On April 8th the club took up the issue of Proposition 1A on the May 19th ballot, which is, in fact, a constitutional amendment. Our speaker was Paul Chatman, President of the Ocean View School Board.

According to Paul, the language in the proposition is unclear, making an already complicated proposition more confusing. In essence, Proposition 1A does three things:

1- It requires that a percentage of state revenues be set aside each fiscal year in a “budget stabilization fund” (Rainy Day Fund) until the fund reaches 12.5% of the state general fund. (Note: Whether this would be done in a deficit year is unclear.) California already has a Reserve fund but 1A changes how large the fund must be and how, when and for what it can be used.

2- Prop 1A is presented as a spending cap because until the target amount in the Rainy Day fund is reached, the amount spent cannot exceed the budget from the previous year plus factors for inflation and population increase. Pending that outcome, the fund could only be used for emergencies (fire, earthquake, etc.) or bond repayments and repayments of funds to Education, which latter caveat ties it to Proposition 1B, a repayment formula to begin in 2011. Even if 1B passes, it cannot be implemented if 1A fails. In addition, 1A does not actually limit state expenditures from other pots of money or other tax or fee increases.

3- Prop 1A extends for 1-2 years the recently passed two-year-only tax increases: the state income tax increase of .25% is extended thru the 2012 tax year; the vehicle license fee increase which went to 1.15% of vehicle value through 2013; the 1% sales tax increase through 2012.

Chatman made other important points. He says that 1A extends the piecemeal budgeting for which California is infamous, that it is really a short term fix, which is again typical of California’s budget process, and that it ties the hands of subsequent governors and legislatures. He indicated that the reasons for this are first, that term limits mean present members of the legislature have no reason to care how these “fixes” affect the maneuverability of their successors. Second, the prevalence of safe districts leads to fewer moderates on either side and third, the need for a 2/3 majority to pass a budget means a minority of legislators can hold the budget hostage. This, in turn, leads to the kind of ballot box budgeting represented by the May 19th propositions.

At the same time, we know that California is in dire straights. The Rainy Day fund established by Proposition 1A, and 1B would, beginning in 2011, restore most of the educational funding by directing that 1.5% of the fund go to education. The proponents claim it would stabilize the budget process and ensure the state puts aside money for “a rainy day” and does not spend wildly in good revenue years.

Because of its complications, the fact that it locks in formulas in a constitutional amendment that is difficult for the electorate alone to change, because it does nothing to address problems like the need for infrastructure spending and because it does nothing to address the dysfunctional budget process itself, many of the usual political allies are split on whether to support it or not. The California Teachers’ Association supports it. School administrators also support it. But the California Federation of Teachers opposes it as does a large faction of SEIU and the League of Women Voters.

A lively discussion following Paul’s presentation made it clear that the GOOD Club is, so far, also of two minds on Propositions 1A (and the other ballot measures). At the May 13th meeting we will hear more about it from Scott Frisch who will also address the other propositions.

by Ruth Capelle and Lauraine Effress