A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by repealing and adding Article XIIIB thereof, and by amending Section 8.5 of Article XVI thereof, relating to expenditure limits.

(1) Existing provisions of the California Constitution prohibit the annual appropriations subject to limitation, as defined, of any entity of state or local government from exceeding its adjusted annual appropriations limit. These provisions also require 50% of the excess revenues received by the state in a fiscal year and the fiscal year immediately following it to be transferred and allocated, from a fund established for that purpose, to the State School Fund, and the remaining 50% of those excess revenues to be returned by a revision of tax rates or fee schedules within the next 2 subsequent fiscal years. This measure would repeal those provisions, and instead would limit total state General Fund and special fund expenditures to an annual increase of no more than the increase in the cost of living, as specified, multiplied by the percentage increase in state population. The measure would require excess revenues to be allocated in prescribed amounts to a reserve account, to the State School Fund, and to personal income taxpayers. In addition, the measure would prohibit the expenditure of revenue resulting from any changes in state taxes or fees enacted into law for the purpose of increasing revenue, as determined by the Director of Finance, for a period of 12 months following the date on which the changes in state taxes or fees become operative and would deem those revenues, during this period, not to be General Fund revenues. (2) Existing provisions of the California Constitution require that whenever the Legislature or any state agency mandates a new program or higher level of service on any local government, the state is required to provide a subvention of funds to reimburse the local government for the costs of the program or increased level of service, with specified exceptions. This measure would prohibit the filing of a claim for reimbursement for any mandate if no claim for that reimbursement is filed within a 2-year period following the effective date of the mandate. The measure would repeal specified procedures for payment of local government mandate claims.