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November Ballot Prop 2 ? Devils or Angels in the Details?

Uploaded: Sep 27, 2014
This year's Prop 2* is proof that there's no good, simple idea that can't be made complicated if you study it long enough. Former Speaker/Prop author Perez claimed to have been at the task of drafting it for over a year, and it shows.

The over-arching concept is so sensible that it's practically biblical (remember Pharoah's dreams in Genesis?) ? indeed, it dates from the much earlier advent of agriculture itself. That is: we are wise to put away surplus in the fat years, against shortages of the lean years that are sure to follow. California's vibrant, turbulent economy has been particularly prone to boom-or-bust cycles ever since the days of the Gold Rush; hence the value of a state-level 'rainy day fund.'

It's not even a new concept in Sacramento. In 2004, the voters passed (72-to-28%) similar Prop 58, which established such a Budget Stabilization Account. The trouble was that it failed to adequately define the "surplus" from which funds would be sequestered, and it allowed the Governor to suspend its application ? which both its author, Mr. Schwarzenegger, and Mr. Brown have done.

So, basically, Prop 2 reads into the State Constitution a requirement to annually set aside 1.5% of state general fund revenues, against an upper limit of a 10% accumulation. Actually, it's a bit more complicated than that. From "The long-form summary reads:

 Requires annual transfer of 1.5% of general fund revenues to state budget stabilization account.
 Requires additional transfer of personal capital gains tax revenues exceeding 8% of general fund revenues to budget stabilization account and, under certain conditions, a dedicated K?14 school reserve fund.
 Requires that half the budget stabilization account revenues be used to repay state debts and unfunded liabilities.
 Allows limited use of funds in case of emergency or if there is a state budget deficit.
 Caps budget stabilization account at 10% of general fund revenues, directs remainder to infrastructure."

And actually, the long-form summary does not do it justice, on the complication front. Note, for instance, the emphasis on capital gains tax revenue. It is there because of Google. Capital gains revenue is remarkably volatile: varying from 3% to 14% of the general fund (the latter in 2006, when Google went public). Such a windfall ($7B per the Google IPO) is seen as a prime candidate for socking-away, as long as it exceeds the annual average of 8% of the general fund in-take.

Further, the biggest source of complication ? and controversy ? is not even contained in the summary above. Rather, it is a finer-print provision that caps similar sequestering by local school districts at 5% of Their revenues. The objections to that provision seem to be two: first, it is a power-grab by Sacramento that curtails local control over school budgets, and second, that 5% is not enough, especially given the cash flow concern that districts are locally funded by lumpy property tax revenues mostly received in May and December.

The former concern seems to predominate, especially given the state's spotty record in supporting local schools. California traditionally ranks very low among all states in per-pupil expenditures, and Sacramento has been seen as an unreliable partner in augmenting local funds. This measure would appear to increase local dependency on that volatile source ? thus, there is deep distrust among some education advocates. There is also a suspicion that this is really a teachers' union ploy to force districts to spend money ? and where better than teacher compensation?

Supporters of the measure counter-argue that Prop 2 (still further) provides that Districts may go above that 5% cap by applying to their County Superintendent of Schools ?. and the beat goes on. Now it must be added that Prop 2 passed unanimously in the legislature, that it is supported by both major Parties, both gubernatorial candidates, the League of Women Voters and our own local fishwrap. 43% currently approve, against 33% opposed and 24% undecided (per ballotpedia, as above).

Mr. Brown, secure in his own re-re-re-election prospects (can you name his opponent?), has launched his own side-campaign to promote both Props 1 (ably described and advocated by my colleague, Ms. Roz) and Prop 2.

I am particularly hopeful of hearing from both School Board reps (and candidates) and perhaps our local legislative contingent on the merits of this Proposition. Does it overcome the deficiencies of its predecessor on the loophole front? Is it enough, or too much? Is the school districts' cap a practical problem? Do the anti-union conspiracy theorists have a point?

Please weigh-in ? thanks!

* (as opposed to the landmark food-animal treatment standards referendum passed in 2008)
Local Journalism.
What is it worth to you?


Posted by Herman Glates, a resident of Danville,
on Sep 27, 2014 at 7:27 pm

Everyone should vote ?no? on every ballot initiative. Prop. 2 is no exception.

Ballot initiatives like Prop. 2 amend the California constitution and are difficult to modify, tying the Legislature?s hands. If Prop. 2 turns out to be a bad idea, too bad. We?re likely stuck with it.

Most voters are uninformed. Less than 1/3 of voters can even name the three branches of government, let alone tell if a constitutional amendment is a good idea or not.

Most voters encounter propositions for the first time in the voting booth. That?s scary.

Here?s an idea: Let the Legislature do it?s job and pass its own legislation. Stop punting to uninformed voters.

San Ramon Valley?s rainy day fund is usually between 10% to 20% of revenue. It?s one reason SRVSD was able to weather this latest financial crisis. Prop. 2 says school districts? rainy day funds cannot exceed 5%. Why??

We don?t need a constitutional amendment limiting how much local school districts can save for a rainy day.

Vote No on Prop. 2.

Posted by San Ramon Observer, a resident of San Ramon,
on Sep 28, 2014 at 6:07 pm

San Ramon Observer is a registered user.

Good counter argument HG. I know our city and school district have their own rainy day funds. It's a good idea for the state to have one too, but I agree with HG, the legislature should do that by putting it into the budget and not on the ballot.


PS Thanks, Tom, for the nice plug on my blog on Prop. 1.

Posted by Rick Pshaw, a resident of Danville,
on Oct 1, 2014 at 11:10 pm

What naive twaddle! History has show that the will of the people through the ballot box has been regularly circumvented by the judicial system in California. This election will be no different.

The courts, in essence, are saying, "You stupid Californians. You voted on wrong on Measure X and passed it. We hereby overturn your vote."

Why bother to vote?

Posted by Tom Cushing, a resident of Danville,
on Oct 2, 2014 at 8:34 am

Tom Cushing is a registered user.

Hi Rick: it's long-established law in the system of checks and balances that All legislation -- by legislature or by referendum -- must be consistent with the US Constitution, the supreme law of the land. The Bill of Rights and later amendments contain many of our most cherished individual rights -- and a few about which you and I might disagree. Regardless, they are the foundational bedrock of our aspirations as a nation.

Would you substitute referenda for that principle? If so, are you prepared for a dramatic curtailment of gun rights? Do you favor Big Government dragnetting your hard-drive?

Which of the Props are you referring-to, specifically?

Posted by Dirka Dirka, a resident of San Ramon,
on Oct 2, 2014 at 10:47 am

More goat poop from Tommy and this shepherd has had enough of his supercilious dribble. This is another shining example of deceptive dogma from a lawyer and student of the Saul Alisnky playbook. We have way too many laws on the books as it is. We don?t need this malarkey. We need to get rid of tax and spend politicians and everything will take care of itself. Tommy likes to tout the constitution when it serves his purpose, but he is a socialist revisionist of the worst kind. He?s all for reinterpreting the intent of the constitution when it serves his socialist agenda. Jerry Brown is an anti-business tightwad. He was in the 70?s too and now we have a little tempered version of the same moonbeam agenda.

What is the best way to have a surplus? Grow the economy by stimulating business, not over regulating it! This admin. and the community organizer in chief, aka Barak Hussein Obama, and the rest of the politicians would have twice the economy if they were not so anti-business. Having a surplus would be product of a thriving economy with reasonable people at the helm. Jerry brown?s strategy is to get to the political middle, by curtailing government waste where ever he can, but he stills wastes tons of our tax dollars on naïve social policy spending. OK, cutting cellphone bills and the likes is all good, but common, Jerry?s cuts are small potatoes.

How about we pass a law that says illegal aliens shouldn?t get driver?s licenses, or are able to attend our schools for free, or get free a free ride on our medical system? That would save a ton of cash. How about we immediately deport them, when illegals commit minor crimes? Instead we divert them to services. California?s economy is recovering, but this is due to California?s technology entrepreneurs. It is still an unstable economy and this is due to anti-business politicians, whether they pass a law to build a surplus, or not. This has absolutely nothing to do with Brown, it is a built in economic cushion for whoever takes office, regardless of politics. Cast your votes to grow business and vote all the weasels out. This state is a magnet for people seeking a free ride and the current set of politicians see it as a way to import their party?s next generation of voters.

Vote no on all these news stupid laws aaaaand vote the weasels out. Jerry Moonbeam?s challenger is Neel Kashkari. Web Link

Dikra Dirka

Posted by American, a resident of Danville,
on Oct 3, 2014 at 8:56 am

Tom: Not sure which is more depressing: Reading in the paper that "undocumented aliens" living in CA now pay less in state college tuition than actual U.S. citizens living in Arizona, Nevada, or any other state, or reading about Billy Beane claiming his moves(when we had best record in baseball)allegedly helped us. Right Billy, team chemistry does not matter.

Just got my property tax bill and see I am paying additional taxes for several different community college bonds, and paying additional taxes for several different SRVUSD bonds.

Well, at least we have our Raiders...

Posted by Cholo, a resident of Livermore,
on Oct 3, 2014 at 9:19 am

There are millions upon millions of "aliens" working in the US and improving our economy.

Web Link

Someday, more Americans will be grateful that undocumented workers pick the fruit and vegetables that you serve your families.


Posted by Cholo, a resident of Livermore,
on Oct 3, 2014 at 9:35 am

One more comment - 100% of high-tech workers may eventually be foreigners:

Web Link

The reality that a poorly paid workforce is much more desirable to corporate America is a reality.


Posted by Cholo, a resident of Livermore,
on Oct 3, 2014 at 4:25 pm

What exactly is a Christian, Jewish, Muslim, Hindu, Buddhist, perspective on "undocumented aliens"?

Just asking...

Posted by Tom Cushing, a resident of Danville,
on Oct 4, 2014 at 5:17 pm

Tom Cushing is a registered user.

Aw, American -- does this mean we're going to have to disagree about baseball, too? Oh well, more dog blogging to come soon.

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