A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by adding Section 23 to Article IV thereof, and by amending Sections 1, 1.5, 2, 8, 9, and 10.5 of, and adding Sections 1.9 and 9.5 to, Article XIIIB thereof, relating to government finance.

Existing provisions of the California Constitution place limitations on the authority of the state or an entity of local government to expend the proceeds of taxes, as defined. These provisions require the state or an entity of local government to establish an appropriations limit for each fiscal year, defined as the total annual appropriations subject to limitation. These provisions prohibit the total annual appropriations subject to limitation from exceeding the appropriations limit of the government entity for the prior year adjusted for a change in the cost of living and the change in population, as defined. If the state incurs excess revenues above its appropriations limit for 2 consecutive fiscal years, the provisions require 50% of the excess revenues to be transferred and allocated to the State School Fund for elementary, high school, and community college purposes, and the remaining 50% of the excess revenues to be returned to the taxpayers pursuant to a revision of tax rates or fee schedules. If an entity of local government incurs excess revenues above its appropriations limit for 2 consecutive fiscal years, the provisions require all of the excess revenues to be returned to the taxpayers pursuant to a revision of tax rates or fee schedules. Existing law provides that appropriations for all qualified capital outlay projects are not appropriations subject to limitation under these provisions. Qualified capital outlay projects are defined by the Legislature. This measure would revise and recast these provisions to provide, on and after July 1, 2013, that the appropriations limit of the state for the expenditure of the proceeds of taxes shall be the total amount of appropriations subject to limitation in the 2010–11 fiscal year. The measure would require excess revenues to be allocated on an annual basis rather than biennially. In fiscal years in which the total amount of debt service exceeds a specified amount, any excess revenues of the state or an entity of local government would be appropriated for the reduction of debt, as defined. In fiscal years in which the total amount of debt service is less than that specified amount and excess revenues of the state are less than $2,000,000,000, any excess revenues would be divided between the State School Fund and the prudent state reserve fund. In fiscal years in which the total amount of debt service is less than the specified amount and excess revenues of the state exceed $2,000,000,000, any excess revenues would be returned to the taxpayers pursuant to a reduction of tax rates or fees, as specified. In fiscal years in which the total amount of debt service is less than the specified amount, any excess revenues of an entity of local government would be returned to the taxpayers pursuant to a reduction of tax rates or fees, as specified. The measure would repeal the provision that authorizes the Legislature to define qualified capital outlay projects that are not appropriations subject to limitation under these provisions. The measure would instead define a qualified capital outlay project for purposes of these provisions. The measure would prohibit the Legislature or the people through initiative from enacting a statute that would exempt any proceeds of taxes from these provisions or exempt an appropriation from the appropriations limit of the state or entity of local government. The measure would require the Controller to review the annual calculation of appropriations subject to limitation as part of an annual financial audit. The California Constitution requires that a change in state statute, passed by the Legislature, that results in a taxpayer paying a higher tax be imposed in an act that is passed with the approval of not less than 23 of the membership of each house of the Legislature. This measure would, notwithstanding that provision, require any change in state statute to be passed by not less than 23 of the membership of each house of the Legislature if it imposes a new or higher tax on any taxpayer, authorizes or enables the imposition of a new or higher tax on any taxpayer by the state, or authorizes or enables the imposition of a new or higher tax on any taxpayer by any political subdivision of the state. The measure would provide that any person shall have standing to enforce its provisions. The measure would provide that it shall be liberally construed. The measure would provide that its provisions are severable.