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April 15, 2009
SBACC Takes
Action on May 19 Special Election Propositions
The South Bay Association of Chambers of Commerce (SBACC)
released its positions on the May 19, 2009 Special Election
ballot propositions. The ballot propositions are part of the
2009-2010 state budget agreement between the Governor and
Legislature designed to help balance the state budget
through various increase in length of time of taxes,
shifting of former voter-approved propositions and borrowing
of funds from future state lottery revenues.
Proposition 1A – “Rainy Day” Budget Stabilization Fund
SBACC Position: SUPPORT
Proposition 1A
would stabilize long-term budget spending by limiting of the
state’s spending based on 10-year revenue trends. It creates
a Budget Stabilization Fund, also known as a “Rainy Day”
fund, which will allow the State of California to save when
the economy is prospering and therefore can be used when the
economy is in a decline.
As of April 1, 2009 several categories of taxes increased
based on the budget agreement in February. The passage of
Proposition 1A only allows the length of time of the tax
increases to be extended, not the actual amount of tax. The
tax increases would be extended for one or two additional
years depending on the particular tax. It is estimated that
State tax revenues would increase by about $16 billion.
The following tax increase extensions will only go into
effect if Proposition 1A passes:
• The sales tax increase of 1 % would be extended for one
year through 2011 – 2012.
• The Vehicle License Fee (VLF) tax increase would be
extended for two years through 2012 – 2013 from .65% to
1.15%.
• The personal income tax-related increases would be
extended for two more years, through the 2012 tax year.
Proposition 1B – Education Funding. Payment Plan
SBACC Position: OPPOSE
Proposition 1B
would modify how voter-approved revenue for education could
be used to balance the state budget. The State would be
allowed to borrow from the education fund in order to give
flexibility for balancing the state budget. In return,
Proposition 1B ensures that the schools would be paid back
over time starting in 2011.
Payments to schools will come out of the newly created
Budget Stabilization Fund as outlined in Proposition 1A. In
order for the funding guarantees in Proposition 1B to take
place, Proposition 1A would also need to be passed.
Proposition 1C – Lottery Modernization Act
SBACC Position: NEUTRAL
Proposition 1C
will allow the State to immediately borrow $5 billion from
future protected State Lottery revenue in order to balance
the current State Budget deficit. The changes could increase
lottery ticket sales and allow the state to borrow $5
billion from future lottery profits.
Proposition 1C involves selling an asset (future lottery
profits) to investors through a bond transaction by
converting a stream of future annual payments into a “lump
sum.” This type of borrowing – referred to as securitization
– is somewhat different from most other types of state
borrowing in that it involves no legal commitment to use
General Fund tax revenues to pay investors.
Proposition 1D – Children’s Services Funding
SBACC Position: SUPPORT
Proposition 1D
temporarily redirects a portion of excess funds from a prior
voter-approved tobacco tax to the general fund in providing
for more flexibility of shifting funds to balance the state
budget.
This would achieve state savings of up to $608 million in
2009 and $268 million annually from 2010 – 2014.
Proposition 1E – Mental Health Funding Budget
SBACC Position: SUPPORT
Proposition 1E
temporarily redirects funds from the Mental Health Services
Act to fund children’s health programs that are at risk of
elimination due to the budget crisis, including health care
screening, diagnosis and treatment.
Similar to Proposition 1D in that it allows once again more
general flexibility of shifting funds from voter-approved
funding measures in order to help balance the budget.
Proposition 1D and Proposition 1E are consider short term
fixes.
Proposition 1F – Elected Officials’ Salaries
SBACC Position: SUPPORT
Proposition 1F
amends the State Constitution to prevent the California
Citizens Compensation Commission from increasing the annual
salaries of State elected officials when the state General
Fund is expected to end the year with a deficit. |
