October 29, 2009

Pursuant to Elections Code Section 9005, we have reviewed the proposed constitutional amendment related to passage of the state budget and tax increases
(A.G. File No. 09‑0037).

Background

Two-Thirds Vote Requirement for Budgets and Taxes. The State Constitution requires a two-thirds (67 percent) vote of each house of the Legislature for the passage of the annual state budget bill, most state General Fund appropriations (other than for public schools), bills to go into effect immediately (other than for the calling of an election), and bills that raise state taxes. Certain budget actions (for example, a decision by the Legislature and the Governor to change the types of services that the state provides) require changing state law. Such changes in law often are included in "trailer bills" that accompany passage of the budget bill each year. In order for these trailer bills to take effect immediately—rather than, as with most other bills, on January 1—they must be passed by a two-thirds vote of each house.

Proposal

Lowers the Vote Requirement to Pass the Budget Bill and Increase Taxes. This measure amends the Constitution to lower the vote requirement necessary to pass the budget bill and other General Fund appropriations from two-thirds to a simple majority (50 percent plus one). The lower vote requirement would also apply to measures to increase state taxes. (The number of votes required for school appropriations from the state General Fund would continue to require only a simple majority.)

Some Trailer Bills to Take Immediate Effect Would Still Require Two-Thirds Vote. This measure does not amend the section of the Constitution that requires a two-thirds vote for bills to take effect immediately. Some trailer bills, therefore, would still be subject to the requirement for a two-thirds vote in order to take immediate effect.

Fiscal Effect

State Spending and Revenues Easier to Enact. This measure, by reducing the voting requirement from two-thirds to a simple majority, could make it easier to pass a state budget. 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. In addition, a reduction in the number of votes required to pass tax increases could make it easier to approve tax increases related to the budget. If the measure resulted in such tax increases, then the state would have greater tax revenues in some years. 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.

Under the measure, some budget-related trailer bills would still be subject to the two-thirds vote requirement in order to take effect immediately. In some recent years, budget actions by the Legislature have been passed with the minimum number of Senators or Assembly Members necessary for approval. If some proposed trailer bills were passed with only a simple majority vote under this measure, these bills would not take effect until January 1. Therefore, budget actions addressed in these trailer bills could not take effect until halfway through the fiscal year.

Fiscal Summary. This measure would have the following major fiscal effect:

• Unknown state fiscal impacts from lowering the legislative vote requirement for spending and tax increases. In some cases, the content of the annual state budget could change and/or state tax revenues could increase. Fiscal impact would depend on the composition and actions of future Legislatures.

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