Roller Coaster of California State Budgeting after Proposition 13
Since the 1978 passage of Proposition 13, California has exhibited sharp changes in its spending levels. During boom times it increases its spending at a higher rate than other states, and during bust years it spends at a markedly lower rate.
A 2006 paper by California State University, Sacramento, “The ‘Roller Coaster’ of California State Budgeting after Proposition 13,” discusses the Californian fiscal crisis since 1978. Among other significant changes, Proposition 13 capped property tax increases at 2% per year and 1% of value and required a two-thirds majority in both legislative houses for state tax increases.
The paper’s findings include:
- Constitutional amendments since 1978 have further limited the state’s fiscal flexibility. They include state spending limits, a mandatory requirement of a proportion of the state’s general account budget to be dedicated to K-12 education and measures to protect local funding sources.
- California’s greater reliance on more volatile forms of tax revenue such as individual and corporate income taxes and sales/gross receipt taxes has made the state’s fiscal position to be more unstable than other states. In 2001-2002, while these sources accounted for about 19% of all aggregate state revenue, they accounted for nearly 26% of all California’s revenue.
- A growing underclass (such as higher incidence of poverty among immigrants) has increased the proportion of general fund expenditures devoted to health and human service activity to 36% as compared to the 27% that all states devote.
The author views that the most acceptable fiscal reform to resolve the Californian budget crisis would be a reduction in the two-thirds vote requirement to pass a state budget and raise state taxes and/or an increase in the vehicle license fee rate.
Tags: California, municipal
Note to instructor: The suggested assignments are designed for flexibility. They can be used in whole or part and can be adapted to a particular task -- for example, the newswriting assignments could be applied to the writing of the headline, the lead, the nut graph or the full story. Material from the assignments could also be combined with other material, for example, in the writing of a background, feature or local-angle story.
Read the Sacramento State University study titled "The 'Roller Coaster' of California State Budgeting after Proposition 13."
- Summarize the study in fewer than 40 words.
- Express the study's key term(s) in language a lay audience can understand.
- Evaluate the study's limitations. (For example: Do the results conflict with those of other reliable studies? Are there weaknesses in the study's data or research design?)
Read the issue-related New York Times article titled "Pinch of Reality Threatens the California Dream."
- If you were to rewrite the article based on knowledge of the study, what key changes would you make?
- Write a lead (or headline or nut graph) based on the study.
- Spend 60 minutes exploring the issue by accessing sources of information other than the study. Write a lead (or headline or nut graph) based on the study but informed by the new information. Does the new information significantly change what one would write based on the study alone?
- Interview two sources with a stake in or knowledge of the issue. Be prepared to provide them with a short summary of the study in order to get their response to it. Write a 400-word article about the study incorporating material from the interviews.
- Spend additional time exploring the issue and then write a 1,200-word background article, focusing on major aspects of the issue.