Posted on 10/15/2005 2:12:46 PM PDT by FairOpinion
Because we haven't been living within our means, we've spent more than we have taken in each of the last six years. We've tapped out our state credit card, raided funds intended for schools and roads, and now bump along with the worst bond-rating of the 50 states, which costs us hundreds of millions of dollars in extra interest every year. The tired, defeatist answer is: Just raise taxes. But we've spent more than we have received in taxes every year for the last six years. Why do we expect the Legislature wouldn't do so again?
There is a better way. Prop. 76 requires that state expenditures grow more smoothly. Rather than allowing a one-time spike in income to add to permanent-spending formulas, Prop. 76 specifies that the state can only increase its spending over the previous fiscal year by a percentage equal to the previous three years' revenue growth. We're still paying for having put our spending into high-gear based on one-time money at the end of the 1990s. This will stop that. If we have a windfall one year, the extra revenue will go into a reserve to be available for use when a year of exceptionally low revenue occurs.
Prop. 76 walls off the "special funds" that have routinely been raided when the state was spending more than it had. The sales tax we pay on gasoline, for instance, was intended for road building and maintenance; instead, it's been regularly raided for the state's general fund. That would stop.
(Excerpt) Read more at sfgate.com ...
This was one of my "pet peeves", except is much more important than a "peeve". Props. 76 STOPS this also.
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"Tom Campbell is the director of finance for the state of California. He is on leave from his post to be spokesman for the Yes on Prop. 76 campaign. "
Under these circumstances, please explain why I should vote YES on Prop. 76.
What is the worst that is going to happen? At the very least, we get rid of the mandatory funding for schools, imposed upon us by Prop.98. At best, it will really cut spending.
Leaving the current system, with the huge portion of the CA budget being mandated for schools is the WORST of the WORST. A NO vote on Prop. 76 preserves this untenable system. Voting NO on Prop. 76 is exactly what leads to no other alternatives, except tax increases.
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McClintock's recommendations for CA Propositions
"Key Opponents: California Teachers Association, California Democratic Party, California Labor Federation."
"Key Supporters: Gov. Arnold Schwarzenegger, California Chamber of Commerce, Howard Jarvis Taxpayers Association."
Key supporters also include conservatives Tom McClintock, and Ray Haynes.
Proposition 76 - A Conservative Argument for Voting “NO”
In prior years, California has had many deceptive Propositions pass (and even more proposed). Take for example Proposition 111, the "Traffic Congestion Relief and Spending Limitation Act.,” backed by conservative Republican Governor George Deukmejian and passed in 1990. What voters didn’t realize in passing this measure is the fine print of the Proposition also obliterated the strict Gann Spending limit that was in place since 1979, something that would have avoided the fiscal woes that we have today. Ted Balaker of the Reason Foundation wrote the following article in 2002, offering sage advice in evaluating California propositions. The advice still applies today.
(snip)
Shady sales jobs and unfulfilled promises are part of today's reality in politics.
Californians must walk into voting booths on March 2 like they would walk onto a used car lot. Expect deception, don't listen to fast talk and watch your wallet.
Many voters choose to vote by identifying a group or leader that they support and then following their recommendations. Others may choose to follow party recommendations. Still others look for the position of groups they usually oppose, then simply take the opposite position. But none of these approaches are truly adequate as many of those leaders stray from the ideals or principles in which one believes. We are seeing battles between big business and unions. Is either position necessarily good for the average taxpayer? The fact that a union is opposing something vigorously does not mean that it is necessarily a good thing for John or Jane Californian. The fact that the CA GOP is backing something also offers little solace to conservatives, as they are also backing new social programs like Proposition 78. The only answer is for voters to read as much as they can from all sources and sift out the truth from the flurry of campaign-speak. The full text of the proposed new law is the only non-biased information voters will find.
The following links are provided to assist in understanding Proposition 76 and as support for many of the issues discussed below.
Legislative Analysts Office - Proposition 76: Key Issues and Fiscal Effects, September 30, 2005
Proposition 76. State Spending and School Funding Limits. Initiative Constitutional Amendment.
[Includes summary, ballot arguments (pro/con), the first LAO Analysis dated ..., and the full text of the proposed law]]Legislative Analysts Office Analysis of Budget Initiative, as submitted to Attorney General’s Office, March 17, 2005.
(Also included with Ballot Summary and full text of law, linked above)
While generally presented by proponents as a "spending control" measure, Proposition 76 is much, much more than that. In a report by the Legislative Analysts Office - Proposition 76: Key Issues and Fiscal Effects, September 30, 2005, they state:
Proposition 76 on the November Special Statewide Election ballot is a complex measure that would have far-reaching effects on the state budget.
It is indeed complex. While it does provide for a spending cap, it also gives the Governor new powers for mid-year budget actions in the event of a "fiscal emergency," changes the formulas for education funding, defers certain debt, authorizes new bonds, places limits on some future fund transfers and makes various other changes.
The following discusses some of these complexities and some reasons why a conservative might choose to oppose Proposition 76. While there are also some additional positives in this measure, they need to be weighed against the negatives.
Two years ago, conservatives supported a Recall effort to oust a fiscally irresponsible Governor from office, largely in anticipation of getting spending under control (i.e. reduced--or at least to eliminate the structural imbalance and deficit spending.)
Much to the dismay of many fiscal conservatives, spending has not been reduced and we have continued over the past 2 years to spend more than the State generates in revenues. The rate of increased spending has grown, with budgets showing a growth of 16% over the two past fiscal years (2004-05, 2005-06). The continued deficit spending under the new administration was largely made possible by the $15 billion Proposition 57/58 bonds, bonds to pay for pension contributions, tribal gaming bonds, and other internal borrowing and transfers which supplemented revenues. In short, the State is spending way beyond its means.
Also, to generate more near term revenue, the administration implemented a tax amnesty program, resulting in an acceleration of tax payments to the State. The State has also benefited this year with increased one-time revenues resulting from new federal rules governing offshore profits.
[See CA: Taxes from wealthy, corporations boost state revenue ]
All of the above has resulted in two things: Both revenues and expenditures have been inflated from what would have occurred under ordinary circumstances.
Which takes us to the Proposition 76 "spending cap."
In its simplest presentation, Proposition 76 is called a spending cap. Future spending will be limited to the prior year expenditure level, plus a percentage increase based on a 3-year-average of prior revenue growth. Given recent history, this means that the spending level (inflated by borrowing) and the revenue (inflated by one time increases) will be used as a basis to “limit” future spending. They are taking the best-of-the-best and presenting it as a fiscally responsible basis for “limiting” future expenses. What is responsible about using the highest revenues and the highest expenditures of all time as a basis to establish a "cap" for limiting future expenditures? While that will not always be the case in future years, it is the near term outlook as of today. At a time when fiscal conservatives expected to see spending cuts, this plan will, for the most part, lock in the high spending we have experienced in the past two fiscal years.
In addition to Proposition 57/58 borrowing and other bonds, state spending has been supplemented the past few years by internal borrowing--from education, from transportation, from local government, etc. Proposition 76 proposes to take the balance due on those borrowings and, instead of paying it back over the next few years from general fund revenues as would be indicated by current law, it proposes to defer those obligations, extending the repayment over the next 15 years. In the case of transportation funds, voting “yes” on Proposition 76 is giving voter approval for the issuance of new bonds for that purpose. By deferring these obligations, Proposition 76 frees up even more revenue whereby the State can increase spending in the near term, while adding to the mounting debt pushed into the next decade.
The Sacramento Bee reported [see Proposition 76: Curb on spending - or a 'power grab'?, October 12, 2005]:
"The strongest reason is the record of the last seven years, every one of which we've spent more than we've taken in," said Schwarzenegger's former finance director, Tom Campbell, who helped write the measure and is campaigning for Proposition 76.
"We are borrowed out. We've borrowed from every special fund that we can, and our state cannot continue this way."
They say they cannot continue this way, spending beyond their means, without either raising taxes or borrowing more money. In effect, Proposition 76 borrows more money and bails them out once again. Without that borrowing, there does not appear to be a back-up plan, other than to raise taxes, as both Governor Schwarzenegger and Tom Campbell have threatened.
Former Silicon Valley Rep. Tom Campbell brought the fight over Gov. Arnold Schwarzenegger's ballot initiatives to San Jose on Wednesday, warning members of the Silicon Valley Chamber of Commerce that new taxes are "highly likely" if a proposal to curb government spending is not passed by voters in the Nov. 8 special election.
[See Tom Campbell campaigns for Prop. 76, Contra Costa Times, September 15, 2005]Asked ... what he might do to avert future budget deficits if the spending control is defeated, Schwarzenegger said: "Then we have to look at raising taxes, because this is the only option we have, in order to create the money. And this is why I tell people vote yes on Proposition 76 and make sure that we do everything that we can to pass this proposition so that we force our legislators once and for all to live within their means and not to continue spending money and to keep making promises to people that they can't keep."
[See Governor: Tax Hike Possible if Prop. 76 Fails, Los Angeles Times, September 2, 2005
But the state can't continue to borrow at this rate given the cost of the debt load.
The Los Angeles Times recently reported [See CA: State Weighs New Wave of Borrowing, October 4, 2005]:
According to the nonpartisan legislative analyst's office, the percentage of the state's budget that goes to pay off debt has reached 6%. Over the next few years even more debts will come due. By 2009, according to the analyst, paying back debt will account for nearly 7% of the state budget.
The State is becoming a new borrow-and-spend machine. Notwithstanding the ever-increasing debt-load, the current administration is reportedly launching a new era of borrowing. The Ventura County Star reported [see Reform, rebuild ... repay - Schwarzenegger's vision involves trips to the bank, September 28, 2005]
It's no secret, Campbell said, that an infrastructure bond will soon be in the offing and it will not be modest.
Schwarzenegger, he said, has told his advisers that they shouldn't blink at talk of a $9 billion or $10 billion bond when "we should be talking about $60 billion or $70 billion."
When will we truly cut up the credit cards? It is clear that those in Sacramento haven’t got the message yet--the answer is to CUT spending, a message clearly sent to Sacramento through the Recall election. “Smoothing” is not a new concept. It is a budgeting practice used every day by responsible businesses, organizations and individuals. In good years, money is set aside to cushion the blow in bad years. Jon Coupal of the Howard Jarvis Taxpayers Association recently told the Daily News that Proposition 76 "will have the effect of smoothing out the peaks and valleys so if we ever undergo another dot-com boom, we won't just go out and spend that money like drunken sailors." [See PROP 76 PRO: Fiscal woes need action now, 10/12/2005] The state could employ this method without new laws, simply choosing to spend less in good years and building up a surplus or reserve to carry forward into future bad years. Instead, irresponsible legislators and Governors decided to spend every dollar they could find (and then some), despite bad years looming on the horizon. One could try to argue that Proposition 76 now forces the State to set aside that reserve. But under Proposition 76, surplus dollars (those that exceed the already inflated “spending cap”) would only partially be used to establish this reserve fund. Only 25% would be set aside as a reserve for future lean years. Another 25% would be used for road, highway, and school construction projects. The remaining 50% would be used for debt payments. But those debt payments already must be included in the budget, so, in effect, by using the surplus to pay for the debt, they will free up even more dollars to spend on other items. They aren’t paying off the debt early; the language specifically prohibits that (except for any amounts going toward the Economic Recovery Bonds). They are simply paying their annual debt payment using funds that exceed the “spending cap.”Smoothing Expenditures
[See page 3: Legislative Analysts Office Analysis of Budget Initiative ]
Proposition 76 provides for increasing the Governor’s powers to effect mid-year spending cuts, an act that would currently require legislative approval. Under current law, the Governor proposes the budget and has final approval power, including line-item veto power. He has shown little will to cut spending through use of either power. What we have seen is record spending increases combined with continued deficit spending. If he won’t use the powers he has today, what hope is there that he will use these additional powers, if granted. Also, the major deficit California is experiencing does not result from overspending that occurred only from mid-year changes, but overspending--period.
Mid year spending cuts means cuts in appropriations. That means, that one of the actions the Governor can take is to simply cut appropriations to local governments. This would not relieve the county of performing their tasks, it just leaves the counties without anticipated funding for responsibilities they are still obligated to perform, thus shifting the burden and creating a pressure for increased local taxes. The LAO states: [See Legislative Analysts Office - Proposition 76: Key Issues and Fiscal Effects, September 30, 2005]
“The additional spending limit and new powers granted to the Governor would likely reduce state spending over time relative to current law. These reductions also could shift costs to local governments (primarily counties).”
The Sacramento Bee, reporting on a campaign event in Orange County quoted Schwarzenegger as saying:
"Shouldn't the governor of the most ... populous and the most diverse state, with the biggest budget of any state in the union, have the same ability to respond to crisis as other governors?"
[See Proposition 76: Curb on spending - or a 'power grab'?, October 12, 2005 ]
But what is a “Crisis”? According to the Legislative Analysts Office, a "crisis" as defined by Proposition 76 would be rather commonplace.
[See Legislative Analysts Office - Proposition 76: Key Issues and Fiscal Effects, September 30, 2005]
How Often Could a Governor Declare a Fiscal Emergency?
The specific thresholds set forth by the measure for declaring fiscal emergencies are not particularly high. For example, a 1.5 percent deviation on revenues could occur frequently, given the volatility of revenues, especially in individual months within the fiscal year. Thus, the frequency of emergency declarations would largely be at the discretion of the administration.
While one may not have concerns about this power under a Republican Governor, what about a Governor Phil Angelides or a Governor Warren Beatty?
Many on FR have tried to argue that Proposition 76 eliminates the Minimum Guarantee included in the Proposition 98 Education funding formulas. It doesn’t. It changes it, but it does not eliminate it. In part, it eliminates one of the changes that voters passed in Proposition 111 to try to correct the overly generous formulas of Proposition 98. Quoting from the Legislative Analysts Office - Proposition 76: Key Issues and Fiscal Effects, September 30, 2005:
In 1990, voters approved Proposition 111. Among other things, this measure added an alternative, less generous, formula (referred to as “Test 3”) to Proposition 98. The alternative formula allows school funding to grow more slowly when state revenues are weak.
...
[Proposition 76] ... would eliminate the Test 3 and maintenance factor provisions of Proposition 98. Thus, school funding would no longer automatically fall during bad times and rise back up to the main guarantee level in good times.
As such, we currently have Proposition 76 proponents Governor Schwarzenegger, Tom Campbell, and the California Taxpayer’s Association all saying that education spending will go up in bad years, including next year. And where will the money come from? There are no established reserves for funding lean years. Why is the one provision that actually would indicate a decrease in education funding being eliminated from Proposition 98?
NBC11 reported [See Proposition 76 Could Change Education Funding, October 11, 2005]:
Gov. Arnold Schwarzenegger and his team insist schools won't lose money... "It actually increases education funding when the economy is down, that is unequivocal, that is without debate," said Tom Campbell, the governor's financial director. "Then when the economy is doing well, the legislature could put the money back in or not. It's up to the legislature. Its not automatic."
And, the California Taxpayer’s Association is also turning up the heat to prove that education funding will increase.
Cal-Tax Urges Yes Vote on Proposition 76 – Budget Reform That Will Increase School Funding, September 26, 2005
Why Proposition 76 Provides Schools with More Money Next Year, October 14, 2005
Lastly, we have this Schwarzenegger quote from an August interview with Hugh Hewitt:
No, no. We never want to cut anything. As a matter of fact, it's quite the opposite. We want to increase funding for education, because as you know, I'm an education Governor.
So, if we are to believe all of these proponents of Proposition 76, in a year when revenues turn down, formulas in this new Proposition will require that we dedicate even more funding to education. Is this good reform?
The Orange County Register wrote:
Among the top of Schwarzenegger's reforms is Proposition 76, the Live Within Our Means Act, which would require the Governor to bring the budget into balance periodically by giving Governors sole authority to cut or raise taxes.
[See Governor: Ballot is for 'big stuff' , September 21, 2005]
When the author was questioned, they stood by their interpretation of the proposed law while declining to provide a specific citation. Perhaps their interpretation is what the Legislative Analysts Office referred to in their report:
“The Governor would have greater control over both the general nature of the solutions (for example, tax increases versus spending reductions) as well as the specific programs that would be reduced in order to balance the budget.”
[See Legislative Analysts Report - Proposition 76: Key Issues and Fiscal Effects, September 30, 2005 ]
While some may trust the current administration to not raise taxes, one has to acknowledge the shift in power and ask if it would be an improvement if a Democrat were in office. For example, if the above tactic was employed by say, a Governor Phil Angelides, tax increases would be inevitable and our Republican legislators, despite their current ability to block the 2/3 majority requirement today, could be unable to block such an action in the future.
Governor Schwarzenegger used to rail about all of the "Formulas" in the budgeting process. He was right then. Unfortunately, Proposition 76 is creating a host of new formulas --and they look like they could be killers the first year revenue turns down.
Ping.
Also, why are you MISREPRESENTING Arnold's position.
Arnold said:
"No one has ever raised taxes and solved the problem, nor will we solve the problem. We don't have a revenue problem; we have a spending problem."
http://www.schwarzenegger.com/news.asp?id=1940
Here is the speech:
February 23, 2005
GOVERNOR SCHWARZENEGGER CALLS UPON LAWMAKERS TO STOP THE RED INK
Governor Arnold Schwarzenegger called upon legislators to approve his plan to prevent continued overspending and vowed to let the people do so if the lawmakers do not act. Speaking at Cal Expo, where he shut off a spigot of flowing red water to symbolize the State's autopilot spending problem, the Governor explained why spending control is required.
"I have declared 2005 a year of reform and job number one is reforming our out of control budget system," said Governor Schwarzenegger. "We can't have a system that says for every $1.00 we take in we have to spend $1.10. If we don't get control of the auto-pilot spending, there will be deficits as far as the eye can see and we will risk every program for years to come. If the legislators don't do their job the people will and I will stand with them to stop the red ink."
Under the current budget system, California is always at risk of spending more than it takes in. The Governor's Spending Control Proposal contains reforms that:
Stop auto-pilot formulas from allowing spending to out-pace revenues and require greater budget discipline.
Cut spending when expenditures outpace revenues.
Prevent spending from automatically growing in the absence of a budget.
Block borrowing from special funds to cover general fund obligations.
Close off the state's ability to borrow from K-14 schools (Proposition 98) and transportation (Proposition 42), as well as from special funds.
Require accounts with unpaid debts and no scheduled repayment to be repaid over a period of no more than 15 years.
This year, California took in at least $5 billion more in general fund revenues than last year. Autopilot formulas within the budget system, however, require that the state spend over $10 billion more than it did last year. California does not have a revenue problem, it has a spending problem. The Governor's budget proposal holds spending in line with revenues, but without changing the state's budget process, California will continue to face multi-billion-dollar deficits in future years.
THE CALIFORNIA DEMOCRAT PARTY IS PROUD OF YOU!
Propositions 78 and 79: Prescription drug discounts. Do you want the same people who run the DMV to run your pharmacy? NO. These are rival measures, one supported by drug companies and the other by liberal activists – both of which purport to lower drug prices. What they really do is assure that one group of patients gets to pay higher prices to provide subsidized prices for others. There’s no such thing as a free Levitra.
So, I assume you will be voting NO on both Prop 78 and Prop 79?
You are grasping at straws.
I put how I voted in my sig line.
I also gave a link to Tom McClintock's recommendations, which includes votine YES on 73-77.
Your position of agitating AGAINST the reform propositions 74-77 are EXACTLY aligned with the position of the Democrats, including Angelides, Villaraigosa, John Kerry, Diane Feinstein and other left wing liberals. "Birds of a feather flock together.." You are flocking to the John Kerry camp.
I have posted my support for Prop 74 and Prop 75. See tagline above, and for the past two days.
So why did he borrow so much to save the c"rats the pain when he first came into office? Did he do it to avoid all the pain the women, children and illegals would have suffered? That pain will likely just be intensified down the road and shared across the full spectrum of folks in the form of new taxation, imo.
His feeble attempts to act in a bipartisan fashion were just that, feeble... anyone who has been in California the last few years knows the c"rats play the game to win.
His aborted attempts at blowing up the boxes and freezing state hiring were the ultimate in botchjobs or out and out deception and his quips about girlie men only diminished the office he claims to respect in principle.
I won't mention that a veto pen is for use for more then vetoing gay marriage legislation and vehicle license fees and drivers licenses for illegals and token budget cuts.
He obviously thinks we can outgrow the deficits as he certainly has not slowed the rates of spending growth that has been proposed by him the last 2 years in the budget, auto-pilot spending or not. I am not so sure , even with such a staunch "fiscal conservative" at the wheel, that his dream will come true.
I am troubled also that, if nothing else, he has rammed thru untold billions more in spending before the hammer drops on spending or gets capped or whatever, which , imo, smacks of a liberal move if I ever saw one. He has made no bones about his love and support for social programs.
btw, When does the auto-pilot borrowing stop?
Your lack of any effort to rebuke much less criticize the Gub's obvious GLBT and GReen agendas displays an affinity by yourself and others that speaks volumes, imo.
If you want to keep playing the Tom card and "You're a dem if you don't vote the way I tell ya" , go ahead.
I, for one, am really tired of seeing some here attempt to hijack FR to push gay&liberal agendas masking themselves as moderates, at a conservative forum, no less.
The initiatives will stand on their own merit and pass or fail accordingly, all the hyperbole and cheerleaing notwithstanding.
There has been no misrepresentation of Arnold's position. If you believe there has, then explain this one:
Schwarzenegger quote from an August interview with Hugh Hewitt: "No, no. We never want to cut anything. As a matter of fact, it's quite the opposite. We want to increase funding for education, because as you know, I'm an education Governor."
Arnold has also threatened to raise taxes if #76 is defeated:
Asked ... what he might do to avert future budget deficits if the spending control is defeated, Schwarzenegger said: "Then we have to look at raising taxes, because this is the only option we have, in order to create the money. And this is why I tell people vote yes on Proposition 76 and make sure that we do everything that we can to pass this proposition so that we force our legislators once and for all to live within their means and not to continue spending money and to keep making promises to people that they can't keep." [See Governor: Tax Hike Possible if Prop. 76 Fails, Los Angeles Times, September 2, 2005]
So, FO, if Arnold never wants to cut anything, and if the only option he sees should #76 be defeated is to raise taxes rather than cut spending, why should I believe he will make cuts rather than raise taxes should #76 be passed.. Remember, "...No, no. We never want to cut anything."
I believe you have argued your pro-#76 position as well as it can be argued. The problem is that your argument ignores Arnold's borrowing/no cuts record and statements. So your argument is simply not persuasive because I do not trust Arnold. Remember that old advice--it's still good: "Pay no attention to what they say; watch what they do."
See calcowgirl's post #5: Proposition 76 - A Conservative Argument for Voting “NO”. It is exhaustively researched and well stated. It fairly presents both the pros and cons without shading anything, leaving the reader to make up his own mind. Unfortunately, that's more than we can say about your hysterical cheerleading from the Arnold amen corner.
On balance, there are more negatives than positives in Prop. 76. Until I see something that convinces me otherwise, count me as a NO.
Clarification:
I did not attempt to highlight all of the items included in Proposition 76--it is just too complex. What I was trying to point out is that you get the BAD with the GOOD. Just as Proposition 111, the "Traffic Congestion Relief and Spending Limitation Act.,” included some GOOD things, and was being pushed by a CONSERVATIVE REPUBLICAN Governor, had I known it obliterated the Gann Spending Limit (BAD thing), and the implications of that, I most definitely would have voted NO.
Sorry, your efforts to try to distract from the main issues is not working.
The topic is the CA REFORM PROPOSITIONS.
If you want to discuss homosexual issues, I am sure there are a lot of boards for that. Same for the environmental issues
Remember that old advice--it's still good: "Pay no attention to what they say; watch what they do."
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Exactly.
Arnold PUT Prop.s 74-77 on the ballot and is actively campaigning for them.
I read somewhere that if both 78 & 79 pass, the one with the higher # of votes would take effect. Is that true? I am asking because you appear to have done much more research than I have.
"See calcowgirl's post #5: Proposition 76 - A Conservative Argument for Voting “NO”. "
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That merely tries to substitute a huge quantity of nonsense, for a short, reasoned argument, facts and logic.
There are NO facts and logic supporting a NO vote on Prop. 76.
If you want to side with the Democrats on wanting to destroy CA, fine, but stop pretending that it's a conservative position.
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