BALLOT MEASURES

The California Labor Federation vote on the May 19th ballot measures resulted in the Federation taking a "No Recommendation" (NEUTRAL) position on all six initiatives (Measures 1A-F). However, we continue to encourage everyone to engage in this important election. Below is some helpful information about each measure. For additional information, visit the Secretary of State’s website at:http://www.voterguide.sos.ca.gov/quick-reference-guide/

As part of the September and February budget agreements, six measures were placed on the ballot for the upcoming May 19th Special Election. A seventh measure (open primaries) has been submitted for the 2010 Primary Election.

Prop 1A--Spending Cap (ACAx3 1):

Prop 1A would require the state to deposit 3% of annual General Fund revenues in the Budget Stabilization Fund (BSF) until the fund reached 12.5% of General Fund revenues. Each year, half of the revenues transferred to the BSF would be used to meet the obligations of the additional Prop 98 education payment (as proposed in Prop 1B), with any remaining portion of that amount reserved for retiring bond debt or for one-time capital outlay projects. Once the education payment is completed, or if the education measure fails altogether, the entire 1.5% would go to those debt and outlay purposes. This transfer provision would double the length of time it would take the state to meet the 12.5% threshold.

The measure would severely limit the conditions under which any funds could be withdrawn from the BSF. Each year, state spending would be tightly constrained, effectively resulting in a zero growth budget. In downturns, the budget could only increase over prior year spending with population and consumer price index adjustments. In economic booms, unanticipated revenues would be siphoned out of the General Fund to the BSF or to meet outstanding obligations. A recent analysis showed that if a spending cap had been in place this year, it would have required billions of dollars in additional cuts above and beyond all those proposed by the governor.

Additionally, while not included in the language of the ballot measure itself, passage of Prop 1A would trigger two other changes. First, it would extend many of the increased taxes and fees in the budget deal including: sales tax (additional year), vehicle license fee (two years), income tax surcharges (two years), and reduction in dependents’ credit (two years). Second, it would give the governor unilateral authority to enact mid-year budget cuts to a wide variety of state expenditures, resulting in increased gubernatorial budget authority.

Prop 1B--Prop 98 Payment (ACAx3 2):

In lieu of payments that would normally be owed to K-14 schools for education underfunding in the 2007-08 and 2008-09 budget years, this amendment calls foreducation payments totaling $9.3 billion. The payments would begin in the 2011-12 fiscal year and nearly all the funds would be allocated to school districts on a non-restricted basis, leaving districts to apportion the funds as they see fit. This payment is contingent upon passage of the spending cap measure.

PROP 1C--Lottery Securitization (SCA 12, 2008):

As part of the September budget deal, legislative leaders placed a measure on the ballot to allow the state to securitize future lottery revenues in order to plug part of the coming year’s budget gap. While the budget analysis banks $5 billion from the sale of future lottery proceeds, the constitutional amendment itself contains no limits on the length of time or the amount of money that could be raised through this or future securitization efforts. It also does not specify how that funding stream, which currently produces in excess of $1 billion a year for education, would be replaced in future years.

PROP 1D--Redirecting Prop 10 Funds (SBx3 17):

This measure would redirect funds from the Prop 10 (California Children and Families Act) Trust Fund to support state health and human services programs for the next five fiscal years. It would also permanently eliminate funding for mass communications regarding First 5 California programs and projects.

PROP 1E--Redirecting Prop 63 Funds (SBx3 10):

This measure would redirect $460.7 million of funding from Prop 63 (the Mental Health Services Act) to the Early and Periodic Screening, Diagnosis and Treatment Program, a children’s health program. The redirection of funds would occur for the 2009-10 and 2010-11 budget years.

PROP 1F--Legislative Pay Raises (SCA 8):

This measure would prohibit the California Citizens Compensation Commission from increasing the salaries of legislators or state officers during any fiscal year in which there is an operating deficit.