Making sense of super Tuesday's proposals

By Rory Sa

Tuesday, March 2 is more than the typical primary election. California faces an uncertain future due to the state’s budget deficit, which is an estimated $22 billion this year and an estimated $14 billion next year.

The four propositions on Tuesday’s ballot deals are bound together by their effects on California’s budget. This is especially true for Proposition 57 and 58. Gov. Schwarzenegger has warned of drastic cuts in state services should Proposition 57 and 58 fail to pass in tomorrow’s election.

• Proposition 55: Kindergarten-University Public Education Facilities Bond Act of 2004

If approved, Proposition 55 will allow the state to issue $12.3 billion in bonds to upgrade classroom facilities for k-12 schools, community colleges, the University of California system and the California State University system.

The legislative analyst’s office estimates that California will pay $823 million each year to pay off the bonds. It will ultimately cost the state $24.7 billion to repay both the bond as well as interest.

Supporters say the bond will allow schools to repair old and outdated school buildings as well as construct new schools and classrooms from K-12 to higher education.

Opponents contend that the bond will damage California’s credit rating by issuing additional bonds at a time when more than one-third of the state’s current bonds can not be issued. They also say Californians will be saddled with bond repayment for decades.

Fresno State stands to receive $91 million to expand and renovate the Madden Library.

• Proposition 56: State Budget, Related Taxes and Reserve. Voting Requirements. Penalties. Initiative Constitutional Amendment and Statue

Proposition 56 will change the state constitution to allow the legislature to pass the yearly budget as well as budget-related tax and appropriation bills with 55 percent vote. Currently two-thirds of the state legislature must approve the budget before it passes.

The governor and the legislature will be penalized for not finishing the budget by June 14. Each day they are late ,they will permanently lose their salary and expenses for that day.

The measure would establish a reserve fund. When state revenues exceed the amount needed to fund existing state programs, at least 25 percent of the excess revenue would be placed in a reserve fund. The fund could only be spent in case of an emergency or in years where spending on services exceed that year’s revenue.

Supporters say Proposition 56 will force legislators to pass the state budget on time or suffer the consequences. They also say it will reduce partisan gridlock and establish a summary of the budget in California’s Official Voter Guide.

Opponents contend that Proposition 56 will make it easier for legislators to raise taxes.

• Proposition 57: The Economic Recovery Bond Act

Proposition 57 will allow the state to issue up to $15 billion in bonds to eliminate California’s cumulative budget deficit. Proposition 57’s bond will replace a $10.7 billion bond enacted last year to refinance the state’s debt. The 2003 bond is currently being challenged in the courts.

Bonds have traditionally been used to finance large projects such as roads, schools, prisons and water projects. Since 2002, bonds have been used to help reduce shortfalls in California’s General Fund budget.

California faces a total budget deficit of $22 billion, with $14 billion in short-term borrowing that must be repaid by June 2004. Proposition 57 would allow the state to sell as much as $15 billion in bonds to retire debt from previous years and help cover part of this year’s projected shortfall.

According to a statement prepared by California’s legislative analyst about $36 billion in bond debt currently exists, not including the deficit-financing bond from 2003.

Supporters say Proposition 57 will keep the state from running out of money. This will give the state time to address issues within the budget and streamline services without raising taxes or making drastic cuts in state services such as education or health.

Opponents contend that Proposition 57 will lead to more debt for California. Californians will be forced to repay the bond and any interest the bond has accrued. It will take from 9 to 14 years for California to repay the bond. Because using bonds to cover deficit spending was forbidden by the California constitution in 1849, it requires voters to approve both it and Proposition 58 to repeal, then re-institute this ban.

Proposition 57 requires Proposition 58 to be approved in order for it to pass.

• Proposition 58: The California Balanced budget Act

Proposition 58 requires the governor to enact a balanced budget, where General Fund expenses do not exceed General Fund revenue.

It would allow the governor to proclaim a fiscal emergency in case of substantial revenue losses or spending deficits. The state legislature would be required to pass legislation that addresses the problem within 45 days. If they exceed this deadline, legislators would be unable to act on other bills or adjourn.

Proposition 58 would establish a Budget Stabilization Account (BSA) within the state’s general fund. Up to 3 percent of General Fund revenue would be redirected into the BSA, until the BSA is equal to $8 billion or 5 percent of General Fund revenue, which ever is greater.

Half of all money redirected into the BSA, up to a cumulative total of $5 billion, would be used to help pay off Proposition 57. The remaining funds can be used for any purpose by the legislature.

The measure would also prohibit any future borrowing to cover budget deficits.

Supporters say Proposition 58 will require the governor and the legislature to enact balanced budgets. The BSA will help California pay Proposition 57’s bond early.

Opponents contend that Proposition 58’s purpose is to allow the state to borrow to cover deficit spending, which is in violation of the state constitution. They say the bond only addresses long-term bonds, and continues to allow legislators to use short-term bonds to spend more than the state receives. It also allows the governor to suspend the BSA at any time.

Proposition 58 requires Proposition 57 to be approved in order for it to pass.