Santa Cruz Good Times

GT’s Guide to the Special Election Initiatives

It’s fair to say that, in the current economic climate, we’ve got our minds on our money and our money on our minds. From the daily Dow Jones ticker and a sinking economy to furloughs and pervasive budget cuts, no one entity—person, business, city, county or state—has escaped the effects, including the Golden State. Earlier this year, after 90 tiring days of impasse, the California Legislature finally

The Special Election, slated for May 19, was slow to garner attention and is expected to produce a voter turnout as low as 20 percent. But, as the election draws nearer, take note of our ongoing coverage here. Assemblymember Bill Monning gave readers his two cents in last week’s Town Hall column, offering a legislator’s take and advice. This week, take note of Propositions 1A-1F—all claim to help balance the budget—and other election fodder below.

Prop 1A: The “Rainy Day” Initiative
What It Is: If passed, Prop 1A would amend the state constitution to allow for changes to the budgeting process. It aims to limit state spending and increase “rainy day” funds by depositing 12.5 percent of the estimated annual General Fund into the Budget Stabilization Fund (one of two such state reserves, the other being the Special Fund for Economic Uncertainties) instead of the current 5 percent. Part of the funds will be designated as a cushion for future economic downturns; the rest will go to education, infrastructure, repaying debts and being use in a declared emergency. Essentially, Prop 1A will increase the amount of funds being set aside and further restrict withdrawals from that fund. Also important to note is the proposition’s affect on taxes: if passed, several of the tax increases passed in February will be extended for another year or two, increasing the state’s tax revenue by about $16 billion between 2010 and 2013.

For: Proponents of Prop 1A are atop a budget reform soapbox, and claim that the initiative will stabilize future spending and prepare California for another economic crisis. They also say its passage will help protect schools, public safety and other services by providing consistent levels of funding. The list of supporters includes the California Teachers Association, California Taxpayers Association, California Police Chief’s Association, and the Secretary of Education.

Against: Naysayers are not opposed to budget reform, just to this version of it, which they say is flawed, hastily drafted and full of loopholes. Their key argument is that it “allows unlimited rainy day funds to be spent on borrowing and Pork Barrel spending,” and that money would continue to be set aside to the fund even in bad years, while forcing service cuts even in good years. Also, as with 1B, this measure won’t stop state borrowing from local governments this year. Among the opposition are the Congress of California Seniors, Health Access California and the California Faculty Association.

Prop 1B: Payment Plan for Education Funding.
What It Is: Prop 1B will go into effect if and only if 1A passes. It would require the state to pay a total of $9.3 billion to K-12 schools and community colleges (or K-14) via annual payments starting in the 2011/2012 fiscal year. The payments will be funded by the 1.5 percent of General Fund money that is set aside into the Budget Stabilization Fund for education, and will be allocated according to schools’ average daily attendance. This “supplemental education” obligation will replace the amount the state owes K-14 in maintenance factor payments from 207/2008 and 2008/2009. Legislative analysts foresee several billion dollars in potential savings in 2009/2010, but several billion in losses in the years to follow.

For: Twelve billion dollars have been cut from education, and over 5,000 teachers have been laid-off. California already ranks 47th in per pupil spending, and those backing Prop 1B, such as the California Teachers Association, say that not creating a re-payment program would move our state even lower on that list. They say that Prop 1B would create accountability for educational funding, and send money straight to the classroom.

Against: The Peace and Freedom Party endorsed a “no” vote for 1B (along with the LA Times, the California Nurses Association and others), based on the belief that it is a “trick” to get the California Teacher’s Association to endorse 1A and 1B. Opponents remind voters that the state already has to pay a minimum amount to K-14 schools thanks to Prop 98, which passed in 1988. The state currently has an outstanding payment (or “maintenance fee”) towards education (the figure is debated, but was $1.4 billion at the end of the 2007/2008 year) that Prop 1B’s $9.3 billion would replace; if 1B and 1A fail, the state will still have to pay schools annually, although they do have the authority to suspend Prop 98 payments, and have done so for the past few years due to budget deficits.

Prop 1C: Lottery Face-Lift
What It Is: Known as the “Lottery Modernization Act,” this proposition would allow the state to borrow from future lottery proceeds in order to avoid cutting state programs and increasing taxes. The “modernization” would entail improving marketing and management, and increasing payouts.

For: The passage of 1C would allow the state to borrow $5 billion from future lottery profits to balance the 2009/2010 budget. Supporters include the California Democratic Party and Budget Reform Now.

Against:  Borrowing this money to address the current budget will make it harder to balance budgets in future years by creating debt to the lottery. Opponents include the American Federation of State, County and Municipal Employees (AFSCME), California Nurses Association and the Peace and Freedom Party.

Prop 1D: Redirects Funds to Children’s Services.
What It Is: Important language to understand here is “First Five,” a phrase that refers to state services and funding for early childhood development programs. Revenues from state tobacco tax currently fund First Five programs. Prop 1D would annually redirect $268 million of tobacco tax revenues that are currently earmarked for First Five to bolster a wider range of state services for children (such as Medicaid, foster care, preschools, and more) for five years. The state would also redirect $340 in unspent First Five funds to pay for other state health and human services that are currently supported by the General Fund. Over its temporary five-year borrowing plan, Prop 1D is expected to save the state up to $608 million in 2009/2010 and $268 million each additional year until 2013/2014.

For: Hard times have hit, and more families are in need of welfare and children’s services as a result. Prop 1D aims to prevent further cuts to these state services by temporarily borrowing existing First Five monies. Supporters of 1D argue that this will protect the programs and services for children under five, and ensure that the state can provide them throughout this economic hardship.

Against: Currently, 80 percent of First Five funds are allocated to counties, which then oversee the early childhood programs and services. Under Prop 1D, counties will not receive their First Five funding for five years; a funding freeze that may end many First Five programs. Prop 1D dissenters claim that this will take $1.6 billion from local education, medical and health services and put it into Sacramento’s hands.

Prop 1E: Temporary Reallocation of Mental Health Services Funding.
What It Is: If passed, Prop 1E would allow the state to reallocate funds intended for mental health programs under the Mental Health Services Act (passed as Proposition 63 in 2004) to the Early and Periodic Screening Diagnosis and Treatment Program (EPSDT) for two years. The EPSDT program, which is a Medicaid program for low-income youth under 21, is currently state-funded via the General Fund. The programs under the Mental Health Services Act are funded by revenues from a one percent income tax on people with incomes of over $1 million. Under Prop 1E, the state would redirect $226.7 million of this mental health services money in 2009/2010 and 2010/2011 to pay their share of the EPSDT funding, thus offsetting state costs that would otherwise be paid for by the General Fund and creating a state savings of about $225 million in ‘09/10 and up to $234 million in ‘10/11.

For: Legislative proponents of this proposition, including co-author of Proposition 63 and Senate President Pro Tempore Darrell Steinberg, cite it as an example of “shared sacrifice.” They argue that while it will temporarily decrease funding for mental health programs, it will prove instrumental in absolving the budget crisis by reducing the severity of cuts to a greater number of other state funded programs.

Against: Those opposed to Prop 1E say that it is not only wrong to take services and care away from the mentally ill, but that the programs under the Mental Health Services Act are actually saving the state money—and temporarily borrowing their funding will increase taxpayer spending on hospitals, prisons, and more. The California League of Women Voters and Peace and Freedom Party are among the opposition.

Prop 1F: No Pay Raises for Politicians During a Deficit.
What It Is: California legislators currently earn an average annual salary of $116,208 (this figure doesn’t include the $170 they receive per day they are in session and additional perks and benefits), making them the highest paid state elected officials in the nation. Since its formation in 1990, the California Citizens Compensation Commission has been in charge of establishing the salaries of the 120 elected Members of the Legislature, as well as those of the Governor, Attorney General, Lieutenant Governor and all other constitutional officers. If Prop 1F is passed, the Commission will no longer have the ability to increase these politicians’ pay in years when the state is running a deficit. The Director of Finance will be in charge of determining what constitutes an official “deficit year” and informing the commission of such a decision in June of any given fiscal year. The Director will notify the commission of a deficit when the Special Fund For Economic Uncertainties (the state’s traditional “rainy day fund,” also mentioned in the discussion of Prop 1A) is expected to have a negative balance that is equal to or greater than one percent of the General Fund (for some perspective, one percent of the General Fund is currently about $1 billion).

For: The commission has raised legislative pay three times in the past four years. Many feel that this proposition prevents probable further increases in upcoming years and makes our well paid elected officials share the sacrifice of budget cut-backs. However, legislative analysis of the initiative concludes that it would spur only minor state savings. In the words of The Los Angeles Times, which endorsed Prop 1F, “This measure is, well, OK. It won’t help much. But it won’t hurt much either.”

Against:  In times like these, who doesn’t want to see their legislators on pay freeze? Not even a single member of the California Assembly or Senate voted against Prop 1F (although this may have been out of fear of looking like a jerk), and the prop has held the highest approval rating in voter polls. But Pete Stahl, who authored the opposing argument for the state’s official ballot book, has this to say against it: $116,000 is a middle class salary, and preventing pay raises is “childish” and “vindictive.” He also says that the freeze won’t just hurt the legislature, but “innocent bystanders” such as the Insurance Commissioner and the Superintendent of Public Instruction.

Helpful websites:
http://www.voterguide.sos.ca.gov: The state’s official voter guide and voter information resource.

http://theballot.org/2009/ca : The website of the (very opinionated) San Francisco League of Young Voters (a.k.a. The League of Pissed Off Voters).

http://www.couragecampaign.org/page/invite/MayVoterGuide : The Courage Campaign’s “Progressive Voter Guide.”

http://ca.lwv.org : This League of Women Voters of California homepage can direct you to a number of non-partisan voting resources.

http://www.thepolicyreport.net / : The Policy Report, a site for those of a persuasion between the “center and the right,” has a voter guide complete with info on party endorsements.

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