California Voters’ Guide: 2012: Proposition 31

Policy Brief

California Voters’ Guide: 2012: Proposition 31

Among a daunting package of ballot questions, here is the free minds and free markets perspective on this proposition.

Proposition 31: State Budget and Funding Reforms

Proposition 31 is a state constitutional amendment with a bundle of changes to the budget and spending process of state government, specifically:

  1. Shifts the state to a two-year budget instead of an annual budget.
  2. Sets rules requiring the legislature to make spending cuts or raise new revenue to balance any new expenditures after a budget is enacted.
  3. Allows the governor to make spending cuts in a fiscal emergency if the legislature does not.
  4. Requires performance reviews of all state programs and mandates state and local government to start using performance measures for programs that are funded in their budgets.
  5. Requires publication of all bills at least three days prior to a vote by the state Senate or Assembly.
  6. Lets counties alter state statutes or regulations related to spending unless the state legislature or a state agency vetoes those changes within 60 days.

Fiscal Impact

The Legislative Analyst’s Office estimates that Prop. 31 will have a small fiscal impact of shifting about $200 million a year in sales tax revenue from the state to some local governments.

Arguments for Proposition 31

Supporters of Prop. 31 argue that it does not raise taxes, increase costs to taxpayers or set up any new government bureaucracy, but simply changes the way budgeting and spending is done in an effort to force state politicians to live within their means.

They argue that under current budget and spending rules hundreds of millions of dollars every year are wasted that could be better used for local schools, law enforcement and other community priorities. Prop. 31, they say, makes key changes to help prevent these problems.

Supporters point out that the legislature tends to authorize new spending during the year that is not in the budget without figuring out where the money will come from. Prop. 31 would fix that by requiring that major new programs and tax cuts costing $25 million or more must have a clearly identified funding source before they are enacted.

They also argue that too many state spending decisions happen without voter’s knowledge or review. Accordingly, Prop. 31 gives voters and taxpayers critical information to hold politicians accountable. Prop. 31 supporters say its rules would make the legislative process more transparent by requiring all bills, including the budget, to be made public for three days in advance of a final vote.

Finally, supporters say that Prop. 31 will help make state spending more dependent on actual results than just politics. They say that changing the budget to a two-year cycle provides more chance for the legislature to perform oversight on spending and performance, and that Prop. 31 requires a review of every state program at least once every five years, along with mandating five year fiscal forecasts to allow for long term solutions. And they argue that oversight is strengthened by requiring state and local government to identify goals, demonstrate how spending supports these goals, and publicly report results with every budget.

Key Supporters of Proposition 31


  • Nicolas Berggruen (a wealthy individual who is the driving force behind the Think Long Committee for California)
  • California Forward
  • Largest Donors to Yes Campaign as of October 1, 2012
  • Nicolas Berggruen: $1,557,587
  • California Forward: $1,260,967

Arguments Against Proposition 31

Critics of Prop. 31 argue that it will lead to lawsuits and confusion, and that while we all want reform, Prop. 31 just adds bureaucracy and creates new problems. They say the restrictions and requirements on budgets and spending in Prop. 31 leave key decisions up to unelected bureaucrats and that those decisions that will be challenged in court year after year.

At the same time, critics argue that Prop. 31 will cost state and local government tens of millions of dollars for new budgeting practices, but that performance-based budgeting is more of a slogan than anything else, which has been tried before and not been shown to work. Meanwhile they say that Prop. 31 would prevent the state from adopting improvements to programs like education or increasing funding to schools even if it has the money to do so, unless it raises taxes or cuts other programs. And that it would prohibit the state from cutting one tax unless it raises another, even when there is a budget surplus.

Critics say Prop. 31 is open to abuse. That while the state is in financial distress, Prop. 31 takes $200 million per year from state revenues to give to counties for experimental programs. At the same time, they argue, Prop. 31 allows local politicians to alter or override state health and environmental rules without a vote of the people, and without an effective way to prevent abuse.

Prop. 31 would also give too much power to the Governor, according to some critics, by giving him the power to make spending cuts in a fiscal emergency-cuts that would be hard for the legislature to overturn.

Opponents of Proposition 31

Website: There is not a “No on Prop. 31” campaign website.

  • California Federation of Teachers
  • Peace Officers Research Association of California
  • California School Employees Association
  • American Federation of State, County and Municipal Employees (AFSCME)
  • California League of Conservation Voters

Largest Donors to No Campaign as of October 1, 2012

  • AFSCME: $91,831
  • Working Families Issues Committee (AFL-CIO): $80,000
  • Californians for Clean Energy and Jobs: $50,000
  • California School Employees Association: $25,000

Discussion of Proposition 31

California’s budget and spending process is broken. For years now budgets have been months late, and have gone out of balance within weeks of being approved, while the legislature often adds spending part way through the year-all of which winds up forcing the state to borrow more and more to make ends meet. State lawmakers are demonstrably unable to live within their means.

Prop. 31 takes some significant and prudent steps that will help solve these problems.

Right now the legislature spends months debating each budget, then gets busy passing 1500-2000 laws each year, with barely any time spent determining whether the money they spend accomplishes what they say it will. A two-year budget cycle creates some time for the legislature to perform oversight on spending. And Prop. 31 requires them to set performance measure for programs and to consider how well the programs do at meeting goals when deciding on budgets for those programs. The same goes for local governments.

Just as important are requirements to make all of this information, as well as the actual laws the legislature passes, available to the public in advance of them being voted into law. Watchdog groups and citizens can’t be involved and can’t hold politicians accountable if they don’t get to see laws until after they are passed.


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