Public Policy Department

Legislation

Current Legislation

Prop 1A

Proposition 1A was on the ballot in the special election of May 2009, called for by Governor. It was defeated by a vote of 65%to 34%.

The official title of the measure was “STATE BUDGET. CHANGES CALIFORNIA BUDGET PROCESS. LIMITS STATE SPENDING. INCREASES “RAINY DAY” BUDGET STABILIZATION FUND.” Provisions of Proposition 1A would have increased the size of the state “Rainy Day” fund from 5% to 12.5% of the General Fund while a portion of the annual deposits would be dedicated to saving for future economic downturns with the remaining money allocated to fund education, infrastructure, and debt repayment.

The Legislative Analyst’s Estimate of Net Scale and Local Government Fiscal impact revealed that higher state tax revenues of about $16 billion from 2010-11 through 2012-13 would be gathered to help balance the state budget by extending “temporary” taxes such as use and sales tax. It also concluded that there would be potentially less ups and downs in the California state economy because the state would be able to repay more of the debts and providing temporary tax relief.

Although the measure was characterized as a limitation on state spending, it would not have capped the amount of revenue collected by the state and does not limit the power of the governor and legislature to approve tax increases. Prop 1A would have required any annual state revenue increase that is above “historic trends,” plus an increase for inflation and population growth up to three percent to be deposited in the budget stabilization fund, or Rainy Day Fund, each year until it reaches the required 12.5% of the state general fund. BSF deposits, however, would only occur once education spending levels were attained, as mandated by Proposition 98 (1988).