Posted on 10/28/2005 12:48:12 PM PDT by calcowgirl
When the dot-com boom was upon us, the state was taking in huge amounts of income tax from capital gains on stock options. When the dot-com bust hit, the spending had been locked into permanent formulas. This fundamental problem; one-time money going into permanent spending formulas; is at the heart of Proposition 76, "Live within our means."
Because we haven't been living within our means, we've spent more than we had for each of the last six years; we've tapped out our state credit card, raided funds intended for schools and roads and bump along with the worst bond rating of the 50 states, costing us hundreds of millions of dollars in extra interest every year. The tired, defeatist answer is, just raise taxes. But we've spent more than we received in taxes every one of the last six years.
There is a better way. Proposition 76 requires that state expenditures grow more smoothly. Rather than allowing a one-time spike in revenues to add to permanent spending formulas, Proposition 76 specifies that the state can only increase its spending over the previous year by a percentage equal to the previous three years' revenue growth. We're still paying for having put our spending into high gear based on one-time money at the end of the 1990s. This will stop that. If a year is exceptionally high in state revenue, the extra will go into a reserve, to be available for leaner years.
Proposition 76 requires an honest call on what the state's revenues and expenditures actually are, made at least every quarter. If we're off by a significant amount, the Legislature gets 45 days to fix it. If they fail, then the governor must act. If the Legislature does not like some of the governor's cuts, they can put the money back in; but they've got to find an equal amount elsewhere to reduce.
Proposition 76 makes one other important reform. Every year, the state ends the year without an on-time budget. School districts, vendors to the state, cities and counties, can't plan as payments from the state are reduced or frozen. Instead of this chaotic situation, Proposition 76 continues the previous year's budget until we get a new one.
You've probably seen the attack ads on television, saying Proposition 76 will cut education funding. They are false. The nonpartisan California Taxpayers Association has estimated that education funding will increase under Proposition 76, as compared with current law. Indeed, under existing law, no payment above the minimum is required for education unless per capita growth in revenue exceeds per capita growth in personal income, a situation that is unlikely to occur next year, and not guaranteed to occur in any given year.
Proposition 76 smoothes out education funding so that in the low-revenue years more money will go to education. During high revenue years, the Legislature can choose to add more to education, without making the increase automatically go into the base forevermore. For that very reason, it's likely the Legislature will add more than the minimum.
One-time money should go for one-time purposes, not permanent spending formulas. That's what Proposition 76 does, and it will improve every aspect of our state's finances, especially those for education.
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Campbell is on leave as state director of finance.
Bump for later read.
YES ON 76.
Yes on Arnie's Reform Package.
An odd comment from a person who is asking the electotrate to borrow billions more through the passage of Prop 76.
KISS. The obvious answer is that Cambell is attempting to hide the borrowing from the voters.
Vote Republican and borrow to fuel increased spending. Vote Democrat and raise taxes to allow increased spending.
Beside the desire to increase spending both parties seem to have another belief in common: A majority of the California electorate is so lazy that it depends on politicans to educate them regarding the facts.
We already have to "live within our means" and have a balanced budget--it is law. And we already have a process for mid-year overruns (enacted last year under prop 58).
The only reason they need Prop 76 is to authorize the new bonds, defer more expense, and lock in the debt service payments (to allow new infrastructure bonds).
Prop 76 is another sham. No on 76!
Congratulations. You get it.
One of the key demands of the lending community is that California constitutionally protect the lenders on the Prop 58 bonds. Without that protection California's bond rating will continue to suffer. Not only for the until recently illegal borrowing to support General Fund expenditures but also the traditional borrowing to allow infrastructure improvement.
Prop 76 is about California's creditworthiness. On its face to control spending during unforeseen economic downturns, midyear corrections, but at its heart, protections for California's creditors from the whims of California's political class.
Voting NO of Prop 76 obviously cripples the political class in California if they seek to continue spending increases in the face of insufficient traditional revenues but the electorate need to take care not to throw out the baby with the bath water. Each voter needs to decide. Is the continued borrowing so destructive that infrastructure must suffer until the political class gets the message?
I suggest YES. I reach that conclusion because both parties won't listen.
Too bad this discussion among us has been way beyond 99% of the electorate.
No reduction may be made in appropriations for debt service, appropriations necessary to comply with federal laws and regulations, or appropriations where the result of a reduction would be in violation of contracts to which the State is a party.
I believe borrowing for day to day expenses is very dangerous and, as such, has always been prohibited by the Constitution for a reason. This new borrowing trend (starting with Prop 57/58) will become common practice if it is not exposed and stopped in its tracks. I'm with you and Carry_Okie. I'd rather see us hit the wall sooner rather than later and make the spending class put the choice before the people. If they want to keep spending at this rate, they need to raise taxes. If not, they need to cut. It really is a simple choice. Unforutnately, our (D) and (R) spending class would prefer to mask the fundamentals.
No reduction may be made in appropriations for debt service, appropriations necessary to comply with federal laws and regulations, or appropriations where the result of a reduction would be in violation of contracts to which the State is a party.
...is buried in Section 4 of the Proposed Law (Prop 76) and adds the above language to Number (5), under Part (g), in Subsection (C), under Number (5), of Part (f), of Section (10) of Article IV, contained in Section 10 of the California Constitution.
What I do expect is that California's press should have informed California's electorate of the implications of the added language.
That's the problem with direct democracy.
The whim of an uneducated mob is oft times unappreciative of fact, logic, or the subtleties of unintended consequences.
The mob's instigators and its leaders are, however, not so immune to the effacy of ignorance. In our present circumstances the political class has betrayed the mob, as it usually does.
I often wonder whether California's politicians would be so anxious to invoke mob rule if the mob carried guns instead of ballots.
In one simple sentence, all the rationale anyone needs to vote NO on Prop. 76.
Tom McClintock: "Proposition 76: State Spending. Should government live within its means? YES. This measure restores the authority that the governor of California had between 1939 and 1983 to make mid-year spending cuts whenever spending outpaces revenue without having to return to the legislature. "
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THE CA PROPOSITIONS; Democratic and Republican activists discuss the propositions
Dean urges voters to reject measures governor supports [California]
CA: Feinstein to oppose Schwarzenegger's special election initiatives
John Alden (Marin cnty Dem Party chairman): Vote no on Prop 76 - we need better leaders
McClintock's recommendations for CA Propositions
Summary of Recommendations on the CA Propositions by various organizations and parties
CA: McClintock stumps for governor's ballot initiatives
Supporters of the CA Propositions 74-77 include CA Club for Growth, Howard Jarvis Taxpayer Association, Ray Haynes, San Fernando Valley Town Hall Conservatives, Republican Party, and many others. Click on the link for a more comprehensive list.
And you can see from links above who are the ones opposing them: Democrats, Unions, Howard Dean, various Dem party chairmen, etc.
The only reason they need Prop 76 is to authorize the new bonds, defer more expense, and lock in the debt service payments (to allow new infrastructure bonds).
("Denny Crane: Gun Control? For Communists. She's a liberal. Can't hunt.")
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