Spending Limit: Been There, Done That
There's been a lot of coverage of the demand by Republicans in the California legislature that any budget be accompanied by a new state spending limit. Unfortunately, most of the reporting has neglected one key fact: California already has a spending limit.
California's spending limit was passed as Act II of the late-1970s tax revolt set off by the famous Proposition 13 property tax measure. Approved by voters in 1979, Proposition 4, championed by Paul Gann, a co-author of Proposition 13, limited spending by local and state governments to the growth of population and the lower of inflation or per capita personal income. It required revenues collected in excess of the limit to be returned to taxpayers.
Californians soon regretted their decision. The limit pinched California's ability to fund schools and infrastructure. So voters changed course. In 1990, spurred by a coalition that included labor and many of the state's top business leaders, they approved Proposition 111. It loosened the Gann limit to allow spending to grow with population, school enrollment, and the rise in personal income. They moved California from a limit that would rachet down the size of government over time to one that keeps government from growing faster than the economy as a whole.
The modified limit has rarely factored in state budgeting. The deep recession that slammed California immediately after the passage of Proposition 111 curtailed spending for half a decade, keeping it well below the limit. When brisk revenue growth returned later in the decade, Gov. Pete Wilson and the Legislature enacted tax cuts that kept the state below the ceiling. The state bumped up against the limit at the peak of the dot-com boom, but the popping of the Internet stock bubble forced the Legislature to curtail spending over the next several years. California state spending subject to the limit is currently more than $10 billion below the ceiling that voters set in 1990.
Saying that California has a "spending addiction," Legislative Republicans want the voters to change their minds again, and go back to the original Gann formula. Good luck with that. Voters overwhelmingly rejected Gov. Schwarzenegger's proposal, Proposition 76 in the 2005 special election, for a second, tighter spending limit. Polls show that majorities of Californians, Republicans and Democrats alike, want to maintain or increase current levels of state spending for schools, higher education, health and human services, transportation, and water supply –– in other words, for almost everything state government does. The push to drag the spending cap back before voters is just one more instance of the California legislature's real addiction: to dumping the hard calls on voters instead of actually governing.
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