of infrastructure,
including, but not limited to, streets, roads, highways,
transportation, water, parks, and open space, that is owned or is to
be acquired by cities, counties, a city and county, and special
districts.
   (3) Twenty-five percent for acquisition, construction,
rehabilitation, modernization, or renovation of infrastructure that
is owned or is to be acquired by school districts or community
college districts.
   (e) The Legislature may enact a statute that modifies, for one or
more fiscal years as set forth in the statute, the percentage shares
set forth in subdivision (d) by a bill passed in each house of the
Legislature by rollcall vote entered in the journal, two-thirds of
the membership concurring, provided that the bill does not contain
any other unrelated provision and that the moneys described in
subdivision (c) are expended solely for one or more of the purposes
set forth in subdivision (d).
  Fourth--That Section 15 is added to Article V thereof, to read:
      SEC. 15. (a) (1) At the end of any quarter of a fiscal year,
the Governor, in order to bring estimated General Fund revenues and
expenditures for that fiscal year into balance, may propose a
reduction to any appropriation for that fiscal year, except an
appropriation authorizing expenditures for the Legislature,
expenditures for the courts, expenditures referred to by Section 25
of Article XIII, expenditures pursuant to Section 6 of Article XIII
B, expenditures for education as described in Sections 8 and 8.5 of
Article XVI, and expenditures to service state general obligation
bonded indebtedness or other state debt service. The Governor may
propose one or more reductions under this section only upon issuing a
proclamation that declares that for the fiscal year the amounts
appropriated from the General Fund for that fiscal year will exceed
estimated General Fund revenues, as certified for accuracy by the
Revenue Estimating Conference, as follows:
   (A) For the 2005-06 fiscal year, by 1 percent or less.
   (B) For the 2006-07 fiscal year, and each fiscal year thereafter,
by 3 percent or less.
   (2) The Governor shall transmit to the Legislature the
proclamation, and a statement of the amounts of the revenue shortfall
and the proposed reductions pursuant to paragraph (1).
   (b) Any reduction proposed under subdivision (a) shall become
effective 30 calendar days after the proposal is transmitted to the
Legislature unless, prior to the end of the 30-day period, an
appropriation from the Budget Reserve Fund to cover the revenue
shortfall identified pursuant to subdivision (a) is enacted in
accordance with subdivision (e) of Section 20 of Article XVI.
   (c) For purposes of this section, a "quarter" is a three-month
period ending September 30, December 31, or March 31.
  Fifth--That Article XIII B thereof shall remain in effect only
until July 1, 2005, and as of that date is repealed.
  Sixth--That Article XIII B is added thereto, to read:
      ARTICLE XIII B
EXPENDITURE LIMIT

      SECTION 1. As used in this article:
   (a) "Emergency" means the existence, as declared by the Governor,
of conditions of disaster or of extreme peril to the safety of
persons and property within the State, or parts thereof, caused by
such conditions as attack or probable or imminent attack by an enemy
of the United States, fire, flood, drought, storm, civil disorder,
earthquake, or volcanic eruption.
   (b) "Local government" means any city, county, city and county,
school district, special district, authority, or other political
subdivision of or within the State.
   (c) "Percentage change in the cost of living," as applied to
determine the expenditure limit for a fiscal year, means the
percentage change from April 1 of the prior fiscal year to April 1 of
the current year in the California Consumer Price Index for all
items, as determined by the Department of Industrial Relations or its
successor. For purposes of this calculation, "current year" means
the calendar year in which the fiscal year commences.
   (d) "Proceeds of state taxes" means taxes levied by or for the
State, exclusive of taxes apportioned to (1) state subventions for
the use and operation of local government, (2) refunds of taxes, (3)
benefit payments from retirement, unemployment insurance, or
disability insurance funds, and (4) the investment of tax revenues.
      SEC. 2. (a) For the 2005-06 fiscal year, total expenditures of
General Fund revenues may not exceed ____.
   (b) (1) For the 2006-07 fiscal year, and each subsequent fiscal
year, the total expenditures made in a fiscal year of General Fund
revenues may not exceed the amount of those total expenditures
allowed in the prior fiscal year, as increased by the percentage
increase from the prior fiscal year in California per capita personal
income plus the percentage increase during that period in the state
population.
   (2) If the percentage growth in the amount required to be applied
for the support of school districts and community college districts
pursuant to Section 8 of Article XVI is greater than the total
percentage increase calculated under paragraph (1), the total
expenditures allowed by paragraph (1) shall be increased by an amount
equal to the result of the following calculation:
   (A) Subtract the total percentage increase calculated under
paragraph (1) from the percentage growth in the amount required to be
applied for the support of school districts and community college
districts pursuant to Section 8 of Article XVI.
   (B) Multiply the percentage resulting from the calculation in
subparagraph (A) by the growth from the prior fiscal year in the
dollar amount required to be applied for the support of school
districts and community college districts pursuant to Section 8 of
Article XVI.
   (c) For the 2005-06 fiscal year, the total expenditures of all
state special fund revenues that receive the proceeds of state taxes
may not exceed ____.
   (d) For the 2006-07 fiscal year, and each subsequent fiscal year,
the total expenditures of all state special fund revenues may not
exceed the amount of those total expenditures allowed in the prior
fiscal year, as increased by the percentage increase from the prior
fiscal year in the cost of living plus the percentage increase during
that period in the state population.
      SEC. 3. An expenditure limit determined pursuant to Section 2
may be exceeded as necessary to respond to an emergency. Any such
excess expenditure is not part of the expenditure base for that
fiscal year for the purposes of determining the expenditure limit
pursuant to Section 2 for the next fiscal year.
      SEC. 4. Any General Fund revenues that may not be expended in
the current fiscal year due to the expenditure limit imposed by this
article shall be allocated as follows:
   (a) To the Infrastructure Investment Fund, to the extent that this
fund contains an amount less than 5 percent of the total amount of
allowable expenditures for the current fiscal year. The transfer of
excess General Fund revenues to the Infrastructure Investment Fund
may be suspended, in whole or in part, for a fiscal year if both of
the following conditions are met:
   (1) The Governor has issued a proclamation that declares an
emergency.
   (2) The Legislature enacts by statute, pursuant to a bill passed
in each house of the Legislature by rollcall vote entered in the
journal, two-thirds of the membership concurring, a suspension for
that fiscal year of the transfer of those revenues, provided that the
bill does not contain any other unrelated provision.
   (b) Revenue that exceeds the amount that may be deposited into the
Infrastructure Investment Fund shall be allocated as follows:
   (1) Fifty percent shall be transferred and allocated pursuant to
Section 8.5 of Article XVI.
   (2) Fifty percent shall be paid as a one-time rebate of sales and
use taxes paid by persons, pursuant to a formula provided by statute.

   (c) Special fund revenues that may not be expended in the current
fiscal year due to the expenditure limit imposed by this article
shall be rebated to the payor, to the extent practicable, as provided
by statute.
      SEC. 5. If the financial responsibility for providing services
is transferred, in whole or in part, from the state government to an
entity of local government, then the amount of allowable spending in
the year that the transfer is implemented shall be reduced by an
amount equal to the cost of providing the transferred services, to
prevent an effective increase in the level of allowable state
spending. For the purposes of this section, a transfer of financial
responsibility for providing services does not include any mandate of
a program or level of service for which reimbursement is required by
Section 8.
      SEC. 6. The following expenditures are not subject to the
expenditure limits determined pursuant to Section 2:
   (a) Expenditures that federal law requires the State to make,
whether in the form of funding for additional services or an increase
in the cost of providing existing services. This paragraph does not
apply to expenditures that are not required, but are made by the
State to qualify for a benefit under federal law.
   (b) Expenditures to pay state general obligation bonded
indebtedness.
   (c) Expenditures made pursuant to Section 26 of Article IV.
   (d) Expenditures pursuant to Section 35 of Article XIII.
   (e) Expenditures of money allocated pursuant to paragraph (1) or
(2) of subdivision (b) of Section 4.
   (f) Expenditures pursuant to Section 8.5 of Article XVI.
   (g) Deposits into, and expenditures from, the Budget Reserve Fund
created by Section 20 of Article XVI.
   (h) Expenditures or loans made pursuant to Article XIX or XIX A.
   (i) Expenditures made pursuant to Article XIX B.
   (j) Expenditures of moneys deposited into the General Fund that
are received from the federal government.
   (k) Expenditures from the Cigarette and Tobacco Products Surtax
Fund created by the Tobacco Tax and Health Protection Act of 1988.
   (l) Expenditures from the California Children and Families First
Trust Fund created by the California Children and Families First Act
of 1998.
   (m) Expenditures pursuant to the After School Education and Safety
Program Act of 2002.
   (n) Expenditures of the proceeds of state general obligation
bonds.
      SEC. 7. (a) As used in Section 7.5 of Article IV, "the
percentage increase in the appropriations limit for the State
established pursuant to Article XIII B" means the percentage change
in California per capita personal income from the prior year, plus
(1) the percentage change in the state's population multiplied by the
percentage change in the state's budget in the prior fiscal year
that is expended for other than educational purposes for kindergarten
and grades 1 to 12, inclusive, and the community colleges, and (2)
the percentage change in the total statewide average daily attendance
in kindergarten and grades 1 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 1 to 12, inclusive, and the community
colleges.
   (b) As used in Section 8 of Article XVI, "change in the cost of
living pursuant to paragraph (1) of subdivision (e) of Section 8 of
Article XIII B" means the percentage change in California per capita
personal income from the prior year.
      SEC. 8. (a) Whenever the Legislature or any state agency
mandates a new program or higher level of service on any local
government, the State shall provide a subvention of funds to
reimburse the local government for the costs of that program or
increased level of services, except that the Legislature may, but is
not required to, provide that subvention of funds for the following
mandates:
   (1) A legislative mandate requested by the local government
affected.
   (2) Legislation defining a new crime or changing an existing
definition of a crime.
   (3) A legislative mandate enacted prior to January 1, 1975, or an
executive order or regulation initially implementing legislation
enacted prior to January 1, 1975.
   (b) A claim may not be filed for reimbursement pursuant to
subdivision (a) for any mandate if more than two years have passed
since the effective date of the mandate and no claim for that
reimbursement was filed in that period.
   (c) For the purposes of this section, "local government" means a
city, county, city and county, school district, special district,
authority, or other political subdivision of or within the State.
  Seventh--That Section 1 of Article XVI thereof is amended to read:

      SECTION 1.   The   (a) (1) The
Legislature shall not , in any manner create any
debt or debts, liability or liabilities, which
that shall, singly or in the aggregate with any previous
debts or liabilities, exceed the sum of three hundred thousand
dollars ($300,000), except in case of war to repel invasion or
suppress insurrection, unless the same shall be authorized by law for
some single object or work to be distinctly specified therein
which . That law shall comply with
all of the following conditions:
   (A) The law shall provide ways and means, exclusive of
loans, for the payment of the interest of such
that debt or liability as it falls due, and also to pay
and discharge the principal of such   that
debt or liability within 50 years of the time of the
contracting thereof, and shall be irrepealable until the principal
and interest thereon shall be paid and discharged , and such
  .
   (B) The law may make provision
provide for a sinking fund to pay the principal of
such   that debt or liability to commence at a
time after the incurring of such   that
debt or liability of not more than a period of one-fourth of the time
of maturity of such   that debt or
liability ; but no   .
   (C) Any such law shall   may not
take effect unless it has been passed by a two-thirds vote of all
the members elected to each house of the Legislature and until, at a
general election or at a direct primary, it shall have been submitted
to the people and shall have received a majority of all the votes
cast for and against it at such   that
election ; and all   .
   (D) All moneys raised by authority of such
  that law shall be applied only to the specific
object therein stated or to the payment of the debt thereby created.
Full
   (E) Full publicity as to matters to be voted upon by the
people is afforded by the setting out of the complete text of the
proposed laws, together with the arguments for and against them, in
the ballot pamphlet mailed to each elector preceding the election at
which they are submitted, and the only requirement for publication of
such   that law shall be that it be set
out at length in ballot pamphlets which   that
the Secretary of State shall cause to be printed. The

   (2) The Legislature may, at any time after the approval
of such law by the people of the law referred
to in paragraph (1) , reduce the amount of the indebtedness
authorized by the law to an amount not less than the amount
contracted at the time of the reduction, or it may repeal the law if
no debt shall have   has been contracted
in pursuance thereof.
   Notwithstanding
   (b) Notwithstanding any other provision of this
Constitution, Members of the Legislature who are required to meet
with the State Allocation Board shall have equal rights and duties
with the nonlegislative members to vote and act upon matters pending
or coming before such   the board for the
allocation and apportionment of funds to school districts for school
construction purposes or purposes related thereto.
   Notwithstanding
   (c) Notwithstanding any other provision of this constitution,
or of any bond act to the contrary, if any general obligation bonds
of the State heretofore or hereafter authorized by vote of the people
have been offered for sale and not sold, the Legislature may raise
the maximum rate of interest payable on all general obligation bonds
authorized but not sold, whether or not such
the bonds have been offered for sale, by a statute passed by a
two-thirds vote of all members elected to each house thereof.

   The
   (d) The provisions of Senate Bill No. 763 of the 1969
Regular Session, which authorize an increase of the state general
obligation bond maximum interest rate from 5 percent to an amount not
in excess of 7 percent and eliminate the maximum rate of interest
payable on notes given in anticipation of the sale of such
  the bonds, are hereby ratified .
   (e) This section does not prohibit the State from incurring an
obligation in any amount that is in anticipation of the receipt of
taxes and other revenues that may be applied to the payment of that
obligation, for the purposes and not exceeding the amounts of
existing appropriations to which the resulting proceeds are to be
applied, if that obligation is due and payable no later than one year
following the date that it was incurred.
  Eighth--That Section 8 of Article XVI thereof is amended to read:
      SEC. 8. (a) From all state revenues there shall first
be set apart first the moneys to be applied by
the State for support of the public school system and public
institutions of higher education , second those moneys
sufficient to service state general obligation bonded indebtedness,
and third, commencing July 1, 2005, those moneys required to fund the
Budget Reserve Fund pursuant to Section 20. Remaining moneys may be
appropriated subject to any other restriction imposed by this
Constitution .
   (b) Commencing with the 1990-91 fiscal year, the moneys to be
applied by the State for the support of school districts and
community college districts shall be not less than the greater of the
following amounts:
   (1) The amount which   that , as a
percentage of General Fund revenues which that
may be appropriated pursuant to Article XIII B, equals the
percentage of General Fund revenues appropriated for school districts
and community college districts, respectively, in fiscal year
1986-87.
   (2) The amount required to ensure that the total allocations to
school districts and community college districts from General Fund
proceeds of taxes appropriated pursuant to Article XIII B and
allocated local proceeds of taxes shall not be less than the total
amount from these sources in the prior fiscal year, excluding any
revenues allocated pursuant to subdivision (a) of Section 8.5,
                                   adjusted for changes in enrollment
and adjusted for the change in the cost of living pursuant to
paragraph (1) of subdivision (e) of Section 8 of Article XIII B.
This paragraph shall be operative only in a fiscal year in which the
percentage growth in California per capita personal income is less
than or equal to the percentage growth in per capita General Fund
revenues plus one half   one-half of
one   1 percent.
   (3) (A) The amount required to ensure that the total allocations
to school districts and community college districts from General Fund
proceeds of taxes appropriated pursuant to Article XIII B and
allocated local proceeds of taxes shall equal the total amount from
these sources in the prior fiscal year, excluding any revenues
allocated pursuant to subdivision (a) of Section 8.5, adjusted for
changes in enrollment and adjusted for the change in per capita
General Fund revenues.
   (B) In addition, an amount equal to one-half of one percent times
the prior year total allocations to school districts and community
colleges from General Fund proceeds of taxes appropriated pursuant to
Article XIII B and allocated local proceeds of taxes, excluding any
revenues allocated pursuant to subdivision (a) of Section 8.5,
adjusted for changes in enrollment.
   (C) This paragraph (3) shall be operative only
in a fiscal year in which the percentage growth in California per
capita personal income in a fiscal year is greater than the
percentage growth in per capita General Fund revenues plus
one half   one-half of one
1 percent.
   (c) In any fiscal year, if the amount computed pursuant to
paragraph (1) of subdivision (b) exceeds the amount computed pursuant
to paragraph (2) of subdivision (b) by a difference that exceeds one
and one-half percent of General Fund revenues, the amount in excess
of one and one-half percent of General Fund revenues shall not be
considered allocations to school districts and community colleges for
purposes of computing the amount of state aid pursuant to paragraph
(2) or 3   (3) of subdivision (b) in the
subsequent fiscal year.
   (d) In any fiscal year in which school districts and community
college districts are allocated funding pursuant to paragraph (3) of
subdivision (b) or pursuant to subdivision (h)
(g) , they shall be entitled to a maintenance factor,
equal to the difference between (1) the amount of General Fund moneys
which   that would have been
appropriated pursuant to paragraph (2) of subdivision (b) if that
paragraph had been operative or the amount of General Fund moneys
which   that would have been appropriated
pursuant to subdivision (b) had subdivision (b) not been suspended,
and (2) the amount of General Fund moneys actually appropriated to
school districts and community college districts in that fiscal year.

(e) The maintenance factor for school districts and community
college districts determined pursuant to subdivision (d) shall be
adjusted annually for changes in enrollment, and adjusted for the
change in the cost of living pursuant to paragraph (1) of subdivision
(e) of Section 8 of Article XIII B, until it has been allocated in
full. The maintenance factor shall be allocated in a manner
determined by the Legislature in each fiscal year in which the
percentage growth in per capita General Fund revenues exceeds the
percentage growth in California per capita personal income. The
maintenance factor shall be reduced each year by the amount allocated
by the Legislature in that fiscal year. The minimum maintenance
factor amount to be allocated in a fiscal year shall be equal to the
product of General Fund revenues from proceeds of taxes and one-half
of the difference between the percentage growth in per capita General
Fund revenues from proceeds of taxes and in California per capita
personal income, not to exceed the total dollar amount of the
maintenance factor.
(f) For purposes of this section, "changes in enrollment" shall be
measured by the percentage change in average daily attendance.
However, in any fiscal year, there shall be no adjustment for
decreases in enrollment between the prior fiscal year and the current
fiscal year unless there have been decreases in enrollment between
the second prior fiscal year and the prior fiscal year and between
the third prior fiscal year and the second prior fiscal year.

   (h)
   (g) Subparagraph (B) of paragraph (3) of subdivision (b) may
be suspended for one year only when made part of or
included within any   by a bill enacted pursuant
to Section 12 of Article IV. All other provisions of subdivision (b)
may be suspended for one year by the enactment of an urgency statute
pursuant to Section 8 of Article IV, provided that the
urgency   which statute may not be made part of or
included within any bill enacted pursuant to Section 12 of Article
IV.
  Ninth--That Section 8.5 of Article XVI thereof is amended to read:

      SEC. 8.5. (a) In addition to the amount required to be applied
for the support of school districts and community college districts
pursuant to Section 8, the Controller shall , during each
fiscal year , transfer and allocate all revenues available
pursuant to paragraph 1   (1) of
subdivision (a)   (b) of Section
2   4 of Article XIII B to that portion of the
State School Fund restricted for elementary and high school purposes,
and to that portion of the State School Fund restricted for
community college purposes, respectively, in proportion to the
enrollment in school districts and community college districts
respectively.
   (1) With respect to funds allocated to that portion of the State
School Fund restricted for elementary and high school purposes, no
transfer or allocation of funds pursuant to this section shall be
required at any time that the Director of Finance and the
Superintendent of Public Instruction mutually determine that current
annual expenditures per student   pupil
equal or exceed the average annual expenditure per student
  pupil of the 10 states with the highest annual
expenditures per student   pupil for
elementary and high schools, and that average class size equals or is
less than the average class size of the 10 states with the lowest
class size for elementary and high schools.
   (2) With respect to funds allocated to that portion of the State
School Fund restricted for community college purposes, no transfer or
allocation of funds pursuant to this section shall be required at
any time that the Director of Finance and the Chancellor of the
California Community Colleges mutually determine that current annual
expenditures per student for community colleges in this State equal
or exceed the average annual expenditure per student of the 10 states
with the highest annual expenditures per student for community
colleges.
   (b) Notwithstanding the provisions of Article XIII B,
funds allocated pursuant to this section shall not constitute
appropriations subject to limitation.
   (c) From any funds transferred to the State School Fund
pursuant to subdivision (a), the Controller shall each year allocate
to each school district and community college district an equal
amount per enrollment in school districts from the amount in that
portion of the State School Fund restricted for elementary and high
school purposes and an equal amount per enrollment in community
college districts from that portion of the State School Fund
restricted for community college purposes.
   (d)
   (c) All revenues allocated pursuant to subdivision (a) shall
be expended solely for the purposes of instructional improvement and
accountability as required by law.
   (e)
   (d) Any school district maintaining an elementary or
secondary school shall develop and cause to be prepared an annual
audit accounting for such funds and shall adopt a School
Accountability Report Card for each school.
  Tenth--That Section 20 is added to Article XVI thereof, to read:
      SEC. 20. (a) The Budget Reserve Fund is hereby established in
the State Treasury.
   (b) (1) In addition to all moneys that are transferred to the
Budget Reserve Fund pursuant to subdivision (c), all moneys that are
deposited in any fund established by the Legislature pursuant to the
predecessor to this section as set forth in former Section 5.5 of
Article XIII B, as that section read on July 1, 2004, shall be
transferred to the Budget Reserve Fund.
   (2) Moneys in the Budget Reserve Fund shall be invested in a
manner consistent with prudent investment practices so as to yield
income at competitive market rates. Interest and other income
generated by moneys in the Budget Reserve Fund so invested shall be
deposited into that fund.
   (3) Moneys in the Budget Reserve Fund shall accumulate in that
fund and shall carry over from one fiscal year to the next.
   (c) (1) On July 1, 2005, the Controller shall transfer from the
General Fund to the Budget Reserve Fund a sum equal to 1 percent of
the estimated amount of General Fund revenue for the 2005-06 fiscal
year as determined pursuant to Section 25 of Article IV.
   (2) On July 1, 2006, and annually thereafter, the Controller shall
transfer from the General Fund to the Budget Reserve Fund a sum
equal to 3 percent of the estimated amount of General Fund revenue
for the current fiscal year as determined pursuant to Section 25 of
Article IV.
   (d) The transfer of moneys from the General Fund to the Budget
Reserve Fund pursuant to subdivision (c) may be suspended, in whole
or in part, for a fiscal year only if both of the following
conditions are met:
   (1) Either of the following occurs:
   (A) The Governor has issued a proclamation that declares both of
the following:
   (i) That there is either an emergency involving the health,
safety, or welfare of the residents of this State, or a downturn in
the economy resulting in significant unanticipated revenue shortfalls
that cannot be dealt with through the normal budget process.
   (ii) That the conditions set forth in clause (i) require that the
transfer of moneys pursuant to subdivision (c) be suspended, in whole
or in part.
   (B) (i) At the time that the Governor submits a budget to the
Legislature pursuant to Section 12 of Article IV, the Governor
certifies that the amount in the Budget Reserve Fund then equals or
exceeds 10 percent of the estimated amount of General Fund revenue
for the ensuing fiscal year.
   (ii) Between 100 and 130 calendar days after the Governor submits
a budget to the Legislature pursuant to Section 12 of Article IV, the
Revenue Estimating Conference certifies that the amount in the
Budget Reserve Fund then equals or exceeds 10 percent of the
estimated amount of General Fund revenue for the ensuing fiscal year.

   (2) The Legislature enacts by statute, pursuant to a bill passed
in each house of the Legislature by rollcall vote entered in the
journal, two-thirds of the membership of each house concurring, a
suspension for that fiscal year of the transfer of moneys pursuant to
subdivision (c), provided that the bill does not contain any other
unrelated provision.
   (e) Appropriations may be made from the Budget Reserve Fund by
statute, pursuant to a bill passed in each house of the Legislature
by rollcall vote entered in the journal, two-thirds of the membership
of each house concurring, provided that the bill does not contain
any other unrelated provision. An appropriation may be made from the
Budget Reserve Fund only if one of the following additional
conditions is met prior to passage of the bill making the
appropriation:
   (1) The Governor has issued a proclamation that declares that the
appropriation or appropriations are necessary to address either (A)
an emergency involving the health, safety, or welfare of the
residents of the State, or (B) a downturn in the economy that has
resulted in significant unanticipated revenue shortfalls that cannot
be dealt with through the normal budget process, with the result that
vital public services are at risk.
   (2) The Governor has issued a proclamation that declares, and the
Revenue Estimating Conference has certified, that, after any one or
more transfers or appropriations made pursuant to this paragraph,
there will remain in the Budget Reserve Fund an amount equal to at
least 5 percent of the estimated amount of General Fund revenue for
that fiscal year. Moneys in the Budget Reserve Fund may be
transferred or appropriated, as applicable, pursuant to this
paragraph only for one or both of the following purposes:
   (A) An appropriation to reduce general obligation bonded
indebtedness of the State.
   (B) An appropriation made pursuant to subdivision (b) of Section
15 of Article V.
   (f) Funds deposited into the Budget Reserve Fund derived from
investing moneys in the Budget Reserve Fund pursuant to paragraph (2)
of subdivision (b) shall not be considered "General Fund revenues"
or "General Fund proceeds of taxes" within the meaning of Section 8
of Article XVI.
  Eleventh--That the second, third, fourth, sixth, ninth, and tenth
sections of this measure shall become operative on July 1, 2005.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.