The State of California's Budget Crisis..

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The State of California's Budget Crisis..

• a lively analysis of our dysfunctional
  legislature....

Scott A. Frisch, Professor CSU Channel Islands
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The Crisis

• Governors Budget estimated a 41.6 Billion
  Shortfall
• Crisis the result of a dysfunctional budgetary
  system
• System has evolved over time largely through
  voter initiatives

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Structural Problems

• Over reliance on revenue streams that fluctuate
  wildly
• Two-Thirds Rule for Budget Passage
• Vehicle License Fee Reduction
• Ballot Box Budgeting
• Other Structural Problems

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Proposition 13 (1978)

• Overall Revenue Composition
• U.S. Average
• Income Taxes 25
• Sales Taxes 36
• Property Taxes 32

• California
• Income Taxes 32
• Sales Taxes 36
• Property Taxes 25

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Two-Thirds Budget Requirement
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Two-Thirds Requirement

• In 1933 California voters approved an initiative
  requiring a 2/3 vote when spending increased by
  more than 5
• In 1962 voters eliminated the 5 requirement
• Over the years, numerous commissions and reform
  groups have recommended eliminating the 2/3
  threshold

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Vehicle License Fee Reduction

• From 1948 through 1998 the Vehicle License fee
  was 2 of the vehicles value
• In 1998 Pete Wilson signed a law effectively
  reducing the VLF to 1.5 and authorizing a series
  of further cuts.
• By January 1, 2001, the VLF was reduced to .65
  (a 67.5 reduction)
• State backfills the difference to local
  governments

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Ballot Box Budgeting

• Voter Initiatives Frequently add spending and
  reduce the ability of the state to raise revenues
• For Example, Proposition 66 (1994) the Three
  Strikes and Youre Out Initiative
• Imposed additional court and corrections costs
  with no new funding

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Term Limits

• Very short Assembly three terms of two years
  (six years total) Senate two terms of four years
  (eight years total)
• Limits expertise
• Limits institutional memory
• Limits trust

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Gerrymandering

• Political boundaries are draw for partisan
  reasons
• Preponderance of safe districts (Democratic or
  Republican)
• Encourages party unity and discourages political
  moderates
• Uncertain impact of recent proposition

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Small Relative Size of the Legislature

• Legislative Districts By State
• California 120 (40/80)
• North Dakota 141 (47/94)
• Vermont 180 (30/150)
• Minnesota 201 (67/134)
• New York 212 (62/150)
• Each CA Senator Represents 846,791 people!

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Highlights of Enacted Budget
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Additional Budget Provisions

• Proposition 1A Spending Cap (May 19)
• Proposition 1C Bonds/Lottery funds (May 19)
• Proposition 1F Eliminate State Officials Salary
  Increase in Deficit years (May 19)
• Open Primary Proposition (June 8, 2010)

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Education

• K-12 Staffing in California costs more but
  results in fewer employees than average state
• U.S. 129 teachers/1000 students
• CA 92 teachers/1000 students

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Law Enforcement

• California spends 50 percent more than average on
  criminal justice, yet this results in fewer
  personnel per capita than average.

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Questions?