From Legislature's Attorneys
CTA representatives are cheering a recently released legal opinion that will help protect the sanctity of Proposition 98, the state Constitutional provision guaranteeing schools at least a minimum level of state funding.
The Legislative Counsel's office has issued an opinion that Gov. Gray Davis' proposal to raise $8.3 billion in new state revenues without giving schools their Constitutionally guaranteed portion is a violation of law.
"We're opposed to end runs on Proposition 98, and now we have another strong legal opinion supporting our position," declares CTA President Wayne Johnson.
The issue first surfaced earlier this year when Gov. Davis unveiled a proposal that would raise $8.3 billion in new revenues through sales, tobacco, and income tax increases. Under the formula put into law by Proposition 98, schools would receive on the order of $3.5 billion of that funding.
But the governor's plan called for the new revenues to go directly to local governments without being counted as state revenues for purposes of the Proposition 98 allocation. CTA objected to the proposal when it was first revealed, and the new legal opinion - by the legislative branch's own attorneys - provides added support for the CTA view.
Proposition 98 does include a provision that would allow lawmakers to suspend the minimum-funding guarantee temporarily in an emergency on a two-thirds' vote, but the state would incur an obligation to repay schools the money owed when the crisis has passed. The governor's proposal is part of his 2003-2004 spending plan, which must bridge a budget gap recently estimated at between $33 and $35 billion.
The state Constitution requires the Legislature to adopt a final budget proposal by June 15. It also requires the governor to make his vetoes and sign the spending bill into law by June 30, the day before the start of the new fiscal year. The constitution does not provide any sanctions if those dates are missed, and in recent years the budget has been approved late more often than not.
Senate Passes Revised Cut Bill; GOP Lawmaker Unwraps Budget Plan
The Senate in late February approved an "urgency" measure that would implement more than $3.5 billion in current year budget cuts and allow them to take effect even if a measure to boost vehicle license fees is not approved. In line with CTA policy, the measure does not provide for any cuts in Cost-of-Living Adjustments, the state's class-size reduction program, or across-the-board reductions for public education.
The measure - SB x 19 by the Senate Budget Committee - differs from the earlier current year budget cut measure sent to the Assembly primarily because the new bill would take effect even if the governor does not sign a bill to boost the state's Vehicle License Fees. That measure - AB 4x - is being held in the legislature pending negotiations with the governor.
The new Senate bill was approved overwhelmingly and sent to the Assembly last Tuesday. With a technical companion bill (SB 18x), it would implement cuts for the 2002-2003 year, including the deferral of some education spending and other education cuts.
There are two major differences between SB 19x and the Assembly version. SB 19x is an "urgency bill" that would take effect immediately upon its passage. As an urgency measure, it needs a two-thirds majority to pass. (Many other measures require just a simple majority.) The measure is also not "double-joined" to the VLF measure, so it would become law even without that revenue-raising bill's enactment.
Also last week, Senate Republican Leader Jim Brulte (R-Ontario) briefed reporters on his caucus's plan for balancing the state budget. Overall, the measure would provide 7% across-the-board cuts for all state programs. It would provide $5 billion more in cuts than Gov. Davis's plan. It would also extend the budget time frame for an additional year, giving the state more time to balance the spending plan. At this writing, information about the plan was still sketchy, and CTA budget experts were poring over the available details to assess the proposal's impact on schools.
The GOP caucuses in the Senate and the Assembly have generally opposed all proposals to raise taxes to bridge the looming financial gap. The Senate GOP plan would not raise any new revenues.
Lawmaker Touts Measure to Raise Revenue, Create Equity in Property Taxes
At a Capitol rally on Feb. 26, Sen. Martha Escutia (D-Los Angeles) called for legislative backing for a CTA-supported measure that would raise new state revenues and restore a measure of fairness to the state's property tax system.
SB 17 notes that the state Constitution - as amended by Proposition 13 - delays full reassessment of property until it is sold. In the years since the measure's passage, the state has had trouble determining when certain corporate business properties should be considered sold. As a result, taxes on homes have risen more quickly and now represent a disproportionate share of the state's property tax burden. The Escutia measure could raise as much as $1 billion a year in new revenues for the state.
SB 17 would establish a clear definition of when corporate property is sold. Specifically, the measure spells out that the "intent of the Legislature to enact a program to specify those circumstances under which nonresidential commercial and industrial property undergoes a change in ownership, to ensure that all real property is assessed at fair market value when that real property undergoes a change in ownership."
The author told reporters the measure would conclude for property tax purposes that a site or building is sold when 60% of the owning company's stock has changed hands. At that time, the property would be reassessed and property taxes levied on its fair market value.
The measure is expected to see its first hearing sometime in March.