Two-Thirds is Too Much

For the past several years, California has had to face repeated budget crises that are the result of the two-thirds vote requirements to pass a budget and increase revenue. California is the only state in the union to have both requirements, and it has allowed a minority of our representatives to hold the budget hostage each year. The recent spate of budget battles has fostered a number of movements to restructure budget, governance, and revenues processes. Some of the efforts hold promise, while others are dangerous to social justice.

We need additional revenues to ensure that programs vital to the health of communities of color are fully funded. We need to reduce the two-thirds vote requirements for both passing a budget and for raising revenues. And we need to mobilize against proposals that would make it even harder to fund our programs, or make the state's revenue structure more regressive.

Ballot Propositions:
CPEHN is engaged in and tracking the following budget and revenue reform proposals that have made it onto the November 2, 2010 ballot:

• Prop 21 – Raise Vehicle License Fee (VLF): Establishes an $18 annual state vehicle license surcharge that would be used to operate, maintain, and repair the state park system, and to protect wildlife and natural resources. This new funding would help free up money to pay for other essential programs and services.
• Prop 24 – Repeal Corporate Tax Breaks: Repeals $2.5 billion in corporate tax breaks agreed to by California lawmakers as part of budget agreements in 2008.
• Prop 25 – Change Vote Requirement to Pass a Budget: Changes the legislative vote requirement necessary to pass the state budget from two-thirds to a simple majority. Leaves the two-thirds vote requirement needed to approve revenue increases in place. Provides that if the Legislature fails to pass a budget bill by June 15, all members of the Legislature will permanently forfeit any reimbursement for salary and expenses for every day until the day the Legislature passes a budget bill.

Two initiatives have qualified for the November 2^nd ballot that would make our revenue situation even more dire:

• Prop 22 – Prohibits State Borrowing of Local Funds: Prohibits the State even if faced with severe fiscal hardship from shifting, taking, borrowing, or restricting the use of tax revenues to fund local government services, community redevelopment projects, or transportation projects and services.
• Prop 26 – Increase Threshold to Raise Fees: Increases the vote threshold to raise fees from a majority to two-thirds making it much more difficult to raise fees as a way of balancing the state budget, and keeping polluters and tobacco companies free of fine increases. This would result in a potentially major decreases in state and local revenues and spending.

The following are some additional efforts CPEHN is engaged in and tracking:

CA Majority Rule - Restore Democracy to California (www.camajorityrule.com)
A broad coalition working to change the vote requirement to a majority for passing revenue and budget. They recently withdrew from circulation an initiative that would have required all legislative actions on revenue and budget to be determined by a majority vote.

Commission on the 21^st Century Economy (www.cotce.ca.gov)
Established by Governor Schwarzenegger, the Commission was charged with recommending changes to state revenue policy. The proposed recommendations would shift the burden of revenues from the wealthy to the middle- and low-income. The proposals include reducing the income tax and making it a flat tax, reducing sales taxes, eliminating the corporate tax, and creating a new type of value-added business tax.   

California Forward (www.caforward.org)
This foundation-funded civic group has put forward two initiatives that they believe will improve governance. One of their initiatives, which they named The Best Practices Budget Accountability Act, would allow budgets to be approved by majority vote, but makes matters worse by taking away the Legislature's right to raise fees by a majority vote. It also would require the Legislature to specify funding sources for new programs before they can start, and forces members of the Legislature to forfeit their pay if the state budget is late. This proposal would make the budget easier to pass every year, but would do so by making it harder for us to raise the revenue to fully fund vital health and human services programs. Their second initiative, The Community Funding Protection and Accountability Act, allows our schools and local governments to keep their funding from being borrowed by the state, and allow voters to approve county-wide sales tax increases. California Forward is hoping the legislature will place their proposals on the ballot.

Split Roll, “Close the Loophole” (www.closetheloophole.com)
San Francisco Assessor Phil Ting is pushing the idea to eliminate Proposition 13 limits on property tax increases for businesses only. Legislation to push the issue is being pursued through AB 2392 (Ammiano).

Additional Resources

California Budget Project: A nonpartisan, nonprofit organization seeking fiscal reforms to benefit low and moderate income Californians.

California's Budget Crisis: A report prepared for the Blue Shield of California Foundation provides a historical overview, recent reform efforts, and the affect of the recession on California's budget.