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State Budget Update: Election Results Could Affect Children’s Programs

November 15, 2010
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This month's general elections produced a mixed bag for parents and advocates hoping for a less painful state budget next year.

One of the biggest challenges in passing a state budget, the supermajority vote, was eliminated when Californians voted in favor of Proposition 25 which allows future budgets to be passed on a majority vote of the Legislature. Only two other states - Rhode Island and Arkansas - need a two-thirds vote to pass spending bills.

In recent years, the requirement has caused legislative gridlock in Sacramento, with lawmakers often failing to garner a two-thirds vote. In October, legislators broke their own record, taking more than 100 days to pass a budget. The lengthy delays affected vital programs for young children, with health centers and other services, like state-funded child care, teetering on the edge of closure due to funding hold-ups. Proposition 25 reduces the requirement to a simple majority vote.

However, Californians also passed Proposition 26, creating new hurdles in passing a budget. The measure expands the definition of a tax and a tax increase such that more proposals would require approval by two-thirds of the Legislature-bad news for lawmakers seeking revenue solutions in a cash-strapped state.

According to the state Legislative Analyst's report, the types of fees and charges that would become taxes under Proposition 26 "are ones that government imposes to address health, environmental, or other societal or economic concerns." Another report by the UCLA School of Law suggests that regulatory fees play a critical role in funding public health programs, and would be difficult to replace through other types of funding.

Proposition 26 also has the potential to unravel a number of fixes used to balance the budget earlier this year. The measure includes a clause that retroactively voids any state tax adopted after January 1, 2010, if the tax was not approved by a two-thirds vote. According to California Forward, a bipartisan government reform group, this will cost the state's General Fund $1 billion in lost funding every year, including the current year.

Proposition 26's victory at the ballot box puts legislators in a tough spot. In a report released last week on California's Fiscal Outlook, the Legislative Analyst's Office calculated that the state's deficit has ballooned to more than $25 billion. Outgoing Gov. Arnold Schwarzenegger announced he will convene a special legislative session on Dec. 6 to address the new fiscal crisis.

‹‹ Back to this week's Monday Morning Report 


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