In its overview of Governor Jerry Brown’s proposed state budget for 2013-2014, the LAO announced several serious concerns Monday.
The first regarded Brown’s apparent misuse of new revenues created as a result of Proposition 39. The official ballot statement for Prop 39 ensured voters that only half of the projected $1 billion in new revenues would be dedicated towards Proposition 98’s minimum guarantee for public school funding, whereas the other half would count solely towards green energy job creation via a Clean Energy Job Creation Fund.
The analyst’s generally positive appraisal of Brown’s budget as ‘commendable’ and ‘roughly balancing’ revenues and expenditures, has overshadowed the $500 million budgeting loophole that paints over California’s Prop 98 minimum requirement fund for public education.
If this budget moves forward, the Prop 98 fund will remain deceptively satisfied as some of the funds raised from Prop 39 will only be used for energy-efficient retrofitting and green-job training, not for teachers' salaries and other school expenditures.
The LAO writes:
“The Governor applies all revenue raised by Proposition 39—including the revenue required to be spent on energy–related projects—toward the Proposition 98 calculation. This is a serious departure from our longstanding view of how revenues are to be treated for the purposes of Proposition 98. It also is directly contrary to what the voters were told in the official voter guide as to how the revenues would be treated.”
It seems apparent that the Brown budget misused Proposition 39 funds. Looking back at the fiscal impact estimate of Proposition 39 from July of 2012, the LAO wrote:
“Generally, the revenue raised by the measure would be considered in calculating the state’s annual Proposition 98 minimum guarantee. The funds transferred to the Clean Energy Job Creation Fund, however, would not be used in this calculation.”
The Proposition 98 minimum requirement for school funding constitutes almost 40 percent of California’s general fund or $56.2 billion. The $2.7 billion year increase that is being advertised is much lower in reality. Set to expire in early 2019, the Clean Energy Job Creation Fund is only a temporary and imaginary plug for the minimum requirement fund for California schools.
Consequently, misappropriation of voter initiative funds has been a common theme following Brown’s budget announcement. Many Republicans have cried foul over the fact that only 40 percent of Proposition 30 funds were set to go towards schools in the proposed budget since the initiative, spearheaded by Brown, led voters to believe a more substantial portion of the tax increase would go to the classroom.
These kinds of budgetary games are not uncommon in Sacramento, especially in the wake of voter approved initiatives. The legal recourse for overstepping legislative bounds in this manner remain unclear. Yet, Republican challenges to the budget are largely symbolic as Democrats hold a super-majority in both the Assembly and the Senate.