PROP. 1A
FREQUENTLY ASKED QUESTIONS
What does Prop. 1A do?
Prop. 1A is a convoluted set of new state Constitution formulas and rules. It would make it even more difficult to pass a budget in California.
This bill will result in massive cuts to vital public services, permanently locking in all of the deep budget cuts made in recent years to:
• Higher education
• Healthcare
• Homecare
• Human services
The new rules would require massive set-asides of funds, even in bad years, and would greatly reduce the funding available for public services. For example, according to the Department of Finance’s projections, if Prop. 1A had been in place last year, the amount of money available for spending in 2008-09 would have been $12 billion below the actual budgeted expenditures – which already included cuts of over $10 billion. Prop. 1A would have put us $22 billion below what we needed to sustain services at the workload level.
How exactly does it make CSU’s budget problems worse?
Prop. 1A would institutionalize and make permanent more than 10 years of cuts to the CSU with no prospect of ever substantially increasing state funding to the university. In broad terms, it does this by using recent fiscal years as the baseline, meaning that very dismal budget years are the foundation of the plan. From there, it diverts huge amounts of money from the General Fund over to a Rainy Day Fund, while making it easier for the governor to divert yet more money from the General Fund; this is potentially disastrous for the CSU, because the system’s funding comes from the General Fund.
What exactly is this Rainy Day Fund?
Prop. 1A:
• Creates a “Rainy Day Fund,” called the Budget Stabilization Fund (BSF), also known a spending cap, that will ultimately become a slush fund that would allow unlimited borrowing and pork barrel spending.
• Requires that 3 percent of annual general fund revenue be diverted from the budget and deposited into the BSF until the BSF balance equals 12.5 percent of General Fund revenues, even in a year like this, when we are in the depths of a recession and when state revenues are falling.
• Gives the governor extraordinary unilateral power over the budget. The Director of Finance – a political appointee of the governor – makes all the critical decisions determining when revenues are “excessive” and can be diverted into the “Rainy Day” slush fund, with no checks and balances from the Legislature.
• And if 1A is adopted by voters, another law which was part of the budget deal gives the governor more power to make unilateral cuts to the budget after it is signed into law, again with no oversight by the Legislature.
Won’t our budget problems get worse if Prop. 1A fails? The governor claims that we face a budget Armageddon if we don’t pass all of the initiatives on May 19.
No. In fact, it’s the opposite: passage of Prop. 1A will make our budget problems worse. It certainly won’t reduce the looming deficit in the 2009-10 budget.
As Janis Hirohama, the President of the League of Women Voters of California, a non-partisan good government watchdog, explains, “Although some claim there is an urgency to pass Prop. 1A to resolve our state’s budget problems, we disagree. Most of its provisions will not take effect for two years—two years that we should spend hammering out real solutions to our budget and fiscal challenges.”
Isn’t it a good idea to have a Rainy Day Fund?
A real rainy day fund that can only be used when times are bad is a good idea, but that’s not what Prop. 1A is. Prop. 1A’s rainy day fund could be used as a slush fund by Governor Schwarzenegger to spend every year for unlimited borrowing and other purposes.
Besides, how are we going to raise the $12 billion that’s required for the Prop. 1A Rainy Day Fund? Clearly, at a time of deep deficits, this money will be carved out of higher education and social services budgets.
Isn’t it good to even out spending so there won’t be so many ups and downs?
Evening out spending is a good idea, but Prop. 1A evens out spending on higher education and vital public services by greatly reducing funding for them every year, year after year, for as long as it’s in effect. CSUEU members and the people we care for will be among the hardest hit.
What are the long-term effects of Prop. 1A?
Even in the short run, Prop. 1A will result in huge cuts. The California Budget Project estimates that, in the 2010-11 fiscal year, it will force spending down to a level that is $16 billion below the governor’s own workload projections from December 2008.
The long-term effects of this will be devastating to higher education and to public services, including home care, healthcare, and childcare. Spending on education and public services will be strictly limited and will be crowded out by other kinds of spending, such as debt payments and tax rebates.
Isn’t a vote against Prop. 1A actually a vote in favor of raising revenues, meaning higher taxes?
Yes, CSUEU is strongly in favor of increased revenue to support the level of educational and social services that Californians want and need. Trading short-term revenue (in the form of Prop. 1A’s temporary, two-year taxes) for a permanent spending cap that cuts funding for higher education and vital public services is a bad deal for everyone. If Prop. 1A passes, the revenues that the legislature and the governor passed will only be extended by two years, and then we’ll be right back where we started, only worse – because, at that point, we’ll have strict limits on spending.
Why do Democratic legislative leaders support Prop. 1A?
Prop. 1A is the result of our dysfunctional budget process, and it was part of a deal that legislative leaders made in order to secure the votes they needed.
The California Teachers Association supports Prop. 1A. Doesn’t that mean it’s good for schools? How does Prop 1B relate to Prop. 1A?
Part of the bad deal that created the state’s current two-year budget involved taking $11.6 billion from schools, then promising to give back $9 billion – with strings. That give-back is Prop 1B, which will only take effect if Prop. 1A passes. It’s a cynical trap set by the governor. His intention with Prop 1B was to ensure that the powerful California Teachers Association wouldn’t oppose Prop. 1A..
Props. 1A and 1B aren’t good for education in the long-term. Prop 1B pays back some of the money that the governor took from schools, but it will do nothing to lift California out of its 47th-place ranking in per pupil spending. In fact, Prop. 1A will do the opposite: lock us in.
In the long run, Prop. 1B’s benefits will be far overshadowed by the ill effects of Prop. 1A on every aspect of California’s public services, including schools. That’s why such education groups as the California Federation of Teachers, the California Faculty Association, and the California School Board Association all oppose Prop. 1A.
Is Prop. 1A the only way to protect cities’ funding?
No. Prop. 1A does not contain a single provision that protects local funding. In fact, because Prop. 1A will put pressure on the state budget in the future as spending limits ratchet down, funds for local governments may be less, rather than more, secure.
What’s your alternative solution to our budget problems?
Prop. 1A is not a solution to our budget problems; it will make them all worse – CSUEU members will have to engage in a non-stop battle year after year to defend the CSU budget as well as social services. We need new, real revenue to support higher education, along with healthcare, home care, and other vital public services.
We can achieve some of that through a majority vote of the legislature, and we can work hard to elect more legislators and a governor who agree with us that funding the CSU system and high-quality public services is the way to keep California working and competing.