California Politics: Does the state’s spending limit need a makeover?

Just four months after helping him launch a tax revolution that changed the course of American history, Paul Jan I decided it was not enough.

Gann believed in the success of Proposition 13, the iconic 1978 property tax cut he co-sponsored Howard Jarvis, was evidence that California voters were willing to do more to limit the size and scope of their government.

“The important thing is that something be done to curb the unbridled spending that is sending us home to the poor,” he said during an event in Sacramento, reported by The Times on January 17, 1979.

Nearly 43 years later, the spending limit that Jean convinced voters to add to the California constitution may be more significant than at any time since the 1980s. Government. Gavin Newsom This week, he made clear in his budget proposal that the constitutional provision presents a major challenge to governance.

He hinted that it was time to ask voters to update the law.

Jan: Complete what the show started 13

Jean, who died in 1989, was much milder than the illustrious Jarvis. But he was no less enthusiastic in seeking to reduce the size of local and state governments in California. His spending limit, which qualified for a statewide special election in 1979, was called “Spirit 13.”

“If you want to keep the tax cut you got last year, you have to support my initiative,” Jan said in an article in The Times on March 11, 1979.

It wasn’t hard to see why voters wanted “Had Jan,” as it is still called today. Not only was the growth promised to limit state and local government appropriations of changes in population and cost of living, but any cash above the minimum had to be returned to the taxpayer. More than 74% of voters said yes to the constitutional amendment last November.

But it had no real immediate effect, as high inflation and tepid growth in tax revenue left plenty of room for more government spending. That changed when tax revenue grew strongly in the late 1980s and in the fall of 1987, then in government. George Dikemjian It agreed to deduct $1.1 billion from taxpayers — the first, and so far, only time this part of Jean’s dream has come true.

Soon things changed. In 1988, advocates for California schools persuaded voters to ask for any future excess cash to be divided equally between taxpayers and education. An even bigger change occurred two years later.

The Gann border fades away, then the roar returns

In 1990, Deukmejian and lawmakers persuaded voters to relax Gann’s limit while increasing the state’s gas tax to fund California’s road repairs. Their ballot measure also exempted more categories of government spending from calculating the spending cap. It expanded those accounts over two fiscal years, giving lawmakers more time to rework the budget in ways that avoid tax refunds.

The changes made Gann’s crowning achievement—officially known as the state appropriations limits—invisible in the state capitol for most of the next quarter century, only appearing briefly during the height of California’s internet boom in the late 1990s.

But the recent combination of sharply increasing revenue and stagnating population growth has increased urgency to the point of Gann.

In the wake of tax increases approved by voters in 2012 and 2016, the area of ​​new spending under cap provisions quickly faded away. Then- Gov. Jerry Brown He brought up a variety of ideas, resulting in a 2017 budget that exempted billions of dollars in federal and court mandates from counting. And last year, Newsom warned lawmakers about indirect returns before eventually agreeing to another short-term solution.

This week, the issue resurfaced. The budget Newsom presented to lawmakers on Monday indicates that the state is once again on track to breach Gann’s limit for what would be only the second time in its 42-year history.

It’s all about how “spend” is defined.

The annual process includes three basic steps: adjusting the current spending limit for inflation and population, tallying the state’s primary tax revenue and then determining how much spending is exempt from the limit.

But the reality is more complex.

First, California tax returns are known to fluctuate sharply and it can take months (or years) to get an accurate account. Second, several important categories of spending are excluded from appropriations limits—including some payments to local governments, debt services, court-ordered authorizations, and withdrawals from reserve funds.

Last year, lawmakers pushed more spending into the exemption category. This included the more than $12 billion awarded to local governments to fund social services and public safety operations in the current fiscal year; about $18 billion in long-term costs on land and buildings; and more than $4 billion in revisions to the fiscal relationship between the state and school districts.

“These, effectively, reduce the credits subject to the one-time cap,” the Legislative Analyst’s Office noted in a report last summer.

Perhaps Gann’s most subtle solution is to send a “Golden State Stimulus” check to millions of Californians, limiting eligibility to those with annual incomes of $75,000 or less. Sounds like a deduction, right? Wrong, because cash outlays are classified as emergency payments Response to the COVID-19 pandemic.

Last summer’s budget solutions weren’t enough to really solve the problem. And this week, the governor’s team announced that the state is now preparing to breach Jean’s limit by at least $2.6 billion, due in large part to the amount of tax revenue collected in the fiscal year that ended about six months ago.

Should voters define Jean’s limits?

Kelly Martin BuslerThe governor’s budget director told reporters Monday that Newsom has asked his staff to come up with a robust solution to spending curbs by the time he proposes a revised budget in May. She also noted that more of the state’s surplus from the lean years could have been disposed of had it not been for the way Paul Jean’s constitutional amendment works.

If the country wants to add extra money In a “rainy day” reserve fund, for example, Jean’s limit defines this action as spending It counts it within the two-year cap for credits – although some categories Actual spending, like infrastructure, often does not count within the cap.

“I know it sounds very strange,” Busler said.

Newsom hinted that it might be time to formally rewrite the constitutional text and return to the electorate to demand a rule change rooted in anti-tax activism in 1978 and 1979.

“I am open to reforms and discussions,” he said.

Changes will not be easy. For starters, the 1979 law applies to local governments as well, including school districts, and the amendments could have a huge impact in communities as far from Sacramento. Meanwhile, government skeptics are undoubtedly questioning what special interests they might have in mind when writing the cryptographic details — especially if there is any possibility that the changes may prevent future tax cuts.

Voters will have the final say. This is probably what Gann wanted.

“We the people control our own destiny,” The Times reported, telling a Long Beach crowd in the fall of 1979, “if we can get off our heels and do something about it.”

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Lightning political tour of California

– Newsom on Thursday blocked her parole Sirhan Sirhansaying killer Robert F. Kennedy “He lacks the insight that prevents him from making the same kinds of risky decisions he’s made in the past.”

California will allow all income-eligible residents to qualify for the state’s Med-Cal program regardless of immigration status under Newsom’s budget proposal.

A group of Democratic lawmakers is pushing for a sweeping restructuring of the state’s health care system under legislation that guarantees medical coverage to every resident by enacting billions of dollars in new taxes to create a single payer system.

–This week’s budget proposal cited a declining California school population driven by a sharp drop in birth rates that “eroded” expectations for 12th grade enrollment, and Newsom suggested adjusting the state’s education funding formula to “reduce the impact” of fewer students in schools.

California’s surplus coffers gave the Democratic governor “every politician’s dream.”

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