Courage Campaign Staff Recommendations for the May 19 Special Election
No on Propositions 1A, 1C, 1D, 1E, and 1F. No position taken on Proposition 1B.
Please read the following explanation of the Courage Campaign staff recommendations. Then cast your vote and decide the Courage Campaign's May 19 special election endorsements at:
http://www.couragecampaign.org/EndorsementVote
California needs major structural reform. That's the only way we'll end this seemingly interminable budget mess. These propositions do not offer that reform. Instead, they run the very real risk of making our budget problems much worse for many years to come.
We understand the difficult position that Democratic legislators were in earlier this year. But we do not believe Democrats had to agree to this package, or that voters must ratify it.
No matter what happens on May 19, California will face a multi-billion budget deficit on May 20. Supporters argue that unless we approve these propositions, we'll face a drastic "cuts-only" budget to close that deficit. That is not the only possible outcome. Democratic legislators should pursue a "majority vote" budget that would allow them to bypass Republican obstruction. They should demand that we restore the higher tax brackets on the wealthiest Californians -- used even by Republican governors like Ronald Reagan and Pete Wilson -- to ensure that the rich pay their fair share in support of the vital services we all need. Ultimately we need to seek repeal of the 2/3rds rule to pass a budget, and consider calling a Constitutional Convention to fix what is broken with our state government. And we need a budget that includes accountable spending so that taxpayers can see results.
We are also not convinced that the revenue solutions offered in these propositions will provide what their supporters claim. They are likely to make our budget situation worse and make it difficult to keep core public services funded and available to the people. For those reasons we believe Propositions 1A, 1C, 1D, 1E, and 1F should be rejected.
Proposition 1A - Vote No
Proposition 1A is a modified version of a spending cap, but no one seems to agree upon what it does. It creates a "rainy day fund" that the legislature must put money into even during a bad budget year, even if doing so means cuts to schools and health care. Any revenue that is above the average of revenues over the last ten years must be put into the rainy day fund and cannot be spent on other programs. Because of that clause it will be extremely difficult to reverse the existing cuts to public services, and will force cuts to be made for many years into the future.
Prop 1A amends the constitution, so its effects would be permanent. Because of that, every service that our government provides - schools, health care, police, fire, courts - will eventually be cut. Prop 1A never expires, and will be very difficult to remove from the constitution once it is in place.
The California Budget Project argues (PDF link) that Prop 1A sets up a system that guarantees deficits to at least 2013: $16 billion in deficit in 2010-11, $17 billion in 2011-12, and $21 billion in 2012-13, and potentially well beyond that.
Prop 1A extends some of the recent tax increases, including the sales tax increase, to 2012-13. This money, however, is already largely earmarked to fund the money that schools will receive if Prop 1B passes. If the economy remains in recession, or if the state remains in deficit, the Prop 1A money will not only be insufficient to deal with that deficit, but the rules Prop 1A creates will make it impossible to close that deficit through anything other than cuts. Prop 1A is the worst kind of budget "solution" - something designed for short-term gain that creates truly massive long-term problems.
The Courage Campaign staff recommends you vote No on Prop 1A.
Proposition 1B - No recommendation
Prop 1B is designed to give $9.3 billion to K-12 schools that they are owed this year, but are being denied because of the way Governor Arnold Schwarzenegger and the state Legislature are interpreting Proposition 98, which guarantees schools a minimum level of funding.
There are two key things to know about Prop 1B. First, the money does not go to schools until 2011, and only then for several years after that until the $9.3 billion is repaid. This does not provide an increase in the overall amount of money schools will get in the long- term, but may well be useful in the near term.
Second, the $9.3 billion will be repaid by the tax extensions included in Prop 1A. If Prop 1A fails but Prop 1B passes, Prop 1B will be unfunded. We believe that the education cuts made in the recent budget are unconscionable. We wish Prop 1B reversed them immediately, and we wish it wasn't linked to Prop 1A.
The Courage Campaign staff is not making a recommendation on this initiative. Some of us are voting for it as a signal that our state must not cut education funds.
Proposition 1C - Vote No
Of the six initiatives on the May 19 ballot, only Prop 1C could make a meaningful difference in the immediate budget crisis we face. But it does so at an enormous risk - one that we feel is too great to take. Prop 1C allows the state to sells bonds to be repaid with lottery revenues. The state hopes that $5 billion in bonds can be sold, but there has been skepticism from the bond markets about whether this is possible.
Given the current bad market conditions, the state will likely have to offer high rates of interest to sell the bonds which further mortgages our future and gives us a questionable amount in return. More importantly, the lottery currently does not generate enough money to repay $5 billion in bonds. The lottery made $3 billion in revenue in the last fiscal year - a decline of $600 million from the peak of lottery revenues, which occurred in 2005. The California Budget Project estimated sales would have to increase by as much as 32% (PDF link) to cover the cost of the bonds, even though sales have been in decline for four years. If lottery sales do not increase, then the money to repay the bonds has to come from the general fund -- meaning the state would have to cut funding from other programs in order to pay the Wall Street bondholders. Lottery tickets are most frequently bought by low-income Californians, meaning that Prop 1C is an indirect and regressive method of balancing the budget on the backs of the poor.
We recommend a No vote on Prop 1C.
Proposition 1D - Vote No
In 1998 California voters approved Proposition 10, taxing tobacco sales to pay for educational and health care programs for children under age 5 whose families are otherwise unable to afford those services (the First Five program). The program has been a dramatic success, and is especially valuable during these recessionary times. In fact, the First Five program has been able to build up a budget surplus, which it is using as a reserve - one might even call it a "rainy day fund" - to protect against potential future problems.
Unfortunately for California's children, the success of First Five has now made it a target. Republicans proposed, and Democrats agreed, to put Prop 1D on the ballot to redirect $1.7 billion from First Five to the general fund over the next five years. This was done along with Prop 1E in order to fund nearly $600 million in corporate tax cuts that were part of the budget deal.
Further, Prop 1D would narrow the range of services provided by First Five, and as the California Budget Project concluded (PDF link), "would likely result in cuts to First 5 programs and services."
Proposition 1D, like so many of the other propositions on this ballot, strikes us as robbing Peter to pay Paul. Except in this case it is the most vulnerable and the most in need of investment among us - young children - who would pay the price in lost services. We cannot countenance cutting back on early childhood education.
The staff recommends you vote No on Prop 1D.
Proposition 1E - Vote No
This proposition is very similar to Prop 1D. In 2004 voters approved Proposition 63, levying a 1% surcharge on incomes over $1 million to finally reverse decades of deliberate underfunding of mental health services. Like the First Five program, the mental health programs funded by Prop 63 have surplus funds, as the state has had delays in implementing the projects.
Prop 1E would redirect $500 million over the next two years away from the Prop 63 programs to the general fund. This is not a large amount of money - about 0.8% of the overall state budget - and does not seem worth the risk to mental health programs.
The staff recommends you vote No on Prop 1E.
Proposition 1F - Vote No
Prop 1F would deny legislators a pay raise during years with a budget deficit. It would save barely any money for the state. This proposition is popular because it plays into the mantra of "punish anyone in Sacramento."
The only reason this is on the ballot is because Republican Senator Abel Maldonado demanded it in exchange for his vote for the February budget deal - so Maldonado could look good to his base by claiming to have made legislators pay for the budget deficit. On that basis alone we feel the proposition should be rejected - California voters should not even have to vote on a proposition that is on the ballot solely as a result of one man's blackmail.
It is absurd to believe that legislators are going to change their behavior or their votes based on how much they get paid. California legislators generally make their decisions for ideological reasons, to increase their perceived chances of re-election, or in consideration of special interests who have contributed to their campaigns. Further, if we're going to deny legislators pay, why is a balanced budget the standard we use? Why not the performance of our students in school? Why not the number of children living in poverty? Why not the number of Californians with access to health care?
The budget morass is due to the absurd structural impediments, not because legislators are paid a certain amount. The problem is structural. The 2/3rds rule, years of tax cuts, unlimited expenditures on ballot initiative campaigns, and other factors are the true problem here. Don't give in to the right-wing on this.
The staff recommends you vote No on Prop 1F.
If you have any questions about the sources used to produce these recommendations, please send an email to info@couragecampaign.org
To cast your vote and decide the Courage Campaign's May 19 special election endorsements, please go to:
http://www.couragecampaign.org/EndorsementVote