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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
County Manager’s Office
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DATE:
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October 8, 2010
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BOARD MEETING DATE:
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October 19, 2010
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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David S. Boesch, County Manager
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SUBJECT:
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County Manager’s Report #11
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A.
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Adopt a Resolution in support of Proposition 25, Reduces legislative vote requirement to pass budget from two-thirds to a simple majority; failure to pass an on-time budget results in forfeiture of pay
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RECOMMENDATION:
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Adopt a Resolution in support of Proposition 25, the Majority Vote for Legislature to Pass the Budget Act, that will appear on the November 2, 2010 General Election ballot, which would lower the threshold necessary to pass the state budget and spending bills from two-thirds to a simple majority. The measure would also require that, if the Legislature fails to pass a budget bill by June 15, all members of the Legislature forfeit any reimbursement for salary and expenses for every day until a budget bill is passed.
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BACKGROUND:
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The California Constitution, which can only be changed by a vote of the people, establishes a framework that governs the budget process, including the legislative vote requirements for bills that increase taxes or appropriations. The Constitution provides that the Legislature shall pass a budget bill by midnight on June 15 and cannot send the Governor a measure appropriating funds for the budget year until the budget is passed, with the exception of measures appropriating legislators’ salaries or addressing emergencies. The State Constitution also requires a two-thirds vote approval of the Legislature for the passage of appropriations from the state’s General Fund, as well as budget trailer bills. Finally, the Constitution establishes a two-thirds vote of the Legislature for approval for state taxes.
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DISCUSSION:
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Proposition 25 would reduce the legislative vote requirement for passage of the annual state budget from two-thirds to a simple majority as well as trailer bills that appropriate funds. Finally, the measure would require members of the Legislature to forfeit their pay and per diem payments for each day after June 15 that a budget is not passed and sent to the Governor.
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California is just one of three states to require a supermajority vote of the Legislature to pass a budget. California is also one of just twelve states to require a supermajority vote for any tax increase and the only state to require a supermajority vote to approve both a budget and any state tax increase. Despite the constitutional requirement, the Legislature and Governor routinely miss budget deadlines. The Legislature has missed the June 15 deadline in 23 of the last 25 years, including a 93-day delay in 2008 and longer delay in 2010.
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Approval of this Resolution contributes to the Shared Vision of 2025 of a Collaborative Community by supporting policies that promote the passage of a state budget bill by the June 15 constitutional deadline. The Resolution has been reviewed and approved as to form by County Counsel.
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FISCAL IMPACT:
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Unknown, but substantial as delays in the passage of a state budget creates problems for the County’s own final budget approval process.
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B.
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Adopt a resolution in opposition to Proposition 26, Requires that certain state and local fees be approved by two-thirds vote including those that address adverse environmental impacts.
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RECOMMENDATION:
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Adopt a Resolution in opposition to Proposition 26, “The Stop the Hidden Tax Measure,” that will appear on the November 2, 2010 General Election ballot, which would expand the definition of a tax and a tax increase so that more proposals would require approval by two-thirds of the Legislature or local voters.
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BACKGROUND:
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The California Constitution requires a two-thirds vote of each house of the Legislature for the imposition of new state taxes or changes to existing state taxes. Local governments may also impose or increase taxes, subject to the approval of local voters. For local governments, general taxes require approval of a majority of voters, and special taxes where the proceeds fund a specific purpose, require a two-thirds vote approval.
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Under current practice, a law that increases the amount of taxes charged to some taxpayers but offers an equal (or larger) reduction in taxes for other taxpayers has been viewed as not increasing revenues. As such, it can be approved by a majority vote of the Legislature. One recent example of such a revenue measure is the gas tax swap approved by the Legislature this spring which eliminated the sales tax on gasoline, but increased gasoline fees by the same amount.
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DISCUSSION:
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Proposition 26 would broaden the definition of a state or local tax to include many payments currently considered to be fees or charges. Thus, the measure would define “tax” for state purposes as any “levy, charge or exaction of any kind,” except for user charges, regulatory charges, entrance fees, fines and penalties imposed “as a result of a violation of law,” and local charges related to property development. The initiative would apply to counties, cities, special districts, and “any other local or regional governmental entity.”
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According to the Legislative Analyst’s Office, the measure would have the effect of increasing the number of revenue proposals subject to the higher approval requirement. These include many fees and charges imposed at the state level to address health, environmental, or other societal or economic concerns. Thus, oil recycling fees, hazardous materials fees, and fees on alcohol retailers that are currently used fund to public information and education programs, inspections and pollution prevention, clean up activities, and code and enforcement would now be subject to a supermajority approval process.
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Proposition 26 would also provide that any change in state statute that results in any taxpayer paying a higher tax must be passed by a two-thirds vote of the Legislature. Thus, under the measure, the gas tax swap would be voided after twelve months unless the Legislature reenacted the change with a two-thirds vote.
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Approval of this Resolution contributes to the Shared Vision 2015 of a Collaborative Community by supporting policies that lower the vote requirement for local taxes and that treat fees differently from taxes. The Resolution has been reviewed and approved as to form by County Counsel.
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Performance Measure(s):
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Measure
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FY 2008-09
Actual
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FY 2009-10
Projected
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Federal/State Measures analyzed and acted on
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25
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35
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FISCAL IMPACT:
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Locally significant given the range of fees and charges that would be subject to the higher approval threshold for taxes. At the state level, estimates are the fiscal effects would be major as changes in existing fuel tax laws would increase state General Fund costs by about $1 billion annually for about two decades and increase funds available for transportation programs by the same amount.
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