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Initiative seeks to alter budget process

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POSTED October 7, 2012 10:05 p.m.

SACRAMENTO (AP) — How to end California's boom-and-bust budget cycles and perpetual deficits has perplexed governors, lawmakers and fiscal experts for years.

Now a think tank is proposing a solution and is putting it before voters in November.

Proposition 31's supporters say it will help put an end to California's chronic budget problems by forcing lawmakers to plan ahead, promoting transparency and granting flexibility to local governments.

Opponents cover a broad political spectrum and include labor organizations, conservatives and good-government groups. They say Proposition 31 is ill-conceived and could lead to lawsuits, make it harder to fund education and threaten public health and safety by allowing local governments to override state laws.

The initiative is being pushed by California Forward, a nonpartisan government-reform group, with major funding for the signature-gathering process coming from billionaire investor Nicolas Berggruen. Supporters say it is the result of a multi-year effort to examine the best practices of other states while consulting residents and experts throughout California.

"It was crafted to do what we think is the next right step to fixing California," said Jim Mayer, executive director of California Forward. "To the extent we have a structural budget deficit, that nobody trusts where the money is going, that nobody knows where all the money is, these are the simple procedures that are being used in other states in the nation."

Proposition 31 seeks to change the annual state budget process to a two-year cycle, which proponents say would force the governor and lawmakers to plan ahead. It would prohibit the Legislature from creating new expenditures of more than $25 million unless lawmakers can show where the money would come from, either through taxes or spending cuts.

Likewise, they can't cut revenue without showing what programs would be reduced.

Proposition 31 goes on to make a host of other changes, such as requiring the Legislature to make budget bills available to the public at least three days before lawmakers vote on them, allowing the governor to reduce spending during fiscal emergencies and giving local governments more flexibility in administering state-funded programs.

Opponents argue that California's budget is volatile because so much of the state's revenue depends on capital gains and income taxes from the wealthy. They also cite what they believe is a major flaw Proposition 31: It applies only to the Legislature but does not include the initiative process.

Through initiatives, voters have sometimes created new programs without saying how they will be funded and dictated state spending priorities, restricting lawmakers' ability to write the annual budget.

"We think California Forward has put a valiant effort to try and fix some of the problems that might face Sacramento, but it's an ill-conceived measure," said Angie Wei, a lobbyist for the California Labor Federation, which represents more than 2 million members.

Wei said voters have approved well-intended changes such as tougher prison sentencing and increased surveillance on sex predators without identifying how the state will pay for those new programs. She said Proposition 31 could drive more ballot-box budgeting.

"Pay-as-you-go is supposed to be a way to monitor that our revenues match our spending needs. But when you don't cover initiatives, you create this incentive to go the initiative route, which is where we see a lot of the problems," she said.

Mayer said many of the factors that have contributed to the state's structural budget deficit were done by the Legislature, not ballot initiatives.

During the dot-com boom, for example, he said the state used its surplus to expand public employee pension benefits and social service spending — expenditures the state continues to pay for today.

Opponents say Proposition 31 is poorly drafted, in part because it would allow local governments to work around state law. Labor representatives and voter watchdogs say that could create a patchwork of rules on welfare, health, worker safety and environmental standards.

"There are questions about whether or not the provisions allow local governments to suspend state environmental requirements," the nonpartisan League of Women Voters of California stated in its opposition. "What is clear is that there will be significant legal uncertainty, and years of litigation."

Conservatives also are concerned about that shift in power. National Review's Stanley Kurtz wrote that Proposition 31 grants "de facto regional super-governments the power to swallow up and control local municipalities" because cities, counties and school districts would be encouraged to share their tax revenue.

He warned that, "We're looking at redistribution without representation, an Americanized version of the undemocratic financial and political arrangements currently killing the European Union."

Mayer said the notion that Proposition 31 will create regional super-governments is a "mischaracterization." He said it merely encourages local governments to cooperate.

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