4 Initiatives Seek to Lift State Limits on Spending

Citizens and interest groups frustrated by what they charge is the Legislature’s failure to resolve some of California government’s most pressing financial problems have taken things into their own hands this year at the ballot box.

Two initiatives would raise the government spending limit approved by voters in 1979. One of them is designed to provide at least $1 billion more for transportation projects over the next three years. The other would allow an increase of up to $700 million in spending in the next budget year alone, with expectations that education programs on all levels would receive at least half the money.

These two measures come after longstanding complaints that school and highway programs have been shortchanged in recent years.

Money for New Parks

A third initiative, which will appear on the June ballot, would provide $776 million in bond funds for new park projects. Environmental groups, angered at the relatively low priority set on acquiring park lands set by Gov. George Deukmejian and the Legislature, undertook the first successful park bond initiative drive in 74 years.

A fourth measure, designed to dramatically increase spending for elementary and high schools, is being pushed for the November ballot by a coalition led by the California Teachers Assn. and state Supt. of Public Instruction Bill Honig.

So far, the initiatives have enjoyed a large measure of support. Even some legislative leaders, who in the past have decried the use of initiatives as a simplistic way of developing public policy, are supporting some of the measures.

Senate Democratic floor leader Barry Keene of Benicia, a longtime foe of initiatives who still insists “they are not a good way to do things,” is supporting the parks and school funding measures. He calls them “the lesser of evils.”

Keene said: “The initiative process is not a first resort or a resort of choice. It’s rather a last resort by groups who are frustrated that the Legislature is unable to resolve the problems that are important to them.”

Richard Ross, former chief of staff to Assembly Speaker Willie Brown (D-San Francisco) and now a Sacramento-based political consultant, said Deukmejian and the Legislature could have headed off the school finance initiative.

But he said education interests became angry and struck out on their own after watching the schools’ share of the state budget shrink while Deukmejian and the Legislature were approving a $1.1-billion income tax rebate and a huge cut in business taxes for multinational corporations.

“The system isn’t working,” said Ross, who is leading the drive to qualify the schools initiative for the November ballot. “The genesis of this initiative is the sense of futility felt by people involved in the schools. Everybody says play by the rules. We did, and it didn’t seem to be getting us anywhere.”

Among those critical of the initiatives is Senate Republican leader Ken Maddy of Fresno, who calls writing part of the state budget by the initiative route “crazy, absolutely insane.”

Maddy said the state only has so much money to spend and if interest groups begin carving up the $44-billion state budget, there will not be enough dollars to go around.

”. . . The smallest and the poorest voices in the state will be left out if the big voices all get a percentage of the budget. There are only so many percentages. Once we get 100%, then whoever is left out is never going to have any,” he said.

The three budget-related initiatives that voters will be asked to decide on in June are:

- Proposition 70, the conservationist-backed $776-million bond issue to provide money for the acquisition and development of new state parks.

- Proposition 71, backed by teacher, PTA and other school groups, which would raise the spending limit by about $700 million, with the expectation that colleges, universities and secondary schools would receive about half the new money because that is roughly their share of the proposed $44.3-billion state budget.

- Proposition 72, the measure supported by longtime anti-tax crusader Paul Gann that would earmark sales tax revenues on gasoline for highway projects and also raise the spending limit.

The fourth measure, which still must qualify for the November ballot, is a school funding initiative supported by a coalition that includes teachers, school administrators, the PTA and Honig.

The initiatives are distinguished from other bond issues this year in that they are the product of political forces outside the Capitol. They won their place on the ballot as the result of petitions, rather than actions of the governor and Legislature. Thus, they represent something of a political wild card.

Although bond measures are nothing new, there has not been a parks bond initiative since 1914.

Conservationists say the parks bond issue attracted the largest number of volunteers since the coastal protection initiative of 1972. “It galvanized groups. We had over 20,000 volunteers collect signatures,” said Gerald J. Meral, a lobbyist for the Planning and Conservation League who is directing the campaign.

Basis for Initiative

Meral said the measure was drafted because the Legislature and governor balked at providing enough money for expansion and improvement of state and local parks.

“We would have much preferred going through the legislative process. We only got into this thing because the Legislature just couldn’t quite put it together,” Meral said.

The $776 million in park bonds will carry an estimated $543 million in interest costs if it passes. Those interest payments, along with repayment of the principal, would come from general tax revenues, money that now goes into the budget pot for funding of schools, health, welfare and other programs.

Even so, 55 lawmakers have endorsed the measure.

The highway funding initiative, Proposition 72, is being supported by the California Chamber of Commerce, the Assn. of General Contractors, Californians for Better Transportation and the California State Automobile Assn.

The initiative would lay claim to all sales tax revenues on gasoline--money that now goes to support various other state programs--and earmark it for highway and transit projects. These revenues would be in addition to the special 9-cents-a-gallon state excise tax already levied on gasoline. There also is another 9-cents-a-gallon federal excise tax.

From a public policy standpoint, Proposition 72 would break new ground by dedicating sales tax revenues from a specific product for a specific program. The sales tax has always been considered a general tax, like the income tax, to be used for general government programs, like schools, prisons, health and welfare.

Critics wonder if it would open a Pandora’s Box, leading to a series of proposals such as use of sales taxes on cigarettes for health programs, or income taxes paid by teachers for schools.

The shift of revenues out of the general fund, where they now are used to finance a variety of programs, would be phased in over three years. By the third year, an extra $725 million would be shifted to transportation projects, according to an estimate by the legislative analyst.

Another of the issues addressed by Proposition 72 is the spending limit clamped on state government by voters in 1979. Gann, who authored the 1979 initiative, helped draft the highway funding initiative. To address criticism of the earlier initiative, the highway funding proposal would exempt both the $1-billion budget reserve account and highway expenditures from the state spending limit.

Highway expenditures would also be exempt from spending limits under a rival initiative, Proposition 71, that would enable the expenditure of an additional $700 million a year by the governor and Legislature.

It is being supported by public school interests, who figure that education would get the lion’s share of the new money simply because elementary and high schools now receive the largest share, about 37.5%, of general government expenditures.

Basically, the same coalition of school interests is supporting the November education funding initiative, which would guarantee that elementary and high schools would receive a 38.9% share of the general purpose tax revenues--or nearly $14 billion in actual dollars.

Deukmejian, in his proposed budget for the new fiscal year, is recommending almost that much, $13.5 billion, for public schools. Thus, Proposition 71 would provide just under $500 million in extra financing for the schools in the fiscal year beginning July 1.

Supporters say the measure would simply give schools the same kind of financial guarantees that cities and counties already receive.

But Proposition 71 would establish the higher level of funding as a “floor,” and guarantee annual increases in future years that are tied to inflation and student population growth, something schools do not now receive.

The California Teachers Assn., which initially drafted the measure, put together a fund of $500,000 to qualify it for the November ballot.

Initially, its sponsors considered proposing a tax increase that would be earmarked for public schools. But their polling told them that the public was not ready for a tax increase, even though voters were concerned about lack of adequate funding for schools and were willing to support a measure that gave schools top budget priority.

Ed Foglia, president of the association, said, “What we did was construct an initiative that did not raise taxes but provided for long-term funding based on what we considered to be a fair share of the budget.”

Foglia said “working with the governor and Legislature has been difficult. Everyone talks about education and how much they would like to do for us, but we were not treated like everyone else. Each year we seemed to be getting less of a share of the pie . . .”

The November education initiative is getting a big assist from Democratic leaders in the Senate and Assembly who control the budget committees, even though it means that the lawmakers will have less freedom when making decisions on other state programs.

California public schools currently ranks 49th among states in its ratio of students to teachers.