Voters Getting a Chance to Set State Budget Priorities

Staff Reporter

It's called "ballot box budgeting," the diversion of discretionary government budget dollars to specific programs approved by voters.

Proponents say it's the only way to obtain funding for critical programs neglected by lawmakers. Critics say it places too many constraints on the ability of lawmakers to craft a budget and could result in tax increases to make up for the diverted funding.

On Nov. 5, California voters will get two chances at ballot box budgeting.

Proposition 49, dubbed the "Schwarzenegger initiative" for its chief sponsor, actor Arnold Schwarzenegger, would earmark up to $455 million a year from the state's general fund for before- and after-school programs for public schools and local community colleges.

Proposition 51 would redirect 30 percent of state motor vehicle sales and lease sales tax revenues that now flow into the general fund to a separate fund earmarked primarily for transportation-related programs like building transit facilities, relieving street congestion and upgrading school bus fleets.

The measure also sets aside some funds for other pork-barrel projects, such as $1 million a year to fund a charter school for the arts in Oakland

"These measures basically say that we the voters don't trust legislators to do the right thing with our money," said Michael Alvarez, professor of political science at the California Institute of Technology.

A Field Poll conducted around Labor Day showed that Proposition 49 had 51 percent support, down from 58 percent in a July survey. An August poll from the Public Policy Institute of California, with a larger sample size, had the measure passing with 59 percent support.

While Proposition 51 hasn't been polled, supporters point to the passage last March, by a 69 percent-31 percent margin, of Proposition 42, a similar measure to divert gas tax revenues to transportation programs.

But since then, the budget situation has worsened dramatically, and the economy has remained skittish, prompting concern among supporters of both measures.

Ballot box budgeting is nothing new in California. Over the years, voters have approved the diversion of billions of dollars in general fund revenues to specific programs. The most famous of these is Proposition 98, passed in 1988, which sets aside at least 40 percent of all general fund dollars each year for school funding. In the current budget, the figure is 42 percent.

Supporters say this is the best way of funding needed projects without raising taxes or selling billions of dollars more in bonds.

The problem, critics say, is the cumulative effect of these diversions from the general fund. Already, more than half of the current $99 billion budget consists of funds earmarked by voters for specific programs, with at least another fourth mandated by the federal government.

That leaves less than one-fourth of the total budget that's truly discretionary. With a budget deficit of $24 billion this year, budgeters in Sacramento could have cut the entire discretionary budget to zero and still faced a multibillion-dollar deficit.

What's more, they claim, the measures do not have enough safeguards so that diversions would be stopped in lean budget years.

"The trigger is completely inadequate," said David Kersten, campaign coordinator for Vote No on Prop. 51. "General fund revenues have to decline from the past year for the Prop. 51 diversion to be stopped, and that's happened only four times in the last 60 years. We're facing several years now of multibillion dollar deficits, and this will only add to it."

But supporters of these measures say they contain adequate safeguards to protect the budget. The diversions would be stopped if either general fund revenues or spending suffers a year-to-year decline, they say.

Star power

Proposition 49 supporters are counting on the appeal of Schwarzenegger, the author and principal funder, who has often been rumored as a Republican gubernatorial candidate.

In sponsoring and bankrolling this initiative, Schwarzenegger is following in the footsteps of Rob Reiner, the Democrat actor and director who in 1998 sponsored Proposition 10, the measure that raised cigarette taxes to fund childhood development programs. That initiative squeaked by with 51 percent of the vote.

So far, Schwarzenegger has provided more than $1 million of the $7 million raised by the Proposition 49 campaign to date. The goal, said a spokesman, is $10 million.

On the other side, all expenses so far have been paid out-of-pocket, primarily by the League of Women Voters, the first group to oppose the measure.

Last week one of the state's two major teacher unions, the California Federation of Teachers, announced its opposition to the measure, saying it would take away funding for other needed programs. The larger union, the California Teachers Association, came out early in support of Proposition 49, as did several business organizations, including the California Chamber of Commerce and the California Business Roundtable.

Meanwhile, the roster of supporters for Proposition 51 contains a cross-section of interest groups, many of which would benefit from seeing projects on their wish lists funded. Together, they have raised about $3 million toward a goal of $4.5 million to $5 million.

Opponents have raised just $40,000.

Ballot Initiatives at a Glance

Proposition 49: Provides up to $455 million a year in state funds for before-and-after school programs, using money previously destined for the state's general fund. Sponsored and primarily funded by Republican actor Arnold Schwarzenegger. Web sites: pro; con

Proposition 51: Redirects 30 percent of state motor vehicle sales and lease tax revenues that now flow into the state's general fund for a variety of transportation-related projects. Provides $420 million in 2002-03, $910 million in 2003-04, increasing amounts thereafter. Sponsored by the Planning and Conservation League, a statewide environmental lobbying group. Web sites: pro; con

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