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SCA-16 Appropriations limit.(2001-2002)

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SCA16:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2001–2002 REGULAR SESSION

Senate Constitutional Amendment
No. 16

Introduced  by  Senator McClintock, Haynes, Knight, Margett, Monteith, Morrow, Oller
 (Coauthor(s): Assembly Member Bates, Briggs, Bill Campbell, John Campbell, Cox, Harman, Hollingsworth, La Suer, Mountjoy, Robert Pacheco, Rod Pacheco, Runner, Strickland, Wyman)

April 17, 2002

A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by amending Sections 1, 2, 3, 6, 7, 8, and 10.5 of, and repealing Sections 9, 10, 12, and 13 of, Article XIII B thereof, and by amending Section 8 of, and repealing Section 8.5 of, Article XVI thereof, relating to appropriations limitations.


LEGISLATIVE COUNSEL'S DIGEST


SCA 16, as introduced, McClintock. Appropriations limit.
Existing provisions of the California Constitution prohibit the annual appropriations subject to limitation, as defined, of an entity of government from exceeding its annual appropriations limit; provide for annual adjustments in that limit based on changes in the cost of living and population, calculated in a specified manner; and 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 the state by a revision of tax rates or fee schedules within the next 2 subsequent fiscal years. An existing provision of the California Constitution provides that, for purposes of adjusting the appropriations limit for any fiscal year, in the event an emergency is declared by the Governor, appropriations approved by a two-thirds vote of the legislative body of an affected entity of government to an emergency account for expenditures related to that emergency shall not constitute appropriations subject to limitation.
This measure would provide that the total annual appropriations subject to limitation of an entity of government may not exceed its appropriations limit for the prior fiscal year adjusted for the change in the cost of living and the change in population. All excess funds collected by the state above these limits would be required to be held in a rebate account. Within 30 days of the close of the end of the fiscal year, all funds in the rebate account would be required to be rebated to the taxpayers on a pro rata basis to those who paid taxes on, or measured by, income for taxable years beginning during the prior calendar year. The measure would also provide that for purposes of adjusting the appropriation limit for any fiscal year, in the event an emergency is declared by the Governor, an appropriation approved by a4/5 vote of the legislative body of an affected entity of government to an emergency account for expenditures related to that emergency shall not constitute an appropriation subject to limitation. The measure would delete provisions that exclude various items from the definition of “appropriations subject to limitation” and would revise other definitions as specified. The measure would specify that the appropriations limit shall be the appropriations limit for the 2002–03 fiscal year for fiscal years beginning on and after the effective date of this measure.
Vote: 2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  
Resolved by the Senate, the Assembly concurring, That the Legislature of the State of California at its 2001–02 Regular Session commencing on the fourth day of December 2000, 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 1 of Article XIII B thereof is amended to read:

SEC. 1.
 The total annual appropriations subject to limitation of the State and of each local government shall may not exceed the appropriations limit of the entity of government for the prior fiscal year adjusted for the change in the cost of living and the change in population, except as otherwise provided in this article.

Second

 That Section 2 of Article XIII B thereof is amended to read:

SEC. 2.
 (a) (1)Fifty percent of all revenues received by the State in a fiscal year and in the fiscal year immediately following it in excess of the amount which may be appropriated by the State in compliance with this article during that fiscal year and the fiscal year immediately following it shall be transferred and allocated, from a fund established for that purpose, pursuant to Section 8.5 of Article XVI.
(2)Fifty percent of all All revenues received by the State in a fiscal year and in the fiscal year immediately following it in excess of the amount which that may be appropriated by the State in compliance with this article during that fiscal year and the fiscal year immediately following it shall be returned by a revision of tax rates or fee schedules within the next two subsequent fiscal years held in a rebate account to be used for purposes of this article.
(b) At the end of each fiscal year all funds in the rebate account established pursuant to subdivision (a) shall be rebated to the taxpayers of California on a pro rata basis to persons, corporations, or other entities that paid taxes on, or measured by, income for taxable years beginning during the prior calendar year. The Franchise Tax Board and the Controller shall jointly undertake any and all actions that will facilitate the timely issuance of those rebates. The provisions of this subdivision are self-executing, but legislation not in conflict with those provisions may be enacted to facilitate its operation.
(c) All revenues received by an entity of government, other than the State, in a fiscal year and in the fiscal year immediately following it in excess of the amount which that may be appropriated by the entity in compliance with this article during that fiscal year and the fiscal year immediately following it shall be returned by a revision of tax rates or fee schedules within the next two subsequent fiscal years within 30 days of the close of the fiscal year on an appropriate pro rata basis that shall be established in advance by the governing body of that entity.

Third

 That Section 3 of Article XIII B thereof is amended to read:

SEC. 3.
 The appropriations limit for any fiscal year pursuant to Sec. Section 1 shall be adjusted as follows:
(a) In the event that If the financial responsibility of providing services is transferred, in whole or in part, whether by annexation, incorporation or otherwise, from one entity of government to another, then for the year in which such that transfer becomes effective the appropriations limit of the transferee entity shall be increased by such a reasonable amount as the said those entities shall mutually agree and the appropriations limit of the transferor entity shall be decreased by the same amount.
(b) In the event that If the financial responsibility of providing services is transferred, in whole or in part, from an entity of government to a private entity, or the financial source for the provision of services is transferred, in whole or in part, from other revenues of an entity of government, to regulatory licenses, user charges or user fees, then for the year of such the transfer the appropriations limit of such that entity of government shall be decreased accordingly.
(c) (1) In the event If an emergency is declared by the legislative body of an entity of government, the appropriations limit of the affected entity of government may be exceeded provided that the appropriations limits in the following three years are reduced accordingly to prevent an aggregate increase in appropriations resulting from the emergency.
(2) In the event If an emergency is declared by the Governor, appropriations approved by a two-thirds four-fifths vote of the legislative body of an affected entity of government to an emergency account for expenditures relating to that emergency shall not constitute appropriations subject to limitation. As used in this paragraph, “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 such conditions as attack or probable or imminent attack by an enemy of the United States, fire, flood, drought, storm, civil disorder, earthquake, or volcanic eruption.

Fourth

 That Section 6 of Article XIII B is amended to read:

SEC. 6.
 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 such local government for the costs of such program or increased level of service, except that the Legislature may, but need not, provide such subvention of funds for the following mandates:

(a)Legislative mandates requested by the local agency affected;

(b)Legislation defining a new crime or changing an existing definition of a crime; or

(c)Legislative mandates enacted prior to January 1, 1975, or executive orders or regulations initially implementing legislation enacted prior to January 1, 1975. No local government shall be required to fulfill any mandate imposed by the State unless and until, and shall be required to fulfill that mandate only to the extent that, funds are appropriated for that purpose.

Fifth

 That Section 7 of Article XIII B is amended to read:

SEC. 7.
 (a) Nothing in this Article article shall be construed to impair the ability of the State or of any local government to meet its obligations with respect to existing or future bonded indebtedness.
(b) Appropriations subject to limitation for all entities of government do not include appropriations for debt service.
(c) The State shall not incur greater general obligation bond debt than is outstanding, as sold or authorized on December 31, 2002. This limit shall be adjusted annually to reflect increases or decreases in the state’s population growth and the cost of living. This limitation of bonded indebtedness shall be enforced as follows:
(1) On January 1 of every year the Controller shall determine the general obligation debt capacity that will be available by subtracting all outstanding general obligation bonds and those bonds previously authorized for sale that have not been sold from the adjusted limitation of bonded indebtedness set forth above.
(2) During that calendar year the Attorney General shall disqualify any bond measure submitted for a title and summary that individually exceeds the general obligation debt capacity established by the Controller.
(3) During that calendar year no bond measure that must be submitted for voter approval may be approved by the Legislature or the Governor that would individually exceed the general obligation debt capacity as established by the Controller.
(4) The Treasurer may not sell any authorized bonds that would cause the debt limit set forth in this section to be exceeded.

Sixth

 That Section 8 of Article XIII B thereof is amended to read:

SEC. 8.
 As used in this article and except as otherwise expressly provided herein:
(a) “Appropriations subject to limitation” of the State means any authorization to expend during a fiscal year the proceeds of taxes levied by or for the State, exclusive of state subventions for the use and operation of local government (other than subventions made pursuant to Section 6) and further exclusive of refunds of taxes, benefit payments from retirement, unemployment insurance, and disability insurance funds.
(b) “Appropriations subject to limitation” of an entity of local government means any authorization to expend during a fiscal year the proceeds of taxes levied by or for that entity and the proceeds of state subventions to that entity (other than subventions made pursuant to Section 6) exclusive of refunds of taxes.
(c) “Proceeds of taxes” shall include, but are not be restricted to, all tax revenues and the proceeds to an entity of government, from (1) regulatory licenses, user charges, and user fees to the extent that those proceeds exceed the costs reasonably borne by that entity in providing the regulation, product, or service, and (2) the investment of tax revenues. With respect to any local government, “proceeds of taxes” shall include subventions received from the State, other than pursuant to Section 6, and, with respect to the State, proceeds of taxes shall exclude such those subventions.
(d) “Local government” means any city, county, city and county, school district, special district, authority, or other political subdivision of or within the State.
(e) (1) “Change in the cost of living” for the State, a school district, or a community college district means the percentage change in the California per capita personal income Consumer Price Index from the preceding year.
(2) “Change in the cost of living” for an entity of local government, other than a school district or a community college district, shall be either (A) the percentage change in the California per capita personal income Consumer Price Index from the preceding year, or (B) the percentage change in the local assessment roll from the preceding year for the jurisdiction due to the addition of local nonresidential new construction. Each entity of local government shall select its change in the cost of living pursuant to this paragraph annually by a recorded vote of the entity’s governing body.
(f) (1) “Change in population” of any entity of government, other than the State, a school district, or a community college district, shall be determined by a method prescribed by the Legislature.

“Change

(2) “Change in population” of a school district or a community college district shall be the percentage change in the average daily attendance of the school district or community college district from the preceding fiscal year, as determined by a method prescribed by the Legislature.

“Change

(3) “Change in population” of the State shall be determined by adding (1) the percentage change in the State’s population multiplied by the percentage of the State’s budget in the prior fiscal year that is expended for other than educational purposes for kindergarten and grades one to 12, inclusive, and the community colleges, and (2) the percentage change in the total statewide average daily attendance in kindergarten and grades one to 12, inclusive, and the community colleges, multiplied by the percentage of the State’s budget in the prior fiscal year that is expended for educational purposes for kindergarten and grades one to 12, inclusive, and the community colleges from the preceding year.

Any

(4) Any determination of population pursuant to this subdivision, other than that measured by average daily attendance, shall be revised, as necessary, to reflect the periodic census conducted by the United States Department of Commerce, or successor department.
(g) “Debt service” means appropriations required to pay the cost of interest and redemption charges, including the funding of any reserve or sinking fund required in connection therewith, on indebtedness existing or legally authorized as of January 1, 1979, or on bonded indebtedness thereafter approved according to law by a vote of the electors of the issuing entity voting in an election for that purpose.
(h) The “appropriations limit” of each entity of government for each fiscal year is that amount which total annual appropriations subject to limitation may not exceed under Sections 1 and 3. However, the “appropriations limit” of each entity of government for fiscal year 1978–79 is the total of the appropriations subject to limitation of the entity for that fiscal year. For fiscal year 1978–79, state subventions to local governments, exclusive of federal grants, are deemed to have been derived from the proceeds of state taxes.
(i) Except as otherwise provided in Section 5, “appropriations subject to limitation” do not include local agency loan funds or indebtedness funds, investment (or authorizations to invest) funds of the State, or of an entity of local government in accounts at banks or savings and loan associations or in liquid securities.

Seventh

 That Section 9 of Article XIII B thereof is repealed.

“Appropriations subject to limitation” for each entity of government do not include:

(a)Appropriations for debt service.

(b)Appropriations required to comply with mandates of the courts or the federal government which, without discretion, require an expenditure for additional services or which unavoidably make the provision of existing services more costly.

(c)Appropriations of any special district which existed on January 1, 1978, and which did not as of the 1977–78 fiscal year levy an ad valorem tax on property in excess of 1212 cents per $100 of assessed value; or the appropriations of any special district then existing or thereafter created by a vote of the people, which is totally funded by other than the proceeds of taxes.

(d)Appropriations for all qualified capital outlay projects, as defined by the Legislature.

(e)Appropriations of revenue which are derived from any of the following:

(1)That portion of the taxes imposed on motor vehicle fuels for use in motor vehicles upon public streets and highways at a rate of more than nine cents ($0.09) per gallon.

(2)Sales and use taxes collected on that increment of the tax specified in paragraph (1).

(3)That portion of the weight fee imposed on commercial vehicles which exceeds the weight fee imposed on those vehicles on January 1, 1990.

Eighth

 That Section 10 of Article XIII B thereof is repealed.

This Article shall be effective commencing with the first day of the fiscal year following its adoption.

Ninth

 That Section 10.5 of Article XIII B thereof is amended to read:

SEC. 10.5.
 For fiscal years beginning on or after July 1, 1990, the effective date of a measure amending this section in the year 2002 or thereafter, the appropriations limit of each entity of government shall be the appropriations limit for the 1986–87 2002–03 fiscal year adjusted for the changes made from that fiscal year pursuant to this article, as amended by the measure adding amending this section in the year 2002 or thereafter, adjusted for the changes required by Section 3.

Tenth

 That Section 12 of Article XIII B thereof is repealed.

“Appropriations subject to limitation” of each entity of government shall not include appropriations of revenue from the Cigarette and Tobacco Products Surtax Fund created by the Tobacco Tax and Health Protection Act of 1988. No adjustment in the appropriations limit of any entity of government shall be required pursuant to Section 3 as a result of revenue being deposited in or appropriated from the Cigarette and Tobacco Products Surtax Fund created by the Tobacco Tax and Health Protection Act of 1988.

Eleventh

 That Section 13 of Article XIII B thereof is repealed.

“Appropriations subject to limitation” of each entity of government shall not include appropriations of revenue from the California Children and Families First Trust Fund created by the California Children and Families First Act of 1998. No adjustment in the appropriations limit of any entity of government shall be required pursuant to Section 3 as a result of revenue being deposited in or appropriated from the California Children and Families First Trust Fund. The surtax created by the California Children and Families First Act of 1998 shall not be considered General Fund revenues for the purposes of Section 8 of Article XVI.

Twelfth

 That Section 8 of Article XVI thereof is amended to read:

SEC. 8.
 (a) From all state revenues there shall first be set apart the moneys to be applied by the State for support of the public school system and public institutions of higher education.
(b) Commencing with the 1990–91 fiscal year, the moneys to be applied by the State for the support of school districts and community college districts shall be not less than the greater of the following amounts:
(1) The amount which that, as a percentage of General Fund revenues which that may be appropriated pursuant to Article XIII B, equals the percentage of General Fund revenues appropriated for school districts and community college districts, respectively, in fiscal year 1986–87.
(2) The amount required to ensure that the total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B and allocated local proceeds of taxes shall not be less than the total amount from these sources in the prior fiscal year, excluding any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for changes in enrollment and adjusted for the change in the cost of living pursuant to paragraph (1) of subdivision (e) of Section 8 of Article XIII B. This paragraph shall be operative only in a fiscal year in which the percentage growth in the California per capita personal income Consumer Price Index is less than or equal to the percentage growth in per capita General Fund revenues plus one half of one percent.
(3) (A) The amount required to ensure that the total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B and allocated local proceeds of taxes shall equal the total amount from these sources in the prior fiscal year, excluding any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for changes in enrollment and adjusted for the percentage changein per capita General Fund revenues.
(B) In addition, an amount equal to one-half of one percent times the prior year total allocations to school districts and community colleges from General Fund proceeds of taxes appropriated pursuant to Article XIII B and allocated local proceeds of taxes, excluding any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for changes in enrollment.
(C) This paragraph (3) shall be operative only in a fiscal year in which the percentage growth in the California per capita personal income Consumer Price Index in a fiscal year is greater than the percentage growth in per capita General Fund revenues plus one half one-half of one percent.
(c) In any fiscal year, if the amount computed pursuant to paragraph (1) of subdivision (b) exceeds the amount computed pursuant to paragraph (2) of subdivision (b) by a difference that exceeds one and one-half percent of General Fund revenues, the amount in excess of one and one-half percent of General Fund revenues shall not be considered allocations to school districts and community colleges for purposes of computing the amount of state aid pursuant to paragraph (2) or 3 (3) of subdivision (b) in the subsequent fiscal year.
(d) In any fiscal year in which school districts and community college districts are allocated funding pursuant to paragraph (3) of subdivision (b) or pursuant to subdivision (h) (g), they shall be entitled to a maintenance factor, equal to the difference between (1) the amount of General Fund moneys which that would have been appropriated pursuant to paragraph (2) of subdivision (b) if that paragraph had been operative or the amount of General Fund moneys which that would have been appropriated pursuant to subdivision (b) had subdivision (b) not been suspended, and (2) the amount of General Fund moneys actually appropriated to school districts and community college districts in that fiscal year.
(e) The maintenance factor for school districts and community college districts determined pursuant to subdivision (d) shall be adjusted annually for changes in enrollment, and adjusted for the change in the cost of living pursuant to paragraph (1) of subdivision (e) of Section 8 of Article XIII B, until it has been allocated in full. The maintenance factor shall be allocated in a manner determined by the Legislature in each fiscal year in which the percentage growth in per capita General Fund revenues exceeds the percentage growth in the California per capita personal income Consumer Price Index. The maintenance factor shall be reduced each year by the amount allocated by the Legislature in that fiscal year. The minimum maintenance factor amount to be allocated in a fiscal year shall be equal to the product of General Fund revenues from proceeds of taxes and one-half of the difference between the percentage growth in per capita General Fund revenues from proceeds of taxes and in the California per capita personal income Consumer Price Index, not to exceed the total dollar amount of the maintenance factor.
(f) For purposes of this section, “changes in enrollment” shall be measured by the percentage change in average daily attendance. However, in any fiscal year, there shall be no adjustment for decreases in enrollment between the prior fiscal year and the current fiscal year unless there have been decreases in enrollment between the second prior fiscal year and the prior fiscal year and between the third prior fiscal year and the second prior fiscal year.

(h)

(g) Subparagraph (B) of paragraph (3) of subdivision (b) may be suspended for one year only when made part of or included within any bill enacted pursuant to Section 12 of Article IV. All other provisions of subdivision (b) may be suspended for one year by the enactment of an urgency statute pursuant to Section 8 of Article IV, provided that the urgency statute may not be made part of or included within any bill enacted pursuant to Section 12 of Article IV.

Thirteenth

 That Section 8.5 of Article XVI thereof is repealed.

(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 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.