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SCA-4 State finance.(2003-2004)

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SCA4:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2003–2004 5th Ext.

Senate Constitutional Amendment
No. 4

Introduced  by  Senator Machado

December 05, 2003

A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by amending Sections 10 and 12 of Article IV thereof, and by adding Sections 1.3 and 20 to Article XVI thereof, relating to state finance.


LEGISLATIVE COUNSEL'S DIGEST


SCA 4, as introduced, Machado. State finance.
(1) Existing provisions of the California Constitution require the Governor to submit annually 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 provide that if, following the enactment of the annual Budget Bill, the Governor determines that General Fund revenues are anticipated to decline substantially below the estimate of General Fund revenues upon which the Budget Bill was based, as described below, or that General Fund expenditures are anticipated to increase substantially above that estimate of General Fund revenues, or both, the Governor may issue a proclamation declaring a fiscal emergency, which would identify the nature of the fiscal emergency and be accompanied by proposed legislation to address the fiscal emergency. It would provide that if the Legislature fails to pass and send to the Governor a bill or bills to address the fiscal emergency by the 45th day following the issuance of the proclamation, the Legislature may not act on any other bills, nor may the Legislature adjourn for a joint recess, until that bill or those bills have been passed and sent to the Governor. It would specify that a bill addressing the fiscal emergency shall be passed by a majority vote and take effect immediately, notwithstanding constitutional provisions that otherwise require a 2/3 vote for the enactment of an urgency statute or of a statute making certain appropriations from the General Fund.
(2) Existing provisions of the California Constitution require the Governor to submit to the Legislature a budget, as specified.
This measure would prohibit the Legislature from sending to the Governor for consideration, and the Governor from signing 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 made as of the date of the Budget Bill’s passage, exceeds the estimate of General Fund revenues, as specified, for that fiscal year.
(3) Existing provisions of the California Constitution require the Legislature to establish a prudent state reserve fund in an amount the Legislature deems reasonable and necessary.
This measure would, in addition, establish the Budget Stabilization Reserve Fund in the State Treasury and would require the Controller, commencing on July 15 of each fiscal year, to transfer from the General Fund to the Budget Stabilization Reserve Fund a specified amount of any excess General Fund revenues, as defined, for that fiscal year. The measure would prohibit the Legislature, except as specified, from appropriating moneys from the Budget Stabilization Reserve Fund in a fiscal year for which there are excess revenues in the General Fund, except to pay the principal, interest, or both, on bonded indebtedness incurred under the measure described below, or to address a fiscal imbalance, as described, that is declared by the Governor.
(4) Existing provisions of the California Constitution prohibit the creation by the Legislature of debts in excess of $300,000 except for a single object or work specified in a law creating the debt, which is approved by a2/3 vote of the members of each house of the Legislature and approved by the people by a majority of the votes cast at a general or direct primary election.
This measure would, for the purposes of those provisions, define a “single object or work,” for which the Legislature may create a debt or liability in excess of $300,000 subject to those requirements, to include the funding of an accumulated state budget deficit, as defined, and to the extent, and in the amount, that funding is authorized in a specified measure submitted to the voters at the March 2, 2004, statewide primary election. The measure would dedicate specified sales and use tax revenues to the repayment of that bonded indebtedness, and provide that those revenues are not General Fund moneys for purposes of the constitutional requirements of funding for school districts and community college districts.
(5) This measure would provide that its provisions would become operative only if the specified measure authorizing debt issuance is submitted to and approved by the voters at the March 2, 2004, statewide primary election.
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 2003–04 Fifth Extraordinary Session commencing on the eighteenth day of November 2003, 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 10 of Article IV is amended to read:

SEC. 10.
 (a) Each bill passed by the Legislature shall be presented to the Governor. It becomes a statute if it is signed by the Governor. The Governor may veto it by returning it with any objections to the house of origin, which shall enter the objections in the journal and proceed to reconsider it. If each house then passes the bill by rollcall vote entered in the journal, two thirds two-thirds of the membership concurring, it becomes a statute.
(b) (1) Any bill, other than a bill which would establish or change boundaries of any legislative, congressional, or other election district, passed by the Legislature on or before the date the Legislature adjourns for a joint recess to reconvene in the second calendar year of the biennium of the legislative session, and in the possession of the Governor after that date, that is not returned within 30 days after that date becomes a statute.
(2) Any bill passed by the Legislature before September 1 of the second calendar year of the biennium of the legislative session and in the possession of the Governor on or after September 1 that is not returned on or before September 30 of that year becomes a statute.
(3) Any other bill presented to the Governor that is not returned within 12 days becomes a statute.
(4) If the Legislature by adjournment of a special session prevents the return of a bill with the veto message, the bill becomes a statute unless the Governor vetoes the bill within 12 days after it is presented by depositing it and the veto message in the office of the Secretary of State.
(5) If the 12th day of the period within which the Governor is required to perform an act pursuant to paragraph (3) or (4) of this subdivision is a Saturday, Sunday, or holiday, the period is extended to the next day that is not a Saturday, Sunday, or holiday.
(c) Any bill introduced during the first year of the biennium of the legislative session that has not been passed by the house of origin by January 31 of the second calendar year of the biennium may no longer be acted on by the house. No bill may be passed by either house on or after September 1 of an even-numbered year except statutes calling elections, statutes providing for tax levies or appropriations for the usual current expenses of the State, and urgency statutes, and bills passed after being vetoed by the Governor.
(d) The Legislature may not present any bill to the Governor after November 15 of the second calendar year of the biennium of the legislative session.
(e) The Governor may reduce or eliminate one or more items of appropriation while approving other portions of a bill. The Governor shall append to the bill a statement of the items reduced or eliminated with the reasons for the action. The Governor shall transmit to the house originating the bill a copy of the statement and reasons. Items reduced or eliminated shall be separately reconsidered and may be passed over the Governor’s veto in the same manner as bills.
(f) (1) If, following the enactment of the budget bill for a fiscal year, the Governor determines that, for that fiscal year, General Fund revenues are anticipated to decline substantially below the estimate of General Fund revenues made pursuant to subdivision (f) of Section 12, or General Fund expenditures are anticipated to increase substantially above that estimate of General Fund revenues, or both, the Governor may issue a proclamation declaring a fiscal emergency. The proclamation shall identify the nature of the fiscal emergency and shall be submitted by the Governor to the Legislature, accompanied by proposed legislation to address the fiscal emergency.
(2) If the Legislature fails to pass and send to the Governor a bill or bills to address the fiscal emergency by the 45th day following the issuance of the proclamation, the Legislature may not act on any other bills, nor may the Legislature adjourn for a joint recess, until that bill or those bills have been passed and sent to the Governor.
(3) A bill addressing the fiscal emergency declared pursuant to this section shall contain a statement to that effect, shall be passed by each house by a rollcall vote entered into the journal, a majority of the membership concurring, and shall go into effect immediately. A bill as described in this paragraph is exempt from the vote requirements of subdivision (d) of Section 8, and subdivision (d) of Section 12, of this article, but is subject to Section 3 of Article XIII A.

Second

 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) (1) The budget shall be accompanied by a budget bill itemizing recommended expenditures. The
(2) The budget bill shall be introduced immediately in each house by the persons chairing the committees that consider appropriations. The the budget.
(3) The Legislature shall pass the budget bill by midnight on June 15 of each year. Until
(4) 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 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) (1) 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 made as of the date of the budget bill’s passage, exceeds estimated General Fund revenues for that fiscal year. The Governor shall submit an estimate of General Fund revenues for the ensuing fiscal year to the Legislature no later than June 1 preceding that fiscal year. The Legislature shall adopt an estimate of General Fund revenues for that fiscal year which shall be set forth in the budget bill.
(2) For purposes of this subdivision, “General Fund revenues” include moneys in the Budget Stabilization Reserve Fund established pursuant to Section 20 of Article XVI only to the extent those moneys are appropriated pursuant to that section for the current fiscal year.
(3) For purposes of this subdivision, “General Fund revenues” do not include the proceeds of borrowing.

Third

 That Section 1.3 is added to Article XVI thereof, to read:

SEC. 1.3.
 (a) For the purposes of Section 1, a “single object or work,” for which the Legislature may create a debt or liability in excess of three hundred thousand dollars ($300,000) subject to the requirements set forth in Section 1, includes the funding of an accumulated state budget deficit to the extent, and in the amount, that funding is authorized in a measure submitted to the voters at the March 2, 2004, statewide primary election.
(b) As used in this section, “accumulated state budget deficit” means the aggregate of both of the following:
(1) The estimated negative balance of the Special Fund for Economic Uncertainties arising on or before June 30, 2004, excluding the effect of the estimated amount of net proceeds of any bonds issued or to be issued pursuant to the California Fiscal Recovery Financing Act (Title 17 (commencing with Section 99000) of the Government Code) and any bonds issued or to be issued pursuant to the measure submitted to the voters at the March 2, 2004, statewide primary election as described in subdivision (a).
(2) Other General Fund obligations incurred by the State prior to June 30, 2004, to the extent not included in that negative balance, as certified by the Director of Finance.
(c) The revenues deposited pursuant to Sections 6201.6 and 7101.3 of the Revenue and Taxation Code into the Fiscal Recovery Fund established pursuant to Section 99008 of the Government Code are dedicated to the repayment of principal and interest on the indebtedness incurred pursuant to the measure described in subdivision (a), and are not “General Fund proceeds of taxes” or “General Fund revenues” for the purposes of Section 8.

Fourth

 That Section 20 is added to Article XVI thereof, to read:

SECTION 20.
 (a) The Budget Stabilization Reserve Fund is hereby created in the State Treasury. Contributions to, and withdrawals from, the fund shall be subject to Section 5 of Article XIII B.
(b) (1) In each fiscal year, from the total amount of any excess revenues in the General Fund, the Controller shall transfer to the Budget Stabilization Reserve Fund the lesser of the following amounts:
(A) The percentage of all excess revenues for the fiscal year specified by clause (i) or (ii), as applicable:
(i) Seventy percent. This clause applies until the total amount of five billion dollars ($5,000,000,000) has been appropriated from the Budget Stabilization Reserve Fund to pay principal, interest, or both, on the bonded indebtedness incurred pursuant to the measure described in Section 1.3, or, regardless of the source of funding, until the principal and interest on that bonded indebtedness have been fully repaid, whichever occurs first. Notwithstanding any other provision of this Constitution, until one of those conditions is met, revenues transferred to the Budget Stabilization Reserve Fund pursuant to this clause may be expended only for the payment of principal, interest, or both, as described in this clause.
(ii) Fifty percent. This clause applies to any fiscal year to which clause (i) does not apply.
(B) The amount necessary to bring the total funds in the Budget Stabilization Reserve Fund to an amount equal to 5 percent of total General Fund expenditures for the immediately preceding fiscal year, or eight billion dollars ($8,000,000,000), whichever is greater.
(2) The Controller shall make the transfer described in paragraph (1) for a fiscal year on or after July 15 of that fiscal year as soon as is feasible in light of the cash flow condition of the General Fund.
(c) For purposes of this section, “excess revenues” means the result of subtracting the amount in paragraph (2) from the amount in paragraph (1):
(1) The estimate of General Fund revenues for the current fiscal year made pursuant to subdivision (f) of Section 12 of Article IV.
(2) The sum of (A) and (B), as follows:
(A) (i) The average annual amount of the calculation in clause (ii) for the three immediately preceding fiscal years, adjusted for the change in the cost of living and the change in population from the respective fiscal year as determined pursuant to Section 8 of Article XIII B.
(ii) The amount of total expenditures from the General Fund for that fiscal year, reduced by the amount of any allocations required for that fiscal year pursuant to subdivision (e) of Section 8 of this article.
(B) The amount of any allocations required pursuant to subdivision (e) of Section 8 of this article for the current fiscal year, and each of the three immediately preceding fiscal years, adjusted for the change in the growth factors from the respective fiscal year as determined pursuant to subdivision (b) of Section 8 of this article.
(d) Subject to paragraph (2) of subdivision (f) of Section 12 of Article IV, moneys in the Budget Stabilization Reserve Fund are General Fund revenues for all purposes of this Constitution except that, in a fiscal year for which the Controller determines pursuant to this section that there are excess revenues in the General Fund, the Legislature may appropriate moneys from the Budget Stabilization Reserve Fund only for one or both of the following purposes:
(1) The payment of principal, interest, or both, on the bonded indebtedness incurred pursuant to the measure described in Section 1.3.
(2) Upon a declaration by the Governor that, for that fiscal year, either General Fund revenues are anticipated to decline substantially below the estimate of General Fund revenues made pursuant to subdivision (f) of Section 12 of Article IV, or General Fund expenditures are anticipated to increase substantially above that estimate of General Fund revenues, or both, expenditures to address the circumstances identified by the Governor.

Fifth

 That this measure shall become operative only if the measure described in subdivision (a) of Section 1.3 of Article XVI is submitted to and approved by the voters at the March 2, 2004, statewide primary election.