Skip to comments.California Just Passed One Law To Fix Its Yearly Budget Crisis, And Two Laws To Make It Worse
Posted on 11/05/2010 7:15:47 AM PDT by SeekAndFind
Prop 19 went down in smoke, but the world's fifth biggest economy passed three propositions that address its yearly budget crisis.
One makes it better and two make it worse, according to Bond Buyer.
First, California voters passed Prop 25 to allow the legislature to pass a state budget without a 2/3 supermajority. This was the main obstacle to passing a budget this year for over 100 days past due. Arkansas and Rhode Island are the only states that still require a supermajority to pass the budget, and Rhode Island is another fiscal disaster.
Second, California voters passed Prop 26 to force the legislature to have a supermajority to levy new fees. Whoops.
Third, they passed Prop 22 to limit the state's ability to shift funds from local governments and agencies. Whoops again. Overpaid and corrupt local governments and powerful agencies are probably the number one thing bankrupting California every year.
(Excerpt) Read more at businessinsider.com ...
This analysis from the BOND BUYER...
California May Have Seen Its Last Late Budget
by Rich Saskal
ALAMEDA, Calif. Late budgets will be a thing of the past, a key California lawmaker promised Wednesday, a day after the state’s voters approved a measure that allows spending plans to pass the Legislature with a majority vote instead of two-thirds.
“Certainly there is no reason for a late budget again with the passage of Proposition 25,” the Senate’s president pro tem, Darrell Steinberg, D-Sacramento, said at a press conference Wednesday.
Getting the budget balanced, however, might be even harder than it was before, after voters passed two other measures that take money from the general fund.
California has a history of late budgets. It set a new record for tardiness this year when lawmakers approved the budget 100 days after the fiscal year started.
Proposition 25 allows a state budget to pass with a majority vote in each house of the Legislature, though it does not change the two-thirds supermajority requirement to increase taxes. Meanwhile, Proposition 26, which also passed, clouds the process by requiring two-thirds supermajorities to adopt fees that previously required a majority.
Voters also approved Proposition 22, which limits the state’s ability to shift funds from local governments and agencies.
“Voters gave with one hand and took with the other with Prop. 26 and Prop. 22,” Steinberg said.
Regardless, Steinberg said, the majority party’s new ability to pass budgets on a majority vote will bring an end to budget delays.
“It is such a symbol of the dysfunction here in Sacramento, and it is incumbent upon us to get it done in time,” he said.
The Legislature’s cast of characters hasn’t changed dramatically. Several members were forced out by term limits, but despite the national GOP wave, only one California seat changed parties, and that open Sacramento-area Assembly seat flipped to Democratic control from Republican, giving Democrats a 52-28 edge there. They have a 24-15 advantage in the Senate, with one open seat.
There will be a new governor or perhaps it’s better to say a different governor, since Jerry Brown, 72, is returning to the statehouse from a 28-year absence after serving two terms from 1975 to 1983.
He’s the second Californian to win three terms as governor. Barring an unexpected comeback from the 82-year-old George Deukmejian, he’ll also be the last, thanks to term-limit rules that took effect after his first statehouse stint.
With the departure of Republican Arnold Schwarzenegger, Democrats control the governor’s office and the Legislature. The same was true during Brown’s first go-round in Sacramento, but that didn’t mean Brown had a good relationship with lawmakers. His vetoes, for example, were overridden a dozen times, something that has never happened since.
Brown has changed over the years, according to Sacramento veteran Barbara O’Connor, director emeritus of the Institute for the Study of Politics and Media at California State University, Sacramento. Brown appointed her to chair the California Public Broadcasting Commission in the 1970s.
“It is a different Jerry Brown, and I don’t think people recognize that yet,” she said.
Brown has promised intensive collaborative discussions with the entire Legislature over the budget, starting Thursday.
At his news conference Wednesday, Brown restated the principals he announced during his campaign saying he’s not going to easily agree to new taxes.
“He’s going to be the one saying, ‘No, you can’t do that,’ “ O’Connor said.
“We have to make tough choices, we have to live within our means, we have to move as much government and responsibility as we can to the local level,” Brown said Wednesday. “No taxes unless the people make it clear what they want and they make it clear in an actual vote of the electorate.”
California’s budget problems got worse Tuesday. Proposition 22 and Proposition 26 each have an immediate impact on the general fund.
Moody’s Investors Service already projected that the state would face a $12 billion structural deficit in its next budget cycle.
According to the Legislative Analyst’s Office, Proposition 22, the measure that prohibits the state from shifting funds away from local governments, prohibits the state’s current practice of using transportation funds to pay debt service for transportation-related general obligation bonds. That will cost the general fund about $1 billion a year.
The proposition also bars the state from repeating its recent fund shift that cost redevelopment agencies $2 billion to help balance the 2010 general fund budget.
Proposition 26, in addition to making it harder to raise revenue through fee increases, will also affect an accounting maneuver the Legislature approved in 2010, swapping the sales tax on gasoline for an excise tax. The overall effect was revenue neutral, but it saved the general fund $1 billion a year, according to the LAO, which will now be lost unless lawmakers approve it by a two-thirds margin.
Brown has to deliver his first budget proposal within two weeks of his Jan. 3 inauguration.
One step forward and two steps back, you’re doin’ the liberal shuffle.........
I don’t see a problem. Pass a budget using existing revenue. No new “fees” and no robbing local government.
Redistricting may help this some, but probably not enough with the overabundance of libs out here.
Brown will be doomed from the start. Arnie signed a late budget that contained rosy revenue forcasts, including some dollars from the feds that we now know are not gonna come. We've now had deficit budgets long enough that all the easy cuts have been made and Brown will not have any good chices available to him.
Which I believe enables them to merely deem new fees and taxes.
Soon as it happens and gets out of control, I am out of here.
“It is such a symbol of the dysfunction here in Sacramento”
It’s actually a symbol of the unwillingness to cut expenses.
The other prop restricting fees does not apply to taxes, yes?
So the price for getting your license doesn’t go up w/o 2/3 vote, but income, property, sales, and vice (excise taxes) go up on simple majority, along w/that timely budget.
How did Moonbeam do as mayor of Oakland? Is the city’s economy getting better or worse?
Voters also approved Proposition 22, which limits the states ability to shift funds from local governments and agencies.
Anyone who thinks these two props are bad have rocks in their head. A 2/3 majority should be required to pass "fees"(another name for taxes)and taxes. I don't like doing away with the 2/3 majority for the budget, but it isn't so bad as long as these two things are in place. The last thing CA needs are more taxes and fees.
BTW, California also REJECTED Proposition 23 resoundingly, which would have limited the environmental requirements of law AB 32, California’s anti-greenhouse gas law.
AB 32 was signed into law by Gov. Arnold Schwarzenegger on September 27, 2006, and mandates the following:
1. Reducing Greenhouse Gas (GHG) emissions to 1990 levels by 2020.
2. Producing one-third of the state’s electricity from renewable sources of energy by 2020.
The intent of Prop 23 is to delay the implementation of AB 32 until unemployment levels in California drop to 5.5 percent or less over four consecutive quarters.
It is not surprising that President Barack Obama and former U.S. Vice President Al Gore came out against Prop 23. Gore has been promoting for the past several years his doomsday scenario of terrible, catastrophic happenings unless the world deals with the underlying causes of global warming.
IN SHORT, THE CLIMATE DOOMSAYERS SUCCEEDED.
GOOD LUCK WITH YOUR ECONOMY CALIFORNIA. DON’T EXPECT THE OTHER STATES TO BAIL YOU OUT WHEN YOU DECLARE BANKRUPCY.
CA voters told Sacramento Dems to 1. stop stealing local funds, 2. not raise taxes, 3. not raise fees, 4. pass a budget on time. 2011 could be fun for CA.
RE: tax hikes were already on a 2/3 requirement.
Looks like California in effect, just voted for spending to be easier and tax hikes to be harder.
If spending is going to be easier and taxing is going to be harder (as California just voted for in their recent propositions), how is California going to raise their revenue if :
* The budget INCREASES (as it usually does and surely will under Gov. Moonbeam )?
* They dont get the super majority they need to increase taxes ?
I can only think of the following possible scenarios :
1) Revenue grows as a result of a prosperous business climate where new companies are formed, and unemployment is very low ( which increases the tax base ).
2) Go into debt ( sell more of their state junk bonds ).
3) Ask Washington DC (AKA as the rest of the other states ) for help.
4) Print their own money ( OK this one was facetious, but recent their printing of IOUs is very close to something similar ).
With the regulatory burden increasing in California (they just voted down Proposition 25, which would have postponed a horrendous green energy bill ) and the strength of their unions, good luck with achieving #1.
#2 will probably be the only other card they have left to play with. But the interest theyll pay on their debt is going to be HIGH.
#3 Will happen only if the new Congress caves, and if they do, Ill keep track of every single one of the RINO Congressmen who votes yes to the California bailout and target them for defeat in 2012.
I Know, I couldn’t believe that one, but then again you have to realize we have more illegals voting than any other state and we are out numbered in the cities by liberals.