February 18, 2009
Pursuant to Elections Code Section 9005, we have
reviewed the proposed constitutional amendment related to the enactment
of the state budget (A.G. File No. 09‑0001, Amdt. #1-NS).
Background
Process for Passing a Budget. The
Constitution vests the Legislature with the sole power to appropriate
funds (and make midyear adjustments to appropriations).
The annual state budget is the Legislature's primary method of
authorizing expenses for a particular year. Specifically, the
Constitution requires that (1) the Governor propose a budget by January
10 for the next fiscal year (beginning July 1) and (2) the Legislature
pass a budget by June 15. The Governor may then either sign or veto the
budget bill. The Governor may also reduce certain individual
appropriations in the budget before signing the measure.
Late Budgets. When a fiscal year
begins without a state budget, most expenses do not have authorization
to continue. Over time, however, a number of court decisions and legal
interpretations of the Constitution have expanded the types of payments
that may continue to be made when a state budget has not been passed.
Consequently, when there is not a state budget, payments now continue
for: (1) state employees (payments are made at the prior fiscal year's
wage level and do not include pay for state legislators or the
Governor); (2) debt service; and (3) various programs authorized by the
Constitution, federal law, or voter-approved initiatives. Any payments
which are withheld are paid upon passage of the budget.
Proposal
Withholds Salaries of the Governor and
Legislature. The measure requires that 25 percent of the
Governor's pay and 25 percent of the Legislature's pay be withheld at
the beginning of each fiscal year. Those funds would be paid upon
completion of the next fiscal year's budget approval process.
Terminates the Governor's and Legislators'
Terms. The measure requires that all legislators' and the
Governor's terms in office be terminated if: (1) by midnight June 15, a
California State budget bill fails to pass the Legislature, or (2) by
midnight June 30, the budget approval process is not completed.
If Terminated, Prohibits Governor and
Legislators From Holding State Offices for Two Years. The
measure prohibits the Governor and the members of the Legislature who
were removed from office due to a late budget from holding any state
elected or appointed position for a period of two years starting from
the date they are terminated from office.
Late Budgets. The measure requires
that when the budget process is not completed by June 30th, the most
recently enacted budget would stay in effect. The level of expenditures
would be modified proportionate to projected revenues of the new fiscal
year.
Fiscal Effect
Costs for State and Local Elections.
The measure would have an impact on state and local election-related
costs if passage of the budget is delayed in any year. State and local
governments would incur increased costs—potentially over $100 million
for each such year—to hold elections to replace the terminated
officials. Costs would depend on the timing and number of runoff
elections required to elect new officials.
Governor and Legislative Salaries.
The initiative could potentially reduce state expenditures for the
salaries of the Governor and the Legislature in years when passage of
the budget is delayed beyond June 15. This is because these elected
officials would be terminated and payments of salaries would stop for a
period of time until new officials were elected. This reduction in costs
would likely be in the low millions of dollars. In addition, while the
measure's requirement to withhold a portion of legislators' and the
Governor's salaries would not have an annual fiscal impact, it could
affect who chooses to run for these offices since payment of a portion
of their annual salary might be delayed for up to a year.
Risk of Termination. The risk of
termination from office could potentially increase the likelihood that a
budget will be passed "on time." In some years, this could affect the
content of the budget and related appropriations. For instance, spending
priorities in a given budget could be different. The extent of the
impacts would depend on a number of factors—including the state's
financial circumstances, the composition of the Legislature, and its
future actions.
State Spending. The proposal could
have an impact on state spending if passage of the budget is delayed.
During the delay, spending based on the prior-year's budget would
continue, as adjusted for changes in revenues. This would likely
increase spending during a budget impasse (since all expenses would have
the authorization to be paid). The effect on total spending for the
fiscal year, however, is unknown and would depend on a variety of
factors such as the length of the impasse, year-to-year revenue changes,
and the Legislature's future actions.
Fiscal Summary. This measure would
have the following direct fiscal effects on state and local governments:
-
Increase in state and local election costs in
any year in which the Governor and all 120 members of the
Legislature are terminated when the budget process is not completed
on time. These costs could potentially exceed $100 million in any
such year.
-
Unknown state fiscal impacts from changes in
the content of the annual budget as a result of the measure's
provisions related to a late budget.
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