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State Spending and School Funding Limits.
Initiative Constitutional Amendment.

THE QUESTION

Should the California Constitution be amended to create an additional state spending limit, grant the governor substantial new power to unilaterally reduce state spending, and revise key provisions relating to the minimum funding guarantee for K-12 schools and community colleges?

THE SITUATION

California has faced annual shortfalls in its state budget since 2001-02. These shortfalls followed the economic downturn in 2001 causing state revenues to fall below the level needed to fund the state's spending commitments. Although revenues are growing again, policymakers will need to take action to address a likely state budget shortfall in 2006-07.

THE PROPOSAL

Proposition 76 will add an additional spending limit based on an average of revenue growth in the three prior years. It will grant the Governor substantial new authority to unilaterally reduce state spending during certain fiscal situations. The measure amends key provisions in the California Constitution regarding the minimum funding guarantee for K-12 schools and community colleges. Other provisions make changes relating to transportation funding; loans between state funds; and payments to schools, local governments, and special funds.

FISCAL EFFECT

Creating an additional spending limit and giving new powers to the Governor would likely reduce expenditures that could apply to schools and shift costs to local government. This could result in a smoother pattern of state expenditures over time—especially if reserves are set aside in good times and these funds are then available in bad. Changing school funding formulas would make school and community college funding more subject to policymaker decision and less affected by a constitutional funding guarantee. The measure could result in a change in the mix of state spending—some programs could receive a larger share and others a smaller one.

SUPPORTERS SAY

• Proposition 76 will reform our budget system and balance the budget without raising taxes.
• It will promote bipartisan cooperation between the Legislature and the Governor.
• Wasteful spending will be eliminated and more money will be provided for roads, health care, and law enforcement without raising taxes.

OPPONENTS SAY

• Proposition 76 will cut school funding by $4 billion overturning voter-approved funding guarantees.
• The Governor will be given unchecked power over the budget destroying the system of checks and balances.
• Proposition 76 will do nothing to prevent new taxes and it endangers local funding for police, fire and health care.

For More Information

PRO: Governor's Coalition to Reform and Rebuild California (916) 498-9775, www.JoinArnold.com

CON: No on 76, Coalition of Educators, Firefighters, School Employees, Health Care Givers and Labor Organizations, (916) 492-1962, www.BetterCA.com

For More Nonpartisan Information

See Smart Voter on Proposition 76.