California Proposition 1C, Changes to State Lottery to Reduce Budget Deficit Amendment (May 2009)

California Proposition 1C
Election date May 19, 2009
Topic Gambling and State and local government budgets, spending and finance
Status d Defeated
Type Constitutional amendment	Origin State legislature

California Proposition 1C was on the ballot as a legislatively referred constitutional amendment in California on May 19, 2009. It was defeated.

A "yes" vote supported amending the constitution to do the following: authorize the state legislature to borrow money against future lottery proceeds; authorize the state legislature to borrow $5 billion from future lottery proceeds to reduce the deficit in the 2009-2010 state budget; authorize the state legislature to appropriate lottery revenues to other purposes instead of limiting such appropriations to educational institutions;  increase appropriations to educational institutions from the state's general fund; and require the lottery to direct $1 million of its funds each year to the state’s existing Office of Problem Gambling.

A "no" vote opposed amending the constitution to alter the lottery program in order to reduce the state's 2009-2010 budget deficit.

Election results

California Proposition 1C
Result		Votes	Percentage
Yes		1,708,800	35.65%
No		3,085,138	64.35%

Results are officially certified.

Overview

Measure design

Proposition 1C would have authorized borrowing against future lottery proceeds. The 2009-2010 budget plan included $5 billion in revenue from this source. The measure did not include a cap on the amount of future lottery revenue that could be pledged to pay for current spending.

The proposal would also have repealed the requirement that lottery revenue be used only for education. Instead, the legislature could, under the measure, have appropriated lottery revenue for any purpose. However, the measure would have required the legislature to appropriate general fund revenues to education in an amount equivalent to the lottery revenues that went to schools in FY 2008-2009, adjusted for inflation and changes in student counts.

The measure would also have revised lottery management details, including repealing a competitive bidding requirement for certain lottery operations and lowering the cap on the amount of lottery revenue that could be used for administration purposes from 16 percent to 13 percent.

2009 budget propositions

Six statewide ballot propositions concerning the California state budget were referred to the May 2009 ballot by the California State Legislature. The six measures were designed to close a $42 billion gap between state spending and expected revenues. The measures were supported by Governor Arnold Schwarzenegger (R). Five of the six measures (Propositions 1A, 1B, 1C, 1D, and 1E), were defeated with an average of 65% of voters voting against each measure. Proposition 1F, which was designed to prohibit pay raises for state legislators in years when there is a state budget deficit, was approved by a vote of 74% in favor to 26% opposed.

Text of measure

Ballot title

The ballot title for Proposition 1A was as follows:

“

STATE BUDGET. Changes CALIFORNIA BUDGET PROCESS. LIMITS STATE SPENDING. INCREASES “RAINY DAY” BUDGET STABILIZATION FUND.

”

Ballot summary

The ballot summary for this measure was:

“

Increases size of state “rainy day” fund from 5% to 12.5% of the General Fund. A portion of the annual deposits into that fund would be dedicated to savings for future economic downturns, and the remainder would be available to fund education, infrastructure, and debt repayment, or for use in a declared emergency. Requires additional revenue above historic trends to be deposited into state “rainy day” fund, limiting spending

”

Full Text

The full text of this measure is available here.

Chart developed by the California Legislative Analyst's Office to help voters understand Proposition 1C

Fiscal impact

See also: Fiscal impact statement

The estimate of net state and local government fiscal implications of Proposition 1C provided by the California Legislative Analyst's Office said:

• Impact on 2009–10 State Budget: Allows $5 billion of borrowing from future lottery profits to help balance the 2009–10 state budget.
• Impact on Future State Budgets: Debt-service payments on the lottery borrowing and higher payments to education would likely make it more difficult to balance future state budgets. This impact would be lessened by potentially higher lottery profits. Additional lottery borrowing would be allowed.

Support

Budget Reform Now, a coalition assembled by Governor Arnold Schwarzenegger (R), led the campaign in support of the six 2009 budget ballot measures. A full list of supporters of all six measures can be found here. The following is a list of Proposition 1C supporters.

Supporters

• Arnold Schwarzenegger (R)
• Budget Reform Now, a coalition assembled by Governor Arnold Schwarzenegger (R) to support the six 2009 budget ballot measures
• The California Democratic Party
• Ed Bonner, president, California State Sheriffs' Association
• Dr. Glen W. Thomas, California Secretary of Education
• Bill Hauck, vice-chairman, California Business for Education Excellence
• Sheldon D. Gilbert, president, California Fire Chiefs Association

Arguments

Official arguments

The following supporting arguments were presented in the official voter guide:

“ YES ON 1C: MODERNIZE OUR LOTTERY AND PROVIDE IMMEDIATE FUNDS TO HELP OUR BUDGET CRISIS AND AVOID MORE TAX HIKES. We’re in the middle of the worst economic recession since the Great Depression. Californians face higher taxes and deeper cuts in education, public safety, transportation, health care and other critical services. We must act now to PROTECT THESE VITAL SERVICES AND AVOID FURTHER TAX INCREASES. YES ON 1C: A RESPONSIBLE, IMMEDIATE SOLUTION TO OUR FISCAL CRISIS. By modernizing our state lottery, Prop. 1C will immediately raise $5 billion in new revenues without increasing taxes. Our lottery is out of date and underperforming. With a few simple changes, OUR LOTTERY CAN BRING IN MUCH MORE REVENUE TO THE STATE—$5 billion immediately without costing taxpayers a dime, while protecting funding levels for schools currently provided by the lottery. YES ON 1C: NEW REVENUE WITHOUT HIGHER TAXES. Without this new lottery revenue, we will either be forced to cut another $5 billion from the state budget—most likely from law enforcement, schools or health care—or California’s hard-working residents will have to pay another $5 billion in taxes. YES ON 1C: PROTECT LOTTERY FUNDING FOR OUR SCHOOLS. Under Proposition 1C, our schools will continue to receive at least as much funding as they receive from the lottery today. YES ON 1C: MODERNIZING THE LOTTERY WILL HELP CALIFORNIA. Every other state that has modernized its lottery has seen an increase in revenues. New York, North Carolina, Missouri and Massachusetts have all brought more revenues into their state budgets, some increasing their revenues by as much as 4,000 percent. Right now, California’s lottery ranks dead last in performance among the ten largest states. CALIFORNIANS DESERVE BETTER. YES ON 1C: INCREASED ACCOUNTABILITY AND OVERSIGHT. Proposition 1C requires independent audits and makes reports available to the public so we can see exactly where lottery funds go and that they are being used appropriately. YES ON 1C: DELIVERING ON THE LOTTERY PROMISE. Proposition 1C will ensure that we’re getting what we voted for and that funding for education is protected. YES ON 1C: PART OF A RESPONSIBLE PACKAGE OF REFORMS TO FIX BUDGET DYSFUNCTION IN SACRAMENTO. Props. 1A, 1B, 1C, 1D, 1E and 1F are a package of reforms that provide short-term solutions to get us through these difficult economic times and long-term solutions to help protect us against the type of deficits we faced this year. VOTE YES ON 1C: PROTECT VITAL SERVICES FROM DEEPER CUTS AND PREVENT HIGHER TAXES. www.CaBudgetReformNow.com ”

Opposition

Stop Taxing Us: No on 1A-F registered with Cal-Access to oppose the six 2009 budget ballot measures. The committee did not report campaign finance activity.

Opponents

• California Nurses Association
• American Federation of State, County and Municipal Employees
• Peace and Freedom Party
• State Senator Bob Huff
• The California Coalition Against Gambling Expansion

Official arguments

The following opposing arguments were presented in the official voter guide:

“ Proponents of Proposition 1C claim that all it will take is a few simple changes to bring in much more revenue to the state. Is anything the government does simple? This is not an immediate, responsible solution to our fiscal crisis and we don’t know how this will play out in the long term. What we do know is that we are making grand assumptions about a modernized state lottery, with anticipated revenues we probably won’t see. Lottery ticket sales dropped 10 percent during the first four months of the current fiscal year beginning July 1. Lottery officials blamed the economic downturn for the drop in sales. If we are counting on the lottery to bail the state out financially, how is that done when people are gambling less because of a sour economy? Part of “modernizing” the lottery will be to make the games available virtually wherever we go. We will also have sustained advertising aimed at separating people from their money, for a chance to win big. After all, it’s for our children! If the increased revenues expected from this scheme don’t materialize, what’s next—full blown Las Vegas style gambling? We cannot afford another ballot measure that creates more problems than it solves. Vote NO on Prop. 1C. ”

Media editorials

Support

• The Los Angeles Times: "...we cannot be as cheerful as the campaign ads that began running last week...but the good outweighs the bad... Without the $5 billion it brings, California would have to make up the difference by again raising taxes or by making deeper, and ultimately more expensive, cuts."

Opposition

• La Prensa San Diego: "The problem with this proposition is that as a state we are becoming more and more dependent on the vices of gambling to solve our problems, not only the lottery but the casino businesses. The lottery is sustained by the poor of our community! They spend a disproportionate amount of their money on lotto tickets with the hope that this may put them on easy street. In essence we are asking the poor, those who can least afford it, to balance our state budget!"

Polls

See also Public opinion polling for all May 2009 statewide ballot propositions

• The Field Poll conducted a public opinion research survey between February 20 and March 1 on Proposition 1C and the other five budget-related measures that were set to appear on the May 19 ballot.

• Public Policy Institute of California conducted a poll that concluded in late March.

• On April 20-21, SurveyUSA conducted a poll of 1,300 California adults for KABC-TV Los Angeles, KPIX-TV San Francisco, KGTV-TV San Diego, and KFSN-TV Fresno.

• Field conducted a poll between April 16-26.

Poll results for the measure are detailed below.

Date of Poll	Pollster	In favor	Opposed	Undecided
February 20-March 1	Field	47 percent	39 percent	14 percent
March 10-17	PPIC	37 percent	50 percent	11 percent
March 11-12	SurveyUSA	28 percent	29 percent	43 percent
April 20-21	SurveyUSA	23 percent	41 percent	35 percent
April 16-26	Field	32 percent	59 percent	9 percent
April 27 - May 4	PPIC	32 percent	58 percent	10 percent
May 8-10	SurveyUSA	29 percent	52 percent	19 percent
May 15-17	SurveyUSA	29 percent	56 percent	16 percent

Path to the ballot

See also: Amending the California Constitution

A two-thirds vote was needed in each chamber of the California State Legislature to refer the constitutional amendment to the ballot for voter consideration.

The California State Legislature voted to put Proposition 1C on the ballot via Senate Constitutional Amendment 12 of the 2007–2008 Regular Session (Resolution Chapter 143, Statutes of 2008) and Assembly Bill 1654 of the 2007–2008 Regular Session (Chapter 764, Statutes of 2008) and Assembly Bill 12 of the 2009–2010 Third Extraordinary Session (Chapter 8, 2009–2010 Third Extraordinary Session). Vote totals are displayed below.

Votes in legislature to refer to AB 12 to ballot
Chamber	Ayes	Noes
Assembly	70	8
Senate	30	8

Votes in legislature to refer to SCA 12 to ballot
Chamber	Ayes	Noes
Assembly	63	14
Senate	27	9

See also

2009 Measures

• 2009 Measures
• Gambling policy on the ballot
• Taxes on the ballot
• State and local government budgets on the ballot
• spending on the ballot
• and finance on the ballot
• 2009 legislative sessions

California

• California ballot measures
• California ballot measure laws

News and analysis

• Ballot measure lawsuits
• Ballot measure readability
• Ballot measure polls

External links

• May 2009 Special Election Voter Guide
• May 19, 2009 ballot proposition election returns
• Proposition 1C in the Smart Voter Guide
• Analysis of Proposition 1C from the Institute of Governmental Studies
• Guide to Proposition 1C from the California Voter Foundation
• Summary of donors to and against Proposition 1C from Cal-Access
• Donors for and against Proposition 1C from Follow The Money
• California Secretary of State's announcement about May 19 ballot measures

Support

• Budget Reform Now, official website in favor of Prop 1C
• Campaign finance reports for Budget Reform Now
• Campaign finance reports for "Californians for Modernization"

Opposition

• California League of Women Voters
• Peace and Freedom Party