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ACA-2 State expenditures.(2003-2004)

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ACA2:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2003–2004 5th Ext.

Assembly Constitutional Amendment
No. 2


Introduced  by  Assembly Member Campbell
(Coauthor(s): Assembly Member Benoit, Bogh, Dutton, La Malfa, La Suer, Maze, Plescia, Spitzer)
(Coauthor(s): Senator Knight, Margett)

November 20, 2003


A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by amending Section 12 of Article IV thereof, by repealing and adding Article XIII B thereof, and by amending Section 8.5 of Article XVI thereof, relating to state expenditures.


LEGISLATIVE COUNSEL'S DIGEST


ACA 2, as introduced, Campbell. State expenditures.
(1) Existing provisions of the California Constitution require the Governor to submit to the Legislature, and prescribe procedures for the Legislature to enact and send to the Governor, a Budget Bill for each fiscal year.
This measure would prohibit the Legislature from sending to the Governor, and the Governor from signing, a Budget Bill for which appropriations from the General Fund combined with all other General Fund appropriations to date for that fiscal year, exceed estimated General Fund revenues, unless there are sufficient unencumbered prior year funds available. This measure would require the Governor to propose any necessary budget adjustments to eliminate any negative balance projected to occur after the Budget Bill is enacted, and would prohibit the Legislature from sending any other bill to the Governor until legislation eliminating the negative balance has been enacted into law.
(2) 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 those provisions, and instead would limit total state General Fund and special fund expenditures to an annual increase of no more than the percentage increase in the cost of living, as specified, and the percentage increase in state population. The expenditure limits imposed by the measure would apply commencing with the 2004–05 fiscal year. The measure would require excess General Fund revenues to be allocated in prescribed amounts to a reserve account, to a deficit reduction bond account, and to personal income taxpayers.
(3) Existing provisions of the California Constitution provide 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, with specified exceptions.
This measure would prohibit the filing of a claim for reimbursement for any mandate if no claim for that reimbursement is filed within a 2-year period following the effective date of the mandate.
(4) This measure would become operative on July 1, 2004.
Vote: 2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

Resolved by the Assembly, the Senate concurring, That the Legislature of the State of California at its 2003–04 Regular Session commencing on the second day of December 2002, 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 12 of Article IV 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) The budget shall be accompanied by a budget bill itemizing recommended expenditures. The bill shall be introduced immediately in each house by the persons chairing the committees that consider appropriations. The Legislature shall pass the budget bill by midnight on June 15 of each year. 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) 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, combined with all appropriations from the General Fund for that fiscal year as of the date of the budget bill’s passage, exceeds the General Fund revenues estimated for that fiscal year by the Department of Finance, or the successor agency to that department, unless there are sufficient unencumbered prior year resources available to fund the excess expenditures. As used in this section, “unencumbered prior year resources” include, but are not limited to, any funds available in the Special Reserve Account that may be expended pursuant to Article XIII B.
(g) If, after enactment of the budget bill, the Director of Finance, or his or her successor, issues a written determination to the effect that the estimates upon which the budget bill is based are changed, and those changes are projected to result in a negative balance in the Special Fund for Economic Uncertainties as of June 30 of the fiscal year for which the budget bill is enacted, the Governor shall immediately propose any budget adjustments that are necessary to eliminate that negative balance. In that event, the Legislature shall not consider any other measure until it has passed and sent to the Governor legislation eliminating that negative balance, and the legislation has been enacted into law.
(h) Notwithstanding any other provision of this Constitution, any interested person shall have standing to bring a legal action against the State for violating any provision of this section. The action may seek declaratory relief, injunctive relief, a writ of mandate, damages, or any other relief that a court may deem appropriate.

Second

 That Article XIII B thereof shall remain in effect only until July 1, 2004, and as of that date is repealed.

Third

 That Article XIII B is added thereto, to read:
Article  XIII B 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 such conditions as 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 conditions of fiscal peril caused by revenue shortfalls, excessive spending, or imprudent budgetary decisions.
(b) “General Fund of the State” and “state special funds” include, but are not limited to, all sources of revenue allocated to the General Fund and to all state special funds in the 2004–05 fiscal year. Solely for the purpose of this article, “state special funds” include, but are not limited to, both of the following:
(1) All individual funds included in the State Treasury as “state special funds” in the 2004–05 fiscal year.
(2) Any other funds in the State Treasury that, in the 2004–05 or any subsequent fiscal year, are credited with revenues attributable to state-imposed taxes, fees, or regulatory exactions.
(c) “Percentage change in the cost of living” means the percentage change from April 1 of the prior year to April 1 of the current 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 from the prior year. For the purposes of this calculation, “current year” means the calendar year in which the fiscal year commences.

SEC. 2.
 (a) The total expenditures made in the 2004–05 fiscal year from the General Fund of the state and state special funds may not exceed the amount of revenues from the General Fund and state special funds for that fiscal year, as estimated by the Director of Finance in the 2004 May Revision.
(b) The total expenditures made, in the 2005–06 fiscal year or any subsequent fiscal year, from the General Fund of the State and state special funds may not increase from the amount of those total expenditures in the prior fiscal year by more than the amount resulting from multiplying the total expenditures for the prior fiscal year by the percentage increase in the cost of living, and multiplying that product by the percentage increase in the State’s population.
(c) If the total expenditures in a prior fiscal year are less than the amount of allowable expenditures for that year, then the amount of total expenditures for the next succeeding fiscal year may equal, but not exceed, that allowable amount.
(d) The expenditure limit imposed by this section may be exceeded for a fiscal year in an emergency, but any excess spending for that purpose shall be related to, and proportionate to the costs arising from, the emergency and shall not become part of the expenditure base for the purposes of determining the amount of allowable expenditures for the next fiscal year.

SEC. 3.
 Any General Fund revenue that may not be expended in the current fiscal year due to the expenditure limit imposed by this article shall be allocated as follows:
(a) (1) Fifty percent to the Special Reserve Account, which is hereby created in the General Fund of the State, to the extent that this account contains an amount less than or equal to 10 percent of the total amount of allowable expenditures for the current fiscal year.
(2) Notwithstanding any other provision of this article, money in the Special Reserve Account may be expended in an amount equal to the amount by which revenues reported by the Department of Finance, or its successor agency, for the fiscal year fall below the expenditure limit established by this section for the fiscal year.
(3) In addition, not more than 30 percent of the current balance of the funds in the Special Reserve Account may be expended for the purposes of an emergency, upon appropriation by the Legislature by a two-thirds vote of the membership of each house.
(4) Any funds expended from the Special Reserve Account pursuant to paragraph (2), but no funds expended from that account for the purposes of paragraph (3), are part of the expenditure base for the purposes of determining the amount of allowable expenditures pursuant to Section 2 for subsequent fiscal years.
(5) Subject to the 10-percent maximum amount specified in paragraph (1), any unexpended balance in the reserve account, including any interest earnings, shall carry over from one year to the next.
(b) Fifty percent to the Deficit Reduction Bond Account, which is hereby created in the General Fund of the State, to the extent that any deficit reduction bonds issued during 2004 remain outstanding. Any funds deposited into the Deficit Reduction Bond Account may be used only for the purpose of accelerating the retirement of outstanding deficit reduction bonds issued during 2004.
(c) Revenue that exceeds the amount that may be deposited into the Special Reserve Account and the Deficit Reduction Bond Account shall be transferred to the Taxpayer Rebate Account, which is hereby created in the General Fund of the State. These funds, together with any funds carried over from a prior fiscal year, shall be returned to taxpayers as a nonrefundable credit against personal income tax liabilities for the calendar year in which the fiscal year generating the excess revenues ended, if possible, but no later than the next succeeding calendar year except as otherwise specified by this subdivision. The credit amount shall be determined by the Director of Finance, or successor, and shall be an equal amount for each taxpayer. If the amount determined by the Director of Finance is less than twenty-five dollars ($25) per taxpayer, no credit shall be provided until the balance of the Taxpayer Rebate Account is sufficient to provide a credit of at least twenty-five dollars ($25) per taxpayer. Any funds not disbursed as a credit pursuant to this section shall be carried over from year to year in the Taxpayer’s Rebate Account, and shall earn interest at the Pooled Money Investment Account rate.

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 cost of living and the percentage increase in the State’s population.
(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 prior fiscal year.

SEC. 5.
 (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 local government affected.
(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 more than two years have passed since the effective date of the mandate 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) The subvention of funds required by this section shall be provided no later than the end of the fiscal year succeeding 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 State fails to provide the subvention as required by subdivision (d), any affected local government may commence an action in superior court for declaratory relief, injunctive relief, or any other appropriate relief for the purpose of securing its right or rights pursuant to this section. If that relief is granted, 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.

SEC. 6.
 (a) Whenever, based on the most recent Department of Finance estimates, or its successor agency, and based on laws then in effect, the estimated total amount of debt service for the current fiscal year or any of the succeeding four fiscal years on non-self-liquidating general obligation bonds and General Fund-supported lease revenue bonds exceeds 6 percent of the estimated General Fund revenues for that fiscal year, exclusive of transfers from other funds, during that fiscal year the Treasurer may not sell any additional non-self-liquidating general obligation bonds or General Fund-supported lease revenue bonds.
(b) If that percentage is 6 percent or less, the Treasurer may sell those bonds to the extent that, based on the most recent Department of Finance estimates, or its successor agency, and based on laws then in effect, the additional debt service will not cause the percentage to exceed 6 percent for the current fiscal year or any of the succeeding four fiscal years.
(c) During any time that the debt service percentage exceeds 6 percent, no measure to authorize additional general obligation bonds may be submitted to the voters by the Secretary of State, whether the proposed debt issuance is submitted by the Legislature or pursuant to an initiative.
(d) For the purposes of this section and Section 12 of Article IV, the Department of Finance, or its successor agency, at the time of publication of the Governor’s Budget in January, at the time of publication of the May Revision, and after the enactment of the Budget Act, shall publish estimates, for the current fiscal year and each of the succeeding four fiscal years, of debt service and General Fund revenues, excluding transfers, based on the law in effect at the time each estimate is made.
(e) For purposes of this section, “debt service” does not include any payments associated with deficit reduction bonds issued during 2004.

SEC. 7.
 Notwithstanding any other provision of law, including this Constitution, any interested person 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, damages, or any other relief that a court may deem appropriate.

Fourth

 That Section 8.5 of Article XVI 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 1 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 Each 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 school accountability report card for each school.

Fifth

 That Section 12 of Article IV as amended, Article XIII B as added by this measure, and Section 8.5 of Article XVI as amended shall become operative on July 1, 2004.

Sixth

 That the people declare the provisions of this measure to be severable, so that if any section, part, clause, or phrase herein is for any reason held to be invalid or unconstitutional, the remaining provisions shall not be affected and shall remain in full force and effect.