SCA 14

Bill Subjects

Abstract

(1) The California Constitution prohibits the annual appropriations subject to limitation, as defined, of any entity of state or local government from exceeding its adjusted annual appropriations limit and provides for the disposition of excess revenues received by the state, as specified. The California Constitution also establishes the Budget Stabilization Account, commonly known as the rainy day fund, in the General Fund, and requires the Controller, no later than September 30 of each year, to transfer from the General Fund to the account a sum equal to 3% of the estimated amount of General Fund revenues for the current fiscal year. This transfer of moneys is not required, unless otherwise directed by the Legislature by statute, in any fiscal year to the extent that the resulting balance in the account would exceed 5% of the General Fund revenue estimate set forth in the Budget Bill for that fiscal year, as enacted, or $8 billion, whichever is greater. This transfer of moneys may also be suspended or reduced for a fiscal year, as specified, by an executive order issued by the Governor. This measure would repeal the existing provisions imposing annual appropriations limits. Commencing in the 2013–14 fiscal year, the measure would instead impose an annual state expenditure limit based on total expenditures in the prior fiscal year, excluding specified amounts allocated to school districts and community college districts to meet a constitutional minimum funding obligation, from General Fund revenues and special fund revenues, adjusted for the percentage change in state population and the percentage change in the cost of living, as specified. The measure would authorize the expenditure limit to be exceeded for an emergency, as defined, declared by the Governor, not including revenue shortfalls, excessive spending, or other similar conditions limiting the ability to fund government operations. The measure would require the Director of Finance to report quarterly on the state's compliance with the expenditure limits for the current fiscal year. This measure would provide for the state expenditure limit discussed above to become permanently inoperative on the date that the Director of Finance determines that (A) the state's Budget Stabilization Account, which the measure would rename as the Budget Stabilization Fund, has a balance at least equal to 10% of the estimate of General Fund revenues, (B) all remaining current and future obligations from state budgetary debt, as defined, have been reduced to zero, and (C) the state is no longer deferring payments, as defined. Upon making this determination, the Director of Finance would be required to so notify the Joint Legislative Budget Committee. The provisions governing the Budget Stabilization Fund, as modified by this measure, would continue in operation after the state expenditure limit becomes inoperative, as discussed above. This measure would prohibit funds from being deposited into the Budget Stabilization Fund in any fiscal year in which all remaining obligations from state budgetary debt have not been reduced to zero. This measure would also provide that the transfer of moneys from the General Fund to the Budget Stabilization Fund is not required in any fiscal year to the extent that the resulting balance in the fund would exceed 10% of the General Fund revenues estimate set forth in the Budget Bill for that fiscal year, as enacted, and would delete the alternative $8 billion limit on the fund. This measure would provide that, apart from a transfer made for the purpose of responding to an emergency declared by the Governor, as defined, or a loan to meet General Fund cash requirements which would be repaid within a fiscal year, the total amount that may be transferred from the Budget Stabilization Fund to the General Fund for any fiscal year shall not exceed the lesser of the shortfall amount for the current fiscal year, as defined, or 50% of the balance of the Budget Stabilization Fund, depending upon specified criteria. In addition, this measure would create in the General Fund the Supplemental Budget Stabilization Account and would direct the Controller to transfer, on October 1 of each year beginning in 2013, from the Budget Stabilization Fund to the Supplemental Budget Stabilization Account a sum equal to 1.5% of the estimated amount of General Fund revenues for the current fiscal year, except that this transfer would not be made in a fiscal year for which funds were not required to be deposited into the Budget Stabilization Fund, as specified, or for which the Governor issues an executive order to suspend or reduce the transfer of moneys from the General Fund to the Budget Stabilization Fund. The measure would permit appropriations to be made from the Supplemental Budget Stabilization Account only for capital outlay purposes or to retire bonded indebtedness of the state. After the state expenditure limit described above becomes inoperative, the measure would provide for the calculation of "unanticipated revenues" for each fiscal year, and would authorize those revenues to be used only to meet constitutional school funding obligations, for deposit in the Budget Stabilization Fund, and for other specified purposes, in a specified order of priority. For purposes of this calculation this measure would require the Director of Finance, on or before the May 29 preceding each fiscal year to report to the Legislature and the Governor (A) an estimate of the amount of General Fund revenues, transfers, and balances available from the prior fiscal year for the current fiscal year, (B) the revenue forecast amount, as defined, for the current fiscal year, and (C) an estimate of specified General Fund obligations for the public schools. (2) The California Constitution requires that 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 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 prohibit a claim from being filed for reimbursement for any mandate if the mandate has been in effect for more than 2 years and no claim for that reimbursement was filed in that period. This measure would provide, as to specified mandates, that if the Legislature fails to either appropriate funds or suspend a mandate, any affected local government may commence an action in court for relief for the purpose of securing its rights pursuant to these provisions and, if that relief is granted in a final decision of a court of competent jurisdiction from which no further review is available, would require the state to provide the same subvention as is required by that court to any other local government that has a substantially similar claim or claims pending against the state. This measure would also provide that any taxpayer shall have standing to bring a legal action against the state for violating any of these provisions, subject to specified criteria. (3) The California Constitution establishes a minimum funding requirement for moneys to be applied by the state for the support of school districts and community college districts based on one of 3 tests in any given fiscal year (Proposition 98) . The first test applies, to the amount of General Fund revenues that may be appropriated pursuant to Article XIIIB of the California Constitution, the percentage of General Fund revenues that were appropriated for school districts and community college districts in the 1986–87 fiscal year. The 2nd and 3rd tests compute the minimum funding requirement based on the allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIIIB of the California Constitution, adjusted for changes in enrollment, cost of living, or per capita General Fund revenues, in the prior fiscal year. This measure instead would base these computations on the amount of General Fund revenues that may be expended pursuant to Article XIIIB of the California Constitution, in accordance with the changes to that article discussed above. (4) The California Constitution requires the Governor to submit to the Legislature, within the first 10 days of each calendar year, a proposed budget for the ensuing fiscal year containing itemized statements for recommended state expenditures and estimated state revenues. The California Constitution prohibits the Legislature from passing, and the Governor from signing, a Budget Bill that would appropriate from the General Fund 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 a reserve account, exceeds estimated General Fund revenues for that fiscal year. The estimate of General Fund revenues is required to be set forth in the Budget Bill. This measure would require the Governor, in his or her proposed budget, to identify estimated total state resources available to meet recommended state expenditures and, further, to identify the amount of those resources that are anticipated to be one-time resources. The measure would prohibit passage of a Budget Bill that appropriates an amount that, when combined with prior appropriations and transfers to the reserve account, exceeds the estimate of General Fund revenues, transfers, and balances available from the prior fiscal year. The measure would require the estimate of General Fund revenues, transfers, and balances to be set forth in the Budget Bill. (5) This measure would state that its provisions are severable.