Fate of services in voters' hands

California’s fiscal future, amid a swirl of mixed signals from politicians, educators and special-interest groups, will be in the hands of voters during a special election Tuesday.

Legislators crafted five ballot measures as part of a plan to fix a $42-billion deficit. They added a sixth initiative to prevent elected officials from receiving pay raises during deficit years.

But since developing the propositions, Democratic and Republican lawmakers have failed to endorse all of the measures on which their budget plan now relies.

Voters must approve Propositions 1A through E in order for California’s current budget plan to work; otherwise, lawmakers will have to reconvene to make up for a growing shortfall.

The state will need to borrow at least $6 billion and cut another $6 billion in spending, regardless of whether the initiatives pass because of a projected $15-billion deficit, Gov. Arnold Schwarzenegger said during a news conference Thursday.

But if the initiatives fail, those totals could grow to $9 billion in new borrowing and $7 billion in cuts to make up for a hole that is expected to grow to $21.3 billion, Schwarzenegger said.

The effects of the resulting cuts will severely impact almost every public service, he said.

Recent surveys show that none of the five budget-related measures have received a majority of support from likely voters, except for Proposition 1F, which limits pay for elected officials.

Local educators and city officials have been torn on the propositions.

The Burbank City Council, on a 4-1 vote, opted not to support the slate of initiatives, while the Burbank Unified School District Board of Education voted unanimously in favor of endorsing the measures.

The Glendale Unified School District Board of Education did not vote on supporting the propositions, and was visibly torn during a discussion of the election.

Statewide signals have been mixed as well.

The California Teachers’ Assn. is supporting every measure because it expects the damage to education would be far worse if the state has to reconvene to discuss solving budget holes, potentially looking to schools for making further reductions. Meanwhile, the California Federation of Teachers has opposed all but one of the measures, arguing that lawmakers should be forced to return to their desks and formulate a better plan.

Some voters have chosen to use the initiatives to send a message of exacerbation to officials who they say have created a flawed budget through irresponsible spending and program expansion.

“What we’ve allowed the politicians to do is absolutely nuts and we, as citizens, have kept giving them more and more money and they’ve just wasted it,” said Paul Hackett, president of the Republican Club of the Foothills. “We’re getting nothing in return. So our only defense is these propositions and voting them down.”

Below is list of each of the propositions on Tuesday’s ballot. The summaries were taken directly from the California secretary of state, accompanied by arguments for either side.

Proposition 1A

Changes the budget process. Could limit future deficits and spending by increasing the size of the state “rainy day” fund and requiring above-average revenues to be deposited into it, for use during economic downturns and other purposes. Fiscal Impact: Higher state tax revenues of roughly $16 billion from 2010-11 through 2012-13. Over time, increased amounts of money in state rainy day reserve and potentially less ups and downs in state spending.

PRO: Proposition 1A will put a necessary limit on government spending, area Democratic and Republican lawmakers said. The measure would also create a pot of money that officials could tap into when the economy goes south, they said. “California needs to have built-in fiscal constraints and a savings plan to make sure that hard times don’t result in draconian cuts to services,” Republican Assemblyman Anthony Adams said.

CON: But area business leaders and conservatives argue that Proposition 1A would hurt local residents through raised taxes and fees, despite its aim to create a rainy-day fund. The California Federation of Teachers also opposes the measure, arguing that cutting out a chunk of the state’s funds for the purposes of a rainy-day account would reduce the total amount that is given to schools, since the state allocates about 40% of its budget for education. “It’s going to just cost more money for taxpayers and its not going to make a great difference in the deficit,” Glendale Chamber of Commerce Executive Director Judee Kendall said.

Proposition 1B

Requires supplemental payments to local school districts and community colleges to address recent budget cuts. Fiscal Impact: Potential state savings of up to several billion dollars in 2009-10 and 2010-11. Potential state costs of billions of dollars annually thereafter.

PRO: Proposition 1B would repay $9.3 billion in funds that have not been paid to schools as the state has struggled through financial difficulty, lawmakers said. The California Teachers Assn. and the California School Boards Assn. support the measure, which they argue would guarantee that schools receive the funds they deserve. Passage of the measure could also protect local districts if the state’s fiscal outlook worsens, said Sue Conway, president of the Burbank Teachers’ Assn. “Hopefully it will mean less cuts that will come our way if the state decides it’s going to cut eduction again,” she said.

CON: But some educators have lined up in opposition of the measure. The California Federation of Teachers has argued that the state owes those funds to schools, regardless of whether the measure passes. The Glendale Unified School District Board of Education did not take a position on the initiative, but President Mary Boger, who was ambivalent on the measure, argued that the state could be forced to turn those funds over through a lawsuit. “I believe that the state legally is obligated to do that without passage of [Proposition] 1B, but with passage of 1B we would be less likely to have to go to court to make them do that,” Boger said. Lawmakers have tied the fate of Proposition 1B to that of Proposition 1A, so that if the latter fails, the funds for Proposition 1B wouldn’t be available.

Proposition 1C

Allows the state lottery to be modernized to improve its performance with increased payouts, improved marketing and effective management. Requires the state to maintain ownership of the lottery and authorizes additional accountability measures. Protects funding levels for schools currently provided by lottery revenues. Increased lottery revenues will be used to address current budget deficit and reduce the need for additional tax increases and cuts to state programs. Fiscal Impact: Allows $5 billion of borrowing from future lottery profits to help balance the 2009-10 state budget. Debt-service payments on this borrowing and higher payments to education would likely make it more difficult to balance future state budgets.

PRO: Voters have been most strongly opposed to the passage of Proposition 1C. Lawmakers are also split on the measure. The initiative would allow a private company to modernize the lottery, which is outdated and has under-performed as a revenue source for the state, Republican Assemblyman Anthony Adams said. While an effort to modernize the lottery through a private firm would be smart during any period, the state’s current fiscal crisis has increased the urgency for the added funds that would come from the tactic, Democratic Assemblyman Paul Krekorian said. “Right now, it’s especially important that we get $5 billion of these funds up front,” Krekorian said.

CON: State Sen. Bob Huff, who is listed in the voter information guide as the party opposed to Proposition 1C, argued that more aggressive marketing for more attractive lottery games would hurt citizens. The majority of lottery tickets are sold to people often struggling to support themselves, Huff said. “People don’t have unlimited resources, so a decision to buy a lottery ticket is for many people a decision not to buy something else that they may need to,” he said. The diversion of spending on lottery tickets rather than other goods could also lower the state’s sales tax revenues, he said.

Proposition 1D

Temporarily provides greater flexibility in funding to preserve health and human services for young children while helping balance the state budget in a difficult economy. Fiscal Impact: State General Fund savings of up to $608 million in 2009–10 and $268 million annually from 2010–11 through 2013–14. Corresponding reductions in funding for early childhood development programs provided by the California Children and Families Program.

PRO: Lawmakers argue that millions in funds that have been restricted for use on specific early childhood health and educational services programs have been left unspent. Those funds could be redirected to similar programs that are paid for through the state’s general fund, but are currently at risk of being cut, they said.

CON: But opponents of the measure argue that those programs currently have surpluses because funds have been allocated based on long-term projections. The First 5 Commission, which distributes the funds from a 50-cent cigarette tax initiative passed in 1998, has multiyear budget plans to support local childhood development programs, including those at Glendale’s New Horizon Family Center and Glendale Community College, said Sherry Novick, executive director of the First 5 Assn. of California. The budgets are extended because tobacco tax revenues are declining, prompting the commission to think ahead, Novick said. “I wouldn’t call it sitting on money, I would call it prudent planning and fiscal responsibility that we would think that maybe the state ought to emulate.”

Proposition 1E

Helps balance state budget by amending the Mental Health Services Act (Proposition 63 of 2004) to transfer funds, for two years, to pay for mental health services provided through the Early and Periodic Screening, Diagnosis and Treatment Program for children and young adults. Fiscal Impact: State General Fund savings of about $230 million annually for two years (2009–10 and 2010–11). Corresponding reduction in funding available for Mental Health Services Act programs.

PRO: Like Proposition 1D, legislators have identified millions in unspent funds that voters have previously restricted for mental health services. Those funds could be redirected to other mental health programs that are currently covered under the state’s strained general fund, lawmakers said. “It would be extremely irresponsible for us to be slashing programs that impact mental health care and impact early childhood development that are paid for out of our general fund, while we preserve money that isn’t being spent in special funds,” Democratic Assemblyman Paul Krekorian said.

CON: But those leftover funds for mental health programs have been allocated for long-term programs, said Rusty Selix, executive director of the Mental Health Assn. of California and the California Council of Community Mental Health Agencies. Funds from the Mental Health Services Act, which support Pacific Clinics in Glendale and other area mental health facilities, could be severely impaired if Proposition 1D is passed, Selix said. “We have a multiyear spending plan so that’s why the money is there. It’s not like its a surplus. It’s in order for us to sustain services when our revenues are going down, and they’re going down right now.”

Proposition 1F

Encourages balanced state budgets by preventing elected members of the Legislature and statewide constitutional officers, including the governor, from receiving pay raises in years when the state is running a deficit. Directs the director of finance to determine whether a given year is a deficit year. Prevents the Citizens Compensation Commission from increasing elected officials’ salaries in years when the state Special Fund for Economic Uncertainties is in the negative by an amount equal to or greater than one percent of the General Fund. Fiscal Impact: Minor state savings related to elected state officials’ salaries in some cases when the state is expected to end the year with a budget deficit.

PRO: Proposition 1F is the only measure to receive broad support from likely voters in recent surveys. It would prevent legislators and other state elected officials from receiving salary increases during deficit years. Lawmakers are in favor of the proposition.

CON: The California Federation of Teachers, on the other hand, is opposed to the measure, calling it a “faux populist measure that would punish all legislators by denying them pay raises if a small minority of them block the adoption of a state budget that requires a two-thirds vote.”

 ZAIN SHAUK covers education. He may be reached at (818) 637-3238 or by e-mail at zain.shauk@latimes.com.

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