California Proposition 76, Cap on Growth of State Budget (2005)

California Proposition 76 was on the November 8, 2005 special statewide ballot in California as an initiated constitutional amendment, where it was defeated. Had it passed, it would have limited state spending and changed the minimum requirements for public school funding.

Proposition 76 was one of a quartet of ballot measures on the 2005 ballot that were the centerpiece of Arnold Schwarzenegger's reform plans for California, two years into his governorship. The other three were Proposition 74, Proposition 75 and Proposition 77. The defeat of all four Schwarzenegger measures is frequently cited as a turning-point in Schwarzenegger's governorship.

The California Teachers Association contributed over $13 million to the campaign against Proposition 76. Arnold Schwarzenegger signed the ballot arguments in favor of the measure and his California Recovery Team led the unsucessful campaign effort to pass it. Schwarzenegger campaigned for the measure on October 31, 2005 by standing in a junkyard "flanked by an aide dressed in a vampire cape and a skeleton behind the wheel of a '57 Ford" saying that California would face "the frightening specter of future tax increases" if voters did not approve Proposition 76.

Election results

Proposition 76
Result		Votes	Percentage
d No		4,877,735	62.4%
Yes		2,948,243	37.6%

Constitutional changes

California Constitution
Articles
I • II • III • IV • V • VI • VII • VIII • IX • X • XA • XB • XI • XII • XIII • XIII A • XIII B • XIII C • XIII D • XIV • XV • XVI • XVIII • XIX • XIX A • XIX B • XIX C • XX • XXI • XXII • XXXIV • XXXV

If Proposition 76 had been approved, it would have:

• Amended Section 10 of Article IV.
• Amended Section 12 of Article IV.
• Amended Section 8 of Article XVI.
• Amended Section 6 of Article XIX.
• Repealed Section 1 of Article XIX A.
• Amended Section 1 of Article XIX B.
• Amended Section 6 of Article XIII B.

Text of measure

Map showing county distribution of Proposition 76 votes

Title

The ballot title was:

State Spending and School Funding Limits. Initiative Constitutional Amendment.

Question

The question on the ballot was:

"Should Californians make major Constitutional changes to create an additional state spending limit, grant the governor substantial new power to unilaterally reduce state spending, and revise key provisions relating to Proposition 98, school and community college funding, and transportation funding authorized by Proposition 42? "

Summary

The official summary provided to describe Proposition 76 said:

• Limits state spending to prior year’s level plus three previous years’ average revenue growth.
• Changes state minimum school funding requirements (Proposition 98); eliminates repayment requirement when minimum funding suspended.
• Excludes appropriations above the minimum from schools’ funding base.
• Directs excess General Fund revenues, currently directed to schools/tax relief, to budget reserve, specified construction, debt repayment.
• Permits Governor, under specified circumstances, to reduce appropriations of Governor’s choosing, including employee compensation/state contracts.
• Continues prior year appropriations if state budget delayed.
• Prohibits state special funds borrowing.
• Requires payment of local government mandates.

Fiscal impact

See also: Fiscal impact statement

The fiscal estimate provided by the California Legislative Analyst's Office said:

• The provisions creating an additional state spending limit and granting the Governor new power to reduce spending in most program areas would likely reduce expenditures relative to current law. These reductions also could apply to schools and shift costs to other local governments.
• The new spending limit could result in a smoother pattern of state expenditures over time, especially to the extent that reserves are set aside in good times and available in bad times.
• The provisions changing school funding formulas would make school and community college funding more subject to annual decisions of state policymakers and less affected by a constitutional funding guarantee.
• Relative to current law, the measure could result in a change in the mix of state spending—that is, some programs could receive a larger share and others a smaller share of the total budget.

Support

Website banner from the Yes on Proposition 76 (archived) website

Supporters

The official voter guide arguments in favor of Proposition 76 were signed by:

• Arnold Schwarzenegger
• Tom Campbell, director, California Department of Finance
• Sandra L. McBrayer, former National Teacher of the Year
• Sebastian Edwards, Ph.D., Professor of Economics, University of California, Los Angeles
• Alan Bersin, Secretary of Education, State of California
• Jon Coupal, president, Howard Jarvis Taxpayers Association

Arguments in favor

Supporters of Proposition 76 made these arguments in its favor in the state's official voter guide:

• "California’s budget system is broken. We have record deficits, unbalanced budgets, and out-of-control spending."
• "The politicians can’t say 'no' to more spending. Since 1999–2000, the state has increased spending by twice as much as it has increased its revenue."
• It "limits spending to the average rate of tax growth of the past three years, so we don’t overspend in good times followed by huge deficits in bad times."
• It "establishes 'checks and balances' to encourage the Governor and Legislature to work together. When tax revenue slows, the Legislature can cut wasteful spending to balance the budget. If the Legislature doesn’t act, the Governor can then cut wasteful spending, while protecting funding for education, public safety, and roads."
• It "stabilizes K–14 education spending. By cutting wasteful spending and balancing the budget, we’ll have more funds to spend on what the state needs, without raising taxes."
• It "stops the autopilot spending binge and holds the politicians accountable."
• It "guarantees that taxes dedicated for highways and roads are spent on those projects and never again raided to balance the budget."

Donors in favor

Total campaign cash
Support:	$76,142,963
Opposition:	$28,000,582

$76,142,963 was contributed to the campaign in favor of a "yes" vote on Proposition 76, through three different campaign committees.

Three campaign committees registered in support of Proposition 76:

• Citizens to Save California, Yes on Propositions 74 & 76
• Schwarzenegger's California Recovery Team
• Reform California, Yes on 74, 75 and 76

Each committee that registered in support of Proposition 76 also registered in support of other propositions in 2005 (particularly, Proposition 74.) Because of this, it is not possible to say with precision how much of the money raised or spent by these committees was particularly directed at promoting Proposition 76.

Donors of $500,000 or more were:

Donor	Amount
Arnold Schwarzenegger	$7,750,000
Jerry Perenchio	$3,750,000
William Robinson	$3,700,000
Alex Spanos	$2,011,430
Henry Nicholas	$1,500,000
Ameriquest Capital	$1,154,000
The New Majority	$1,045,000
Wayne B. Hughes	$1,000,000
California Republican Party	$900,000
California Chamber of Commerce	$646,096
Paul F. Folino	$576,369
T. Boone Pickens, Jr.	$550,000
T. Gary Rogers	$510,000
John A. Gunn	$500,000
Lawrence K. Dodge LKD Trust	$500,000
Vail Drilling Co.	$500,000

Opposition

Opponents

The official voter guide arguments opposing Proposition 76 were signed by:

• Brenda J. Davis, president, California State PTA
• Henry L. "Hank" Lacayo, state president, Congress of California Seniors
• Wayne Quint, Jr., president, California Coalition of Law Enforcement Associations
• Lou Paulson, president, California Professional Firefighters
• Barbara Kerr, president, California Teachers Association
• Deborah Burger, president, California Nurses Association

Arguments against

The arguments presented in the official voter guide opposing Proposition 76 were:

• "It undermines our democratic system of checks and balances by giving the governor awesome new powers without any oversight."
• "Proposition 76 allows the Governor to permanently reduce school funding without a vote of the people."
• "Our students and schools lost three billion dollars when Governor Schwarzenegger broke his promise to repay the money he took from education. Proposition 76 'terminates the repayment requirement,' meaning the Governor will never have to return this money to our schools’ minimum guarantee."
• "Proposition 76 will permanently reduce the money schools will get by over $4 billion—$600 per student. That means teacher layoffs, larger classes, fewer textbooks, less classroom materials, poorly paid teachers, and overcrowded schools. Proposition 76 keeps California behind states like West Virginia and Kentucky in per pupil education funding."
• "Incredibly, if a 'fiscal emergency' is declared, this initiative requires funding be cut for vital services like education, health care, fire, and police, but actually prevents cutting 'pork barrel' road projects."
• "Even if you trust this Governor, who knows what future Governors might do with this unlimited new power."
• "Under Proposition 76, any Governor could declare a 'fiscal emergency' simply by having his own staff overestimate state revenues. Once a fiscal emergency is declared, the Governor would be free to cut vital programs without voter approval and without oversight."
• "Under Proposition 76, 'The Governor could exercise any whim or impose any political vendetta,' warns the Los Angeles Times, which calls Proposition 76 'a really bad idea.'"
• "Just 14 of 120 legislators could block passage of the budget indefinitely, putting government spending on autopilot. This could allow the Governor to declare a 'fiscal emergency,' giving the Governor sweeping new powers to make state spending and budget decisions 'at his discretion,' with absolutely no oversight or accountability."
• "This initiative does nothing to prevent higher taxes. If it passes, the Governor and Legislature can raise car taxes, income taxes, or sales taxes without voter approval. Even the President of the California Republican Assembly says that Proposition 76 'actually encourages tax increases.'
• "It will cut education, health care, fire, and police. It attacks our system of checks and balances. And it opens the door to higher taxes."

Donors against

The "No on 75" side spent $28,000,582 through three different campaign committees.

Donors of $200,000 or more were:

Donor	Amount
California Teachers Association	$13,676,047
Alliance for a Better California	$9,977,101
California State Council of Service Employees	$1,130,927
SEIU	750,000
California Federation of Teachers	$520,405
Association of California School Administrators	$400,000
California Democratic Party	$266,234
Strengthening Our Lives Through Education	$250,370
California School Employees Association	$250,000

Path to the ballot

See also: California signature requirements

As an initiated constitutional amendment, 598,105 valid signatures were required to qualify Proposition 76 for the ballot. The petition drive for Proposition 76 was conducted jointly with the petition drives for Proposition 74, Proposition 75 and Proposition 77 by three different petition drive management companies.

The petition drive management companies involved were:

• National Petition Management. They were paid $4,610,441.40.
• Arno Political Consultants. They were paid $1,094,000.00
• Forde and Mollrich. They were paid $2,172,031.00.

Altogether, the three companies were paid $7,876,472.40. Dividing this across the four propositions involved means that approximately $1,969,118.10 was spent collecting signatures on the individual propositions in the Schwarzenegger package.

See also: California ballot initiative petition signature costs

External links

• Official California Voter Guide to Proposition 76
• PDF of the mailed November 8, 2005 voter guide for Propositions 73-80
• Proposition 76 on the Smart Voter Guide
• Analysis of Proposition 76 from the Institute of Governmental Studies
• Guide to Proposition 76 from the California Voter Foundation
• Summary of donors to and against 76 from Cal-Access
• Donors for and against Proposition 76 from Follow The Money
• Official election results