Contra Costa Times: California anti-tax group files spending cap initiative

California anti-tax groups file their own ballot initiative to curb spending
By Steven Harmon Bay Area News Group
Posted: 12/06/2011 04:02:35 PM PST
© Copyright 2011, Bay Area News Group

SACRAMENTO -- A day after Gov. Jerry Brown filed an initiative to raise taxes, anti-tax groups filed their own ballot measure to curb spending.

The measure would lock in recession-era spending levels, with fiscal year 2010-11 as the base year. Then, any revenues above that base, after being adjusted for inflation and population, would be used to pay off debt -- or, in flusher times, given to schools and returned to taxpayers.

That means if both the spending measure and Brown's proposed half-cent sales tax hike and new taxes on the wealthy are approved by voters next fall, much of the projected $7 billion in new revenue might never reach government coffers.

"We need a mechanism to make sure that the drunken sailor DNA of our Legislature doesn't kick in and that we put that money away and use it for debt reduction," said Jon Coupal, president of the Howard Jarvis Taxpayers Association.

All the competing ballot measures aimed at solving California's budget problems are adding up to a potentially wild and confusing election for next November, said Jack Pitney, a government and politics professor at Claremont McKenna College.

And that may be precisely what the anti-tax groups are counting on.

"If you're trying to limit government, your first option is to pass the spending limit," Pitney said. "If it doesn't pass, Plan B is to get people to vote no on everything. At least then you've blocked the tax increase."

Among the tax initiatives already filed are the governor's; a proposed progressive income-tax hike by wealthy civil rights attorney Molly Munger to raise $10 billion for schools; the Think Long Committee's measure, which also would raise $10 billion but largely by broadening the sales tax to include services; and a millionaires' tax measure backed by the California Federation of Teachers to raise $6 billion.

Spending-limit backers will need to collect 807,605 valid signatures for the constitutional amendment, which will cost about $2 million.

California has had a strict spending limit and a two-thirds vote requirement on most taxes since the late '70s, when voters passed the property-tax-slashing Proposition 13 and the Gann spending limit, named after the late Paul Gann, one of Proposition 13's authors.

Though the idea of limiting government has resounded through California and the nation since then, California voters in recent years have been wary to impose a straight jacket on the Legislature. They voted down spending limit proposals in 2005 and 2009.

Democrats in Sacramento believe they have the public on their side after having cut $56 billion in the past several years, and polls are showing voters may have had enough retrenchment.

"This proposed constitutional amendment would send California's public schools, universities and colleges sliding into perpetual mediocrity," said Senate President Pro Tem Darrell Steinberg, D-Sacramento. "Anyone who wants to restore our scholastic institutions, provide a brighter future for our children, and make our communities safer should be vehemently opposed to this proposed initiative."

The Democratic-led Legislature last year approved a spending-limit ballot measure, ACA 4, as part of budget negotiations with Republicans, but as part of this year's budget pushed back the vote until 2014.

"We believe it's been the out-of-control spending that has created the budget problems of California, yet the Legislature and special interests have no desire to control spending," said Joel Fox, president of the Small Business Action Committee. "No one's fooled that the ultimate goal of the delay (on the ACA 4 vote) is to eventually kill the measure."

The purpose of the latest initiative, said Teresa Casazza, the president of the California Taxpayers Association, is "to keep the Legislature from approving any excess spending, to prioritize the use of revenues in excess of the limits and, most important, to allow government to grow no faster than the economy.

"A spending limit is needed in these times," she said, adding that the current Gann spending-limit level is "so high that there is no limit." It is based on a complex formula that includes varying cost-of-living factors.

Coupal noted that if the lower 2011-12 spending levels were applied, "that would have been even more draconian."

Under the proposed new spending limit, if the debt is more than 5 percent of the state's revenues, excess revenues would be spent to reduce the debt. If it is less than 5 percent, money would be sent to schools and placed into a reserve up to $2 billion, Casazza said. If the amount goes above $2 billion, the rest would go back to taxpayers.

Organizers haven't worked out how the money would be redistributed to taxpayers, saying it would be left up to the Legislature.

Under the current Gann spending limit, excess revenues go equally to schools and taxpayers.

The proposal would also close down loopholes in Proposition 26, passed by voters last year. The law allows the Legislature to increase some taxes collected locally with a simple majority vote.

If the new spending-limit initiative passes, all tax hikes would require a two-thirds vote.

PROPOSED spending limits
A proposed ballot measure backed by anti-tax groups would lock in 2010-11 spending levels.
Any revenues above that recession-era base, after being adjusted for inflation and population, would be used to pay off debt -- or, in flusher times, given to schools and returned to taxpayers.
If the debt is more than 5 percent of the state's revenues, excess revenues would be spent to reduce the debt. If it is less than 5 percent, money would be sent to schools and placed into a reserve up to $2 billion. If the amount goes above $2 billion, the rest would go back to taxpayers.