BILL NUMBER: ACA 19 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Members Villines and Niello
(Coauthors: Assembly Members Adams, Anderson, Benoit, Berryhill,
Cook, DeVore, Duvall, Emmerson, Fuller, Gaines, Garcia, Garrick,
Houston, Huff, Jeffries, Keene, La Malfa, Maze, Nakanishi, Plescia,
Sharon Runner, Silva, Smyth, Spitzer, Strickland, Tran, and Walters)
AUGUST 6, 2008
A resolution to propose to the people of the State of California
an amendment to the Constitution of the State, by amending Sections
10 and 12 of Article IV thereof, by repealing and adding Section 3 of
Article XIII A thereof, by repealing and adding Article XIII B
thereof, by amending Section 2 of Article XIII C thereof, by adding
Article XIII F thereto, and by amending Sections 8.5 and 20 of
Article XVI thereof, relating to expenditure limitations.
LEGISLATIVE COUNSEL'S DIGEST
ACA 19, as introduced, Villines. Expenditure limitations.
(1) Existing provisions of the California Constitution authorize
the Governor to declare a fiscal emergency and call a special session
of the Legislature, if the Governor determines, for that fiscal
year, that General Fund revenues will decline substantially below
specified revenues. These provisions prohibit the Legislature from
acting on another bill or adjourning for recess if it does not pass
and send a bill or bills, by the 45th day following the Governor's
declaration of a fiscal emergency, to the Governor addressing the
fiscal emergency.
This measure would also authorize the Governor, following the
enactment of the Budget Bill for the 2009-10 fiscal year or any
subsequent fiscal year, to declare a fiscal emergency if total state
expenditures are expected to exceed specified constitutional
expenditure limitations. The measure would prohibit the Legislature
from acting on a bill that does not address a fiscal emergency
declared by the Governor, or adjourning for recess, if it does not
pass a bill or bills addressing the fiscal emergency that are enacted
by the 45th day following the Governor's declaration of the fiscal
emergency.
(2) Existing provisions of the California Constitution require the
Legislature to pass the Budget Bill by midnight on June 15 of each
year.
This measure would require the Legislature, if it fails to meet
this deadline, to meet in session 24 hours a day, without recess or
adjournment, until the Budget Bill is passed and presented to the
Governor.
(3) Existing provisions of the California Constitution require the
Governor, within 10 days of each calendar year, to submit a budget,
with statements for recommended state expenditures and estimated
state revenues, to the Legislature for the next fiscal year.
This measure would require the Governor's estimates of revenues
and expenditures for the 3-year period succeeding the fiscal year
beyond the year for which the budget is under consideration, or
recently adopted, to be published whenever the Governor publishes
revised estimates of revenues and expenditures.
(4) Existing provisions of the California Constitution require an
act increasing revenues collected pursuant to a state tax, whether by
increased rates or changes in methods of computation, be passed by
not less than 2/3 of all members elected to each of the 2 houses of
the Legislature.
This measure would, on and after January 1, 2009, require a bill
that would require a taxpayer to pay a higher tax, whether by
increased rates or changes in methods of computation, to be passed in
each house of the Legislature by rollcall vote entered in the
journal, 2/3 of the membership concurring.
This measure would specifically define a tax for purposes of these
provisions to mean any charge or exaction of any kind by the state,
except for charges for the reasonable costs of certain kinds of
services, charges for the reasonable costs of regulation by the
state, charges imposed for entrance to or use of state property, and
fines and other charges for a violation of statutes or regulations.
(5) 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 its adjusted
annual appropriations limit. 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 repeal these provisions. This measure would
instead impose a state expenditure limit computed by multiplying the
prior fiscal year total expenditures, as certified by the Director of
Finance, by the sum of one plus the percentage change in state
population, as determined by the Department of Finance, and then
multiplying that product by the sum of one plus the percentage change
in the cost of living, as determined by the Department of Industrial
Relations, subject to reduction for excess expenditures in the prior
fiscal year. This measure would authorize the expenditure limit to
be exceeded for an emergency, as defined, declared by the Governor
that does not include revenue shortfalls, excessive spending, or
other similar conditions limiting the ability to fund government
operations.
This measure would also require that the total amount of
expenditures made for any fiscal year by a city, county, city and
county, or special district not exceed the total amount of revenues
received by that entity for that fiscal year from its authorized
taxes, as defined, fees, and other charges, state and federal funds,
and other sources of local revenue, including reserve funds carried
over from a prior year.
This measure would also require the Director of Finance to report
quarterly to the Governor and members of the legislative budget
committees on the state's compliance with the expenditure limits for
the current fiscal year.
This measure would also create a Special Reserve Account to
receive revenues that exceed the amount expended in a fiscal year,
and would authorize moneys in that amount to be spent, upon
appropriation by 2/3 vote of the membership of each house, for
specified purposes. This measure would also create the Sales Tax
Rebate Fund as a trust fund to be used to fund temporary state sales
and use tax rate reductions under specified conditions.
(6) Existing provisions of the California Constitution require
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. For the 2005-06 fiscal year and every subsequent fiscal
year, for a mandate for which the costs of a local government
claimant have been determined in a preceding fiscal year to be
payable by the state pursuant to law, the Legislature is required to
either appropriate, in the annual Budget Act, the full payable amount
that has not been previously paid, or suspend the operation of the
mandate for the fiscal year for which the annual Budget Act is
applicable in a manner prescribed by law.
This measure would require, instead, that beginning in the 2009-10
fiscal year, the Legislature would either appropriate reimbursement
funds for each program then in effect and for which reimbursement was
provided in any prior fiscal year or suspend the mandate.
(7) Existing provisions of the California Constitution require any
tax imposed by a local government to be either a general tax or a
special tax, and impose a voter-approval requirement for a local
government to impose, extend, or increase a general tax or special
tax.
This measure would define a tax for purposes of these provisions
to mean any charge or any exaction of any kind by a local government,
except for charges for the reasonable costs of certain kinds of
services, charges for the reasonable costs of local regulation,
charges for the reasonable costs to the community for development,
charges imposed for entrance to or use of local government property,
fines and other charges imposed for violations of statutes,
ordinances, and regulations; and assessments and property-related
fees and charges.
(8) Existing provisions of the California Constitution establish
the Budget Stabilization Account in the General Fund, and require the
Controller, subject to certain exceptions, to transfer to that
account, no later than September 30 of each fiscal year, a sum equal
to 3% of the estimated amount of General Funds revenues for that
fiscal year. These provisions also require that 50% of the moneys
transferred to the account in each fiscal year, up to the aggregate
amount of $5 billion for all fiscal years, be transferred into a
specified subaccount to be used to retire certain deficit recovery
bonds. Remaining amounts transferred to the account may, by statute,
be transferred to the General Fund.
This measure would instead require the Controller, no later than
September 30 in the 2009-10 fiscal year and each fiscal year
thereafter, to transfer only 1.5% of the estimated amount of General
Fund revenues for the current fiscal year, and only into the same
subaccount to be used to retire the deficit recovery bonds.
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 Overspending Prevention Act"; and
WHEREAS, The state and its political subdivisions continue to
suffer chronic budget deficits, and the existing state and local
appropriations limits have failed to prevent this from occurring; and
WHEREAS, These budget deficits are the result of politicians
failing to responsibly manage state finances, enact budgets limited
to available revenues, and set aside a portion of the surpluses
during good fiscal years to ensure stable government resources in the
lean fiscal years; and
WHEREAS, Between the 1998-99 and 2007-08 fiscal years, state
spending was allowed to grow from just over $75 billion to over $145
billion (a 93-percent increase in merely eight years), even though
revenues were not available to support the increased spending; and
WHEREAS, To support the unrestrained spending growth, politicians
raided revenues from local governments, enacted new and expanded
taxes disguised as fees, and pursued massive borrowing, the costs of
which will be borne by future generations; and
WHEREAS, Proposition 13 requires that increases in state taxes be
adopted by not less than a two-thirds vote of the members elected to
each house of the Legislature, and both Proposition 13 and
Proposition 218 require that increases in local taxes be approved by
the voters; and
WHEREAS, The Government Overspending Prevention Act will force
rational fiscal management on state politicians by limiting the
growth in state spending to the combined growth of population and
inflation, and local governments will be prohibited from spending
beyond their available revenues; and
WHEREAS, The increasing interdependence of state and local
finances necessitates limitations on the expenditures of both,
because without state and local limitations restraints on spending as
to one level of government could be circumvented and nullified by
increasing expenditures by another; and
WHEREAS, The Government Overspending Prevention Act will ensure
that politicians cannot avoid the spending limits by passing taxes
disguised as fees by less than a two-thirds vote or without a vote of
the people; and
WHEREAS, For all these reasons, the Government Overspending
Prevention Act will provide better fiscal management for the
taxpayers of California; and
WHEREAS, The Government Overspending Prevention Act shall be
liberally construed to effectuate its purpose of ensuring that the
state enacts responsible, balanced budgets that are sustainable over
time within available resources; now, therefore, be it
Resolved by the Assembly, the Senate concurring, That the
Legislature of the State of California at its 2007-08 Regular Session
commencing on the fourth day of December 2006, 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 10 of Article IV thereof is amended to read:
SEC. 10. (a) Each bill passed by the Legislature shall be
presented to the Governor. It becomes a statute if it is signed by
the Governor. The Governor may veto it by returning it with any
objections to the house of origin, which shall enter the objections
in the journal and proceed to reconsider it. If each house then
passes the bill by rollcall vote entered in the journal, two-thirds
of the membership concurring, it becomes a statute.
(b) (1) Any bill, other than a bill which would establish or
change boundaries of any legislative, congressional, or other
election district, passed by the Legislature on or before the date
the Legislature adjourns for a joint recess to reconvene in the
second calendar year of the biennium of the legislative session, and
in the possession of the Governor after that date, that is not
returned within 30 days after that date becomes a statute.
(2) Any bill passed by the Legislature before September 1 of the
second calendar year of the biennium of the legislative session and
in the possession of the Governor on or after September 1 that is not
returned on or before September 30 of that year becomes a statute.
(3) Any other bill presented to the Governor that is not returned
within 12 days becomes a statute.
(4) If the Legislature by adjournment of a special session
prevents the return of a bill with the veto message, the bill becomes
a statute unless the Governor vetoes the bill within 12 days after
it is presented by depositing it and the veto message in the office
of the Secretary of State.
(5) If the 12th day of the period within which the Governor is
required to perform an act pursuant to paragraph (3) or (4) of this
subdivision is a Saturday, Sunday, or holiday, the period is extended
to the next day that is not a Saturday, Sunday, or holiday.
(c) Any bill introduced during the first year of the biennium of
the legislative session that has not been passed by the house of
origin by January 31 of the second calendar year of the biennium may
no longer be acted on by the house. No bill may be passed by either
house on or after September 1 of an even-numbered year except
statutes calling elections, statutes providing for tax levies or
appropriations for the usual current expenses of the State, and
urgency statutes, and bills passed after being vetoed by the
Governor.
(d) The Legislature may not present any bill to the Governor after
November 15 of the second calendar year of the biennium of the
legislative session.
(e) The Governor may reduce or eliminate one or more items of
appropriation while approving other portions of a bill. The Governor
shall append to the bill a statement of the items reduced or
eliminated with the reasons for the action. The Governor shall
transmit to the house originating the bill a copy of the statement
and reasons. Items reduced or eliminated shall be separately
reconsidered and may be passed over the Governor's veto in the same
manner as bills.
(f) (1) (A) If, following the enactment of
the budget bill for the 2004-05 fiscal year or any
subsequent fiscal year to the 2008-09 fiscal yea
r, inclusive , the Governor determines that, for that
fiscal year, General Fund revenues will decline substantially below
the estimate of General Fund revenues upon which the budget bill for
that fiscal year, as enacted, was based, or General Fund expenditures
will increase substantially above that estimate of General Fund
revenues, or both, the Governor may issue a proclamation declaring a
fiscal emergency and shall thereupon cause the Legislature to
assemble in special session for this purpose. The proclamation shall
identify the nature of the fiscal emergency and shall be submitted by
the Governor to the Legislature, accompanied by proposed legislation
to address the fiscal emergency.
(2)
(B) If the Legislature fails to pass and send to the
Governor a bill or bills to address the fiscal emergency by the 45th
day following the issuance of the proclamation, the Legislature may
not act on any other bill, nor may the Legislature adjourn for a
joint recess, until that bill or those bills have been passed and
sent to teh the Governor.
(3)
(C) A bill addressing the fiscal emergency declared
pursuant to this section paragraph
shall contain a statement to that effect.
(2) (A) If, following the enactment of the budget bill for the
2009-10 fiscal year or any subsequent fiscal year, the Governor
determines that, for that fiscal year, General Fund revenues will
decline substantially below the estimate of General Fund revenues
upon which the budget bill for that fiscal year, as enacted, was
based, or General Fund expenditures will increase substantially above
that estimate of General Fund revenues, or both, or if, following
the enactment of the budget bill, the Governor determines that, for
that fiscal year, total expenditures are expected to exceed the limit
imposed by Article XIII B for that fiscal year, the Governor may
issue a proclamation declaring a fiscal emergency and shall thereupon
cause the Legislature to assemble in special session solely for this
purpose. The proclamation shall identify the nature of the fiscal
emergency and shall be submitted by the Governor to the Legislature,
accompanied by proposed legislation to address the fiscal emergency.
(B) If the Legislature fails to pass and send to the Governor a
bill or bills to address the fiscal emergency declared pursuant to
this paragraph by the 45th day following the issuance of the
proclamation, the Legislature may not act on any other bill except
one relating to a fiscal emergency declared pursuant to this
paragraph, nor may the Legislature adjourn for a joint recess, until
that bill or those bills have been passed and enacted.
(C) A bill addressing the fiscal emergency declared pursuant to
this paragraph shall contain a statement to that effect.
Second-- 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.
(2) The budget bill shall be introduced immediately in each house
by the persons chairing the committees that consider the budget.
(3) The Legislature shall pass the budget bill by midnight on June
15 of each year. If the budget bill is not passed by the
Legislature by June 15 of any year, each house of the Legislature
shall meet in session 24 hours a day, and shall not recess or
adjourn, until the budget bill is passed and presented to the
Governor. For purposes of this paragraph, "budget bill" means a bill
that is introduced and enacted pursuant to this section to make
appropriations for the support of the government of the State for the
entire ensuing fiscal year.
(4) 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 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) For the 2004-05 fiscal year, or any subsequent fiscal year,
the Legislature may not send to the Governor for consideration, nor
may the Governor sign into law, a budget bill that would appropriate
from the General Fund, for that fiscal year, a total amount that,
when combined with all appropriations from the General Fund for that
fiscal year made as of the date of the budget bill's passage, and the
amount of any General Fund moneys transferred to the Budget
Stabilization Account for that fiscal year pursuant to Section 20 of
Article XVI, exceeds General Fund revenues for that fiscal year
estimated as of the date of the budget bill's passage. That estimate
of General Fund revenues shall be set forth in the budget bill passed
by the Legislature.
(g) Beginning with the budget submitted by the Governor for the
2009-10 fiscal year pursuant to subdivision (a), whenever the
Governor publishes revised estimates of revenues and expenditures
there shall also be published the Governor's estimates of revenues
and expenditures for the three fiscal years immediately following the
fiscal year for which the budget was submitted.
Third-- That Section 3 of Article XIII A thereof is repealed.
Section 3. From and after the effective date of this article,
any changes in state taxes enacted for the purpose of increasing
revenues collected pursuant thereto whether by increased rates or
changes in methods of computation must be imposed by an Act passed by
not less than two-thirds of all members elected to each of the two
houses of the Legislature, except that no new ad valorem taxes on
real property, or sales or transaction taxes on the sales of real
property may be imposed.
Fourth-- That Section 3 is added to Article XIII A thereof, to
read:
SEC. 3. (a) On and after January 1, 2009, a bill that would,
whether by increased rates or changes in methods of computation,
require any taxpayer to pay a higher amount of tax shall be passed in
each house of the Legislature by rollcall vote entered in the
journal, two-thirds of the membership concurring, except that no new
ad valorem taxes on real property, or sales or transaction taxes on
the sales of real property may be imposed.
(b) For purposes of this section, "tax" means any charge or
exaction of any kind imposed by the State, except for the following:
(1) A charge imposed for a specific service provided directly to
the payor by the State or so provided by a private contractor on
behalf of the State, and not provided to those not charged, but only
to the extent the charge does not exceed the reasonable costs of the
service provided.
(2) A charge imposed for the reasonable regulatory costs to the
State of issuing licenses or permits, performing inspections,
performing audits, or conducting administrative adjudications.
(3) A charge imposed for entrance to or use of state property.
(4) A fine, penalty, or other monetary charge imposed by the
judicial branch of government, or a state or local administrative
agency, as a result of any violation of a statute or regulation.
(c) Any tax as defined in subdivision (b) enacted on or after
January 1, 2008, but before January 1, 2009, that was not approved by
the Legislature in compliance with subdivision (a) is void beginning
on January 1, 2010, unless, prior to January 1, 2010, the tax is
reenacted pursuant to a measure approved by the Legislature in
compliance with subdivision (a).
Fifth-- That Article XIII B thereof is repealed.
Sixth-- That Article XIII B is added thereto, to read:
ARTICLE XIII B
State Expenditure Limit
SECTION 1. As used in this article, the following terms have
the following meanings:
(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 an
attack or probable or imminent attack by an enemy of the United
States, epidemic, fire, flood, drought, storm, civil disorder,
earthquake, or volcanic eruption. "Emergency" does not include
revenue shortfalls, excessive spending, or other similar conditions
limiting the ability to fund government operations.
(b) (1) Except as specifically excluded in this article, "General
Fund revenues and special fund revenues" means revenues that are
generated by any tax as that term is defined in subdivision (b) of
Section 3 of Article XIII A, any other source of revenue that was
considered a "General Fund" or "special fund" source of revenue for
the 2007-08 fiscal year, and any funds transferred from the Sales Tax
Rebate Account, as specified in subdivision (c) of Section 3.
"General Fund revenues and special fund revenues" do not include
revenues from nongovernmental cost funds, as defined by the Director
of Finance or his or her successor, federal funds, trust and agency
funds, retirement funds, enterprise funds, or bond funds. It is the
intent of this subdivision to ensure that all state revenues received
in any fiscal year and not specifically excluded by this article,
whether or not characterized by any state law as General Fund
revenues or special fund revenues, are subject to the expenditure
limit prescribed by this article.
(2) "General Fund revenues and special fund revenues" do not
include any proceeds from the Economic Recovery Bond Act approved by
the voters as Proposition 57 at the March 2, 2004, statewide primary
election.
(c) "Percentage change in the cost of living" means the percentage
change from April 1 of the immediately preceding calendar year to
April 1 of the current calendar year in the California Consumer Price
Index for all items, as determined by the Department of Industrial
Relations or its successor, but not to exceed the percentage change
in California per capita personal income for the immediately
preceding calendar year. The Department of Finance, or its successor
agency, shall determine the change in per capita personal income
based upon the California personal income statistics produced by the
Bureau of Economic Analysis in the United States Department of
Commerce, or its successor agency. For the purposes of this
subdivision, "current calendar year" means the calendar year in which
the fiscal year commences.
(d) "Allowable expenditures" means the maximum amount of total
expenditures permitted for a fiscal year as provided for in this
article.
(e) "Percentage change in state population" means the change in
population of the State as determined by the Department of Finance,
or its successor agency, revised, as necessary, to reflect the
periodic census conducted by the United States Department of
Commerce, or its successor agency.
SEC. 2. (a) (1) For the 2009-10 fiscal year and each
subsequent fiscal year, the total expenditures made from General Fund
revenues and special fund revenues, in the aggregate, shall not
exceed the expenditure limit for that fiscal year as described in
paragraph (2).
(2) (A) The expenditure limit for the 2010-11 fiscal year and each
fiscal year thereafter shall be computed by multiplying the total
expenditures from General Fund revenues and special fund revenues, in
the aggregate, for the immediately preceding fiscal year by the sum
of one plus the percentage change in state population, and then
multiplying that product by the sum of one plus the percentage change
in the cost of living.
(B) The expenditure limit for the 2009-10 fiscal year is the total
amount of expenditures for the 2007-08 fiscal year from General Fund
revenues and special fund revenues, in the aggregate, as certified
by the Director of Finance or his or her successor, as adjusted
pursuant to subparagraph (A) from the 2007-08 fiscal year to the
2008-09 fiscal year, and then from the 2008-09 fiscal year to the
2009-10 fiscal year, for percentage changes in state population and
percentage changes in the cost of living.
(3) For purposes of establishing the expenditure limit for the
2010-11 fiscal year and each subsequent fiscal year, the Director of
Finance, or his or her successor, shall certify the total amount of
expenditures from General Fund revenues and special fund revenues, in
the aggregate, for the immediately preceding fiscal year. In no
event shall the amount certified be greater than the expenditure
limit for that fiscal year under this article.
(b) The expenditure limit imposed by this article may be exceeded
for a fiscal year to address an emergency as described in subdivision
(a) of Section 1. Any expenditure to address an emergency as
described in subdivision (a) of Section 1 shall first be paid from
any funds accumulated in the Special Reserve Account created pursuant
to subdivision (a) of Section 3. Any expenditure exceeding the
expenditure limit imposed by this article that is made to address an
emergency, as described in subdivision (a) of Section 1, shall be for
that purpose only, shall be directly related to the emergency, and
shall not exceed the costs necessary to address the emergency. No
funds expended pursuant to this subdivision shall supplant or replace
funds already appropriated to any state agency. Expenditures in
excess of the expenditure limit for a fiscal year that are made
pursuant to this subdivision to address an emergency, as described in
subdivision (a) of Section 1, shall not be considered under
paragraph (3) of subdivision (a) for purposes of determining the
expenditure limit for the next fiscal year. Any bill proposing an
expenditure to address an emergency described in subdivision (a) of
Section 1 shall contain a statement to that effect.
(c) If an emergency as described in subdivision (a) of Section 1
has not been declared during a fiscal year, and after the conclusion
of that fiscal year it is determined by the Director of Finance, or
his or her successor, that actual expenditures for that fiscal year
have exceeded the expenditure limit for that year, then the
expenditure limit for the fiscal year immediately following the
fiscal year for which that determination is made shall be reduced by
the amount of the excess. In determining the expenditure limit for
the fiscal year next following the fiscal year for which that
reduction is made, the amount of the reduction shall be applied to
the amount of expenditures in the immediately preceding fiscal year
certified pursuant to paragraph (3) of subdivision (a).
(d) The total amount of expenditures from General Fund and special
fund revenues includes any expenditure of funds that is for purposes
of the retirement of bonds as described by subdivision (f) of
Section 20 of Article XVI.
(e) The Director of Finance, or his or her successor, shall, on a
quarterly basis, report to the Members of the Legislature, who are
members of the committee in each house that considers the budget, on
the state's compliance with the expenditure limit imposed by this
article for the current fiscal year. The report shall include updated
estimates of revenues and expenditures and the expenditure limit for
the current fiscal year. If the director, or his or her successor,
estimates that current fiscal year total expenditures may exceed the
limit imposed by this article, the report shall include
recommendations for corrective action.
SEC. 3. If total General Fund revenue and special fund
revenues, in the aggregate, exceed the expenditure limit for the
current fiscal year, the amount of that excess shall be attributed in
proportionate shares to the General Fund and to each special fund,
by multiplying the balance of each those funds at the end of the
current fiscal year by the percentage by which the aggregate revenues
exceed the expenditure limit. That portion of the excess amount
attributed to each special fund shall be transferred to a reserve in
that special fund subject to expenditure in a subsequent fiscal year.
The amount of these excess moneys attributable to the General Fund
shall be allocated from the General Fund as follows:
(a) (1) Fifty percent to the Special Reserve Account, which is
hereby created in the General Fund, to the extent that this account
contains an amount less than 10 percent of the expenditure limit for
the current fiscal year. Any funds that may not be allocated to the
Special Reserve Account due to the 10 percent limitation shall be
allocated pursuant to subdivision (b).
(2) Moneys in the Special Reserve Account may be expended upon
appropriation by the Legislature pursuant to a bill that does not
contain any unrelated provision and is passed in each house of the
Legislature by rollcall vote entered in the journal, two-thirds of
the membership concurring. The total amount appropriated pursuant to
this paragraph in any fiscal year shall not exceed the amount by
which the expenditure limit pursuant to this article for that fiscal
year exceeds the total amount of General Fund and special fund
revenues reported by the Department of Finance, or its successor
agency, for that fiscal year.
(3) Notwithstanding the limitation set forth in paragraph (2),
funds in the Special Reserve Account may be expended to address an
emergency described in subdivision (a) of Section 1, upon
appropriation by the Legislature pursuant to a bill passed by each
house of the Legislature by rollcall vote entered in the journal,
two-thirds of the membership concurring.
(4) Any funds expended from the Special Reserve Account in a
fiscal year pursuant to paragraph (2), but not funds expended from
that account for the purposes of paragraph (3), that are in excess of
the limitation set forth in paragraph (2) shall be counted as
expenditures for purposes of paragraph (3) of subdivision (a) of
Section 2.
(5) Subject to the 10-percent maximum amount specified in
paragraph (1), any unexpended balance in the Special Reserve Account,
including interest earnings, shall carry over from one fiscal year
to the next.
(b) Fifty percent to be allocated among the following in amounts
prescribed by the enacted budget bill:
(1) To any outstanding maintenance factor pursuant to Section 8
of Article XVI that is in existence as of June 30, 2008, until
allocated in full.
(2) To the Deficit Recovery Bond Retirement Fund Sinking
Subaccount, so long as any bonds issued pursuant to the Economic
Recovery Bond Act remain outstanding. The deposit of funds pursuant
to this paragraph shall supplement, but not supplant, the transfers
to the Deficit Recovery Bond Retirement Fund Sinking Subaccount
required by paragraph (1) of subdivision (f) of Section 20 of Article
XVI.
(3) To the Transportation Investment Fund established by Section
7104 of the Revenue and Taxation Code, or the successor to that
section, until any amount loaned from that fund to the General Fund
has been repaid in full.
(c) Moneys in the General Fund that are allocated as specified in
subdivision (a) or (b) shall not be considered "General Fund revenues"
for purposes of Section 8 of Article XVI, except as to moneys
appropriated pursuant to paragraph (2) of subdivision (a). Any moneys
that exceed the amounts that may be allocated as specified
in subdivision (a) or (b) shall be
transferred to the Sales Tax Rebate Fund, which is hereby created in
the State Treasury as a trust fund, and shall not be considered
"General Fund revenues" for purposes of Section 8 of Article XVI.
Moneys transferred to Sales Tax Rebate Fund shall be used only to
implement a temporary reduction in the sales and use tax rate levied
by the State, as follows:
(1) (A) By each July 15, the Director of Finance, or his or her
successor, shall estimate the amount of revenue that would be
produced by a sales and use tax rate of 0.25 percent over the next
succeeding 12-month period, and determine whether the amount of money
accumulated in the Sales Tax Rebate Fund at the end of the
immediately preceding fiscal year is equal to or greater than that
estimated amount of revenue.
(B) Upon making a determination pursuant to subparagraph (A), the
director, or his or successor, shall give written notice of that
determination, including the amount of the revenue estimate and the
amount of money accumulated in the Sales Tax Rebate Fund, to the
Controller, each member of the State Board of Equalization, and each
member of a committee of the Legislature that considers the budget
bill. If the director, or his or her successor, determines that the
amount of money accumulated in the Sales Tax Rebate Fund is equal to
or greater than the revenue estimate made pursuant to subparagraph
(A), the rate of tax imposed under Section 6051 of the Revenue and
Taxation Code, or any successor to that section, and under Section
6201 of the Revenue and Taxation Code, or any successor to that
section, shall be reduced, as provided in paragraph (2), by 0.25
percent and by any additional 0.25 percent increments as warranted by
the balance in the Sales Tax Rebate Account. If a tax rate reduction
is warranted, the director shall include in the written notice a
finding of whether the amount of money accumulated in the Sales Tax
Rebate Fund is sufficient to warrant one or more additional 0.25
percent reductions in the state sales and use tax rate, and, if so,
the number of additional 0.25 percent reductions that are warranted.
(2) On the October 1 immediately following the notification by the
Director of Finance pursuant to paragraph (1), the State Board of
Equalization, or its successor agency responsible for administering
the Sales and Use Tax Law, shall, for a 12-month period, implement
any tax rate reductions specified in that notice. No less frequently
than each three months during the 12-month period, the Controller
shall transfer, from the Sales Tax Rebate Account to the General Fund
and to other funds and accounts incurring a reduction in deposits as
a result of the tax reduction, amounts in lieu of the deposits not
made as a result of the tax reduction. Any funds so transferred are
"General Fund and special fund revenues" for purposes of this
article, and are "General Fund revenues" for purposes of Section 8 of
Article XVI.
(3) Any funds transferred to the Sales Tax Rebate Fund, along with
any interest earnings, shall only be available for purposes of this
subdivision.
SEC. 4. (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 increase
in the State expenditure limit established pursuant to this article.
(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 immediately preceding fiscal year,
determined in the same manner as provided in subdivision (c) of
Section 1 with respect to calendar years.
SEC. 6. (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 affected local
government.
(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 the mandate has been in effect for
more than two years 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 the State.
(d) (1) Beginning in the 2009-10 fiscal year, the Legislature
shall either appropriate in the annual budget bill reimbursement
funds for each state-mandated program then in effect and for which
reimbursement was provided in any fiscal year prior to the adoption
of this article, or it shall suspend operation of the mandate for the
fiscal year for which the annual budget bill is applicable in a
manner prescribed by law.
(2) The subvention of funds required by this section shall be
provided no later than the end of the fiscal year in which the costs
were incurred, in the case of state-mandated programs for which
reimbursements have been provided by the State in any fiscal year
prior to the adoption of this article. With regard to state-mandated
programs enacted after the adoption of this article, and those not
previously reimbursed, the State shall provide a subvention of funds
no later than the end of the fiscal year next succeeding the fiscal
year in which the Commission on State Mandates or its successor
finally determines that the State is required to provide
reimbursement.
(e) If the Legislature fails to either appropriate funds or
suspend a mandate as required by subdivision (d), any affected local
government may commence an action in court for declaratory relief,
injunctive relief, or any other appropriate relief for the purpose of
securing its rights pursuant to this section. If that relief is
granted in a final decision of a court of competent jurisdiction from
which no further review is available, the State shall provide the
same subvention as required by that court to any other local
government that has a substantially similar claim or claims pending
against the State.
(f) A mandated new program or higher level of service includes a
transfer by the Legislature from the State to cities, counties,
cities and counties, or special districts of complete or partial
financial responsibility for a required program for which the State
previously had complete or partial financial responsibility.
SEC. 7. Notwithstanding any other provision of law, including
this Constitution, any taxpayer shall have standing to bring a legal
action against the State for violating any provision of this article.
The action may seek declaratory relief, injunctive relief, a writ of
mandate, or any other relief that a court may deem appropriate. In
any such action, the State shall have the burden of proving
compliance with this article. Actions brought pursuant to this
section shall have calendar preference over all other actions.
Seventh-- That Section 2 of Article XIII C thereof is amended to
read:
SEC. 2. Local Government Tax Limitation.
Notwithstanding any other provision of this Constitution:
(a) All taxes A tax imposed by any
local government shall be deemed to be is
either a general taxes tax
or special taxes tax .
Special purpose districts A special district or
agencies agency , including a
school districts district ,
shall have has no power
authority to levy general taxes tax
.
(b) No A local government
may shall not impose, extend, or increase any
general tax unless and until that tax is submitted to the
electorate voters and approved by a majority
vote. A general tax shall is not
be deemed to have been increased if it is imposed
at a rate not higher than the maximum rate so approved. The election
required by this subdivision shall be consolidated with a regularly
scheduled general election for members of the governing body of the
local government, except in cases of emergency declared by a
unanimous vote of the governing body.
(c) Any general tax imposed, extended, or increased, without voter
approval, by any local government on or after January 1, 1995, and
prior to the effective date of this article, shall continue to be
imposed only if that general tax was approved by a
majority vote of the voters voting in an election on the issue of the
imposition, which election shall be was
held within two years of the effective date of this
article no later than November 6, 1998, and in
compliance with subdivision (b).
(d) No A local government
may shall not impose, extend, or increase any
special tax unless and until that tax is submitted
to the electorate voters and approved
by a two-thirds vote of
the voters voting on the proposition . A special tax
shall is not be deemed to
have been increased if it is imposed at a rate not higher than the
maximum rate so approved.
(e) On and after January 1, 2009, as used in Section 1 and in this
section, "tax" means any charge or exaction of any kind imposed by a
local government, except the following:
(1) A charge imposed for a specific service provided directly to
the payor by the local government or a private contractor on behalf
of the local government, and not provided to those not charged, but
only if the amount of the charge does not exceed the reasonable costs
of the service provided, and the service was not financed by tax
revenue in the 12-month period immediately preceding the imposition
of the change.
(2) A charge imposed for the reasonable regulatory costs to the
local government of issuing licenses or permits, performing
inspections, performing audits, and conducting administrative
adjudications.
(3) A charge imposed as a condition of property development, if
the amount bears a reasonable relation to the development's probable
costs to the community.
(4) A charge imposed for entrance to or use of local government
property.
(5) A fine, penalty, or other monetary charge imposed by the
judicial branch of government, or state or local administrative
agency, as a result of any violation of a statute, ordinance, or
regulation.
(6) Assessments and property-related fees and charges imposed in
accordance with Article XIII D.
(f) Any tax as defined in subdivision (e) that was imposed on or
after January 1, 2008, but before January 1, 2009, that was not
imposed in compliance with the requirements of this section is void
on January 1, 2010, unless, prior to January 1, 2010, the tax is
reimposed in compliance with the requirements of this section.
Eighth-- That Article XIII F is added thereto, to read:
ARTICLE XIII F
Local Government Expenditure Limits
SECTION 1. (a) The total amount of expenditures made for any
fiscal year by a city, county, city and county, or special district
shall not exceed the total amount of revenues received by that entity
for that fiscal year from its authorized taxes, fees, and other
charges, state and federal funds, and other sources of local revenue,
including reserve funds carried over from a prior year.
(b) For purposes of this section, "authorized taxes" include all
tax revenues received by a local agency pursuant to state law, and
pursuant to a tax imposed by local ordinance approved by the voters
of that local agency. Tax revenues authorized by an ordinance
approved by the voters prior to November 5, 1986, shall be deemed to
have been approved by the voters for this purpose.
(c) For purposes of this section, "tax" shall have the meaning as
prescribed in Section 2 of Article XIII C on or after January 1,
2009.
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
of subdivision (a) of Section 2 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 equal or exceed the average annual
expenditure per student of the 10 states with the highest annual
expenditures per student 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) All revenues allocated pursuant to subdivision (a) shall be
expended solely for the purposes of instructional improvement and
accountability as required by law.
(e) Any
SEC. 8.5. 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 of Article XVI thereof is amended to read:
SEC. 20. (a) The Budget Stabilization Account is hereby
created in the General Fund.
(b) (1) In each fiscal year as specified in
paragraphs (1) to (3) subparagraphs (A) to
(C) , inclusive, the Controller shall transfer from the General
Fund to the Budget Stabilization Account the following amounts:
(1)
(A) No later than September 30, 2006, a sum equal to 1
percent of the estimated amount of General Fund revenues for the
2006-07 fiscal year.
(2)
(B) No later than September 30, 2007, a sum equal to 2
percent of the estimated amount of General Fund revenues for the
2007-08 fiscal year.
(3)
(C) No later than September 30, 2008, and
annually thereafter, a sum equal to 3 percent of the
estimated amount of General Fund revenues for the current
2008-09 fiscal year.
(c)
(2) The transfer of moneys shall not be required by
subdivision (b) paragraph (1) in any
fiscal year to the extent that the resulting balance in the account
would exceed 5 percent of the General Fund revenues estimate set
forth in the budget bill for that fiscal year, as enacted, or eight
billion dollars ($8,000,000,000), whichever is greater. The
Legislature may, by statute, direct the Controller, for one or more
of those fiscal years, to transfer into the account
amounts in excess of the levels prescribed by this subdivision.
(3) Of the moneys transferred to the account in each fiscal year
under paragraph (1), 50 percent shall be deposited in the Deficit
Recovery Bond Retirement Sinking Fund Subaccount established in
subdivision (g). All other moneys transferred to the account in a
fiscal year under paragraph (1) shall not be deposited in the sinking
fund subaccount, and may, by statute, be transferred to the General
Fund.
(c) No later than September 30 in the 2009-10 fiscal year and no
later than the same date in each fiscal year thereafter, the
Controller shall transfer a sum equal to 1.5 percent of the estimated
amount of General Fund revenues for the current fiscal year to the
Deficit Recovery Bond Retirement Sinking Fund Subaccount.
(d) The amount of moneys deposited pursuant to this section in the
Deficit Recovery Bond Retirement Sinking Fund Subaccount shall not
exceed the aggregate amount of five billion dollars ($5,000,000,000)
for all fiscal years. The moneys deposited pursuant to this section
in the sinking fund subaccount are in addition to any other payments
provided by law for the purpose of retiring deficit recovery bonds
authorized and issued as described in Section 1.3.
(d)
(e) Subject to any restriction imposed by this section,
funds transferred to the Budget Stabilization Account shall be
deemed to be General Fund revenues for all purposes of this
Constitution.
(e)
(f) The transfer of moneys from the General Fund
to the Budget Stabilization Account pursuant
to subdivision (b) or (c) may be suspended or reduced for a
fiscal year as specified by an executive order issued by the Governor
no later than June 1 of the preceding fiscal year.
(f) (1) Of the moneys transferred to the account in each fiscal
year, 50 percent, up to the aggregate amount of five billion dollars
($5,000,000,000) for all fiscal years, shall be deposited in the
(g) The Deficit Recovery Bond
Retirement Sinking Fund Subaccount, which
Subaccount is hereby created in the account for the purpose of
retiring deficit recovery bonds authorized and issued as described in
Section 1.3 , in addition to any other payments provided
for by law for the purpose of retiring those bonds . The
moneys in the sinking fund subaccount are continuously appropriated
to the Treasurer to be expended for that purpose in the amounts, at
the times, and in the manner deemed appropriate by the Treasurer. Any
funds remaining in the sinking fund subaccount after all of the
deficit recovery bonds are retired shall be transferred to the
account, and may , by statute, be transferred to the
General Fund pursuant to paragraph (2) .
(2) All other funds transferred to the account in a fiscal year
shall not be deposited in the sinking fund subaccount and may, by
statute, be transferred to the General Fund.
Eleventh-- The repeal and addition of Section 3 of Article XIII A
by this measure shall become operative on January 1, 2009, and the
repeal and addition of Article XIII B by this measure shall become
operative on July 1, 2009.
Twelfth-- The provisions of this measure are severable. If any
provision of this measure or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.