The California Constitution provides that the Legislature meets in a biennial regular session, commencing with the first Monday in December in each even-numbered year, when each house is required to immediately organize, and concluding at midnight on November 30 of the next even-numbered year. The California Constitution requires the Governor to submit to the Legislature a budget for the ensuing fiscal year within the first 10 days of each calendar year and requires the Legislature to pass the Budget Bill by midnight on June 15 of each year. The California Constitution authorizes the Legislature or either house, by resolution, to provide for the selection of committees. committees necessary for the conduct of its business.

The California Constitution provides that the Legislature meets in a biennial regular session, commencing with the first Monday in December in each even-numbered year, when each house is required to immediately organize, and concluding at midnight on November 30 of the next even-numbered year. The California Constitution requires the Governor to submit to the Legislature a budget for the ensuing fiscal year within the first 10 days of each calendar year and requires the Legislature to pass the Budget Bill by midnight on June 15 of each year. The California Constitution authorizes the Legislature or either house, by resolution, to provide for the selection of committees.

This measure would provide that it is the intent of the Legislature to propose to the people of the State of California amendments to the Constitution that, commencing in 2019, would require the Legislature to consider or act only upon the Budget Bill and related bills, and up to 5 bills introduced by the standing committees of the Legislature in the regular session in each odd-numbered year, would require the Governor to submit to the Legislature a budget for the ensuing 2 fiscal years within the first 10 days of the first calendar year of the biennium of the legislative session, and would require the Legislature to adopt, by June 15 of the first calendar year of the biennium of the legislative session, a Budget Bill that provides a budget for the next 2-year fiscal period commencing on July 1.

Resolved by the Assembly, the Senate concurring, That the Legislature of the State of California at its 201516 Regular Session commencing on the first day of December 2014, two-thirds of the membership of each house concurring, hereby proposes to the people of the State of California, California that the Constitution of the State be amended as follows:

(a)The Legislature shall convene in regular session at noon on the first Monday in December of each even-numbered year and each house shall immediately organize. Each regular session of the Legislature shall adjourn sine die by operation of the Constitution at midnight on November 30 of the following even-numbered year.

(e)On extraordinary occasions the Governor by proclamation may cause the Legislature to assemble in special session. When so assembled it has power to, the Legislature shall legislate only on subjects specified in the proclamation but may provide for expenses and other matters incidental to the session.

(a)Each bill passed by the Legislature shall be presented to the Governor. It becomes a statute if it is signed by the Governor. The Governor may veto it by returning it with any objections to the house of origin, which shall enter the objections in the journal and proceed to reconsider it. If each house then passes the bill by rollcall vote entered in the journal, two-thirds of the membership concurring, it becomes a statute.

(b)(1)Any bill, other than a bill which would establish or change boundaries of any legislative, congressional, or other election district, passed by the Legislature on or before the date the Legislature adjourns for a joint recess to reconvene in the second calendar year of the biennium of the legislative session, and in the possession of the Governor after that date, that is not returned within 30 days after that date becomes a statute.

(2)Any bill passed by the Legislature before September 1 of the second calendar year of the biennium of the legislative session and in the possession of the Governor on or after September 1 that is not returned on or before September 30 of that year becomes a statute.

(3)Any other bill presented to the Governor that is not returned within 12 days becomes a statute.

(4)If the Legislature by adjournment of a special session prevents the return of a bill with the veto message, the bill becomes a statute unless the Governor vetoes the bill within 12 days after it is presented by depositing it and the veto message in the office of the Secretary of State.

(5)If the 12th day of the period within which the Governor is required to perform an act pursuant to paragraph (3) or (4) of this subdivision is a Saturday, Sunday, or holiday, the period is extended to the next day that is not a Saturday, Sunday, or holiday.

(c)Any bill introduced during the first year of the biennium of the legislative session that has not been passed by the house of origin by January 31 of the second calendar year of the biennium may no longer be acted on by the house. No bill may be passed by either house on or after September 1 of an even-numbered year except statutes calling elections, statutes providing for tax levies or appropriations for the usual current expenses of the State, and urgency statutes, and bills passed after being vetoed by the Governor.

(d)The Legislature may not present any bill to the Governor after November 15 of the second calendar year of the biennium of the legislative session.

(e)The Governor may reduce or eliminate one or more items of appropriation while approving other portions of a bill. The Governor shall append to the bill a statement of the items reduced or eliminated with the reasons for the action. The Governor shall transmit to the house originating the bill a copy of the statement and reasons. Items reduced or eliminated shall be separately reconsidered and may be passed over the Governors veto in the same manner as bills.

(f)(1)If, following the enactment of the budget bill for the 200405 201819 fiscal year or any subsequent fiscal year, two-year fiscal period, the Governor determines that, for that fiscal year, year or two-year fiscal period, as applicable, General Fund revenues will decline substantially below the estimate of General Fund revenues upon which the budget bill for that fiscal year, year or two-year fiscal period, as enacted, was based, or General Fund expenditures will increase substantially above that estimate of General Fund revenues, or both, the Governor may issue a proclamation declaring a fiscal emergency and shall thereupon cause the Legislature to assemble in special session for this purpose. The proclamation shall identify the nature of the fiscal emergency and shall be submitted by the Governor to the Legislature, accompanied by proposed legislation to address the fiscal emergency.

(2)If the Legislature fails to pass and send to the Governor a bill or bills to address the fiscal emergency by the 45th day following the issuance of the proclamation, the Legislature may not act on any other bill, nor may the Legislature adjourn for a joint recess, until that a bill or those bills to address the fiscal emergency have been passed and sent to the Governor.

(3)A bill addressing the fiscal emergency declared pursuant to this section shall contain a statement to that effect.

(a)The Legislature or either house may by resolution provide for the selection of committees necessary for the conduct of its business, including committees to ascertain facts and make recommendations to the Legislature on a subject within the scope of legislative control.

(a)Within the first 10 days of each calendar odd-numbered year, the Governor shall submit to the Legislature, with an explanatory message, a budget for the ensuing fiscal year next two-year fiscal period commencing on July 1, containing itemized statements for recommended state expenditures and estimated state revenues. If recommended expenditures exceed estimated revenues, the Governor shall recommend the sources from which the additional revenues should be provided.

(b)The Governor and the Governor-elect may require a state agency, officer or employee to furnish whatever information is deemed necessary to prepare the budget.

(c)(1)The budget shall be accompanied by a budget bill itemizing recommended expenditures.

(2)The budget bill shall be introduced immediately in each house by the persons chairing the committees that consider the budget.

(3)The Legislature shall pass the budget bill by midnight on June 15 of each odd-numbered year.

(4)Until the budget bill has been enacted, the Legislature shall not send to the Governor for consideration any bill appropriating funds for expenditure during the fiscal year period for which the budget bill is to be enacted, except emergency bills recommended by the Governor or appropriations for the salaries and expenses of the Legislature.

(d)No bill except the budget bill may contain more than one item of appropriation, and that for one certain, expressed purpose. Appropriations from the General Fund of the State, except appropriations for the public schools and appropriations in the budget bill and in other bills providing for appropriations related to the budget bill, are void unless passed in each house by rollcall vote entered in the journal, two-thirds of the membership concurring.

(e)(1)Notwithstanding any other provision of law or of this Constitution, the budget bill and other bills providing for appropriations related to the budget bill may be passed in each house by rollcall vote entered in the journal, a majority of the membership concurring, to take effect immediately upon being signed by the Governor or upon a date specified in the legislation. Nothing Once enacted, a budget bill or other bill providing for appropriations related to an enacted budget bill may be amended by the Legislature pursuant to subdivision (d) of Section 3 only by a bill passed in each house by a rollcall vote entered in the journal, two-thirds of the membership concurring.

(2)Nothing in this subdivision shall affect the vote requirement for appropriations for the public schools contained in subdivision (d) of this section and in subdivision (b) of Section 8 of this article.

(3)For purposes of this section and Section 3, other bills providing for appropriations related to the budget bill shall consist only of bills passed in the first calendar year of the biennium of the legislative session that are identified as related to the budget in the budget bill passed by the Legislature.

(f)The Legislature may control the submission, approval, and enforcement of budgets and the filing of claims for all state agencies.

(g)For the 200405 fiscal year, or any subsequent fiscal year, the The Legislature may shall not send to the Governor for consideration, nor may and the Governor shall not sign into law, a budget bill that would appropriate from the General Fund, for that fiscal year, that two-year fiscal period, a total amount that, when combined with all appropriations from the General Fund for that fiscal year that two-year fiscal period made as of the date of the budget bills passage, and the amount of any General Fund moneys transferred to the Budget Stabilization Account for that fiscal year that two-year fiscal period pursuant to Section 20 of Article XVI, exceeds General Fund revenues for that fiscal year that two-year fiscal period estimated as of the date of the budget bills passage. That estimate of General Fund revenues shall be set forth in the budget bill passed by the Legislature.

(h)Notwithstanding any other provision of law or of this Constitution, including subdivision (c) of this section, Section 4 of this article, and Sections 4 and 8 of Article III, in any odd-numbered year in which the budget bill is not passed by the Legislature by midnight on June 15, there shall be no appropriation from the current budget or future budget to pay any salary or reimbursement for travel or living expenses for Members of the Legislature during any regular or special session for the period from midnight on June 15 until the day that the budget bill is presented to the Governor. No salary or reimbursement for travel or living expenses forfeited pursuant to this subdivision shall be paid retroactively.

(a)For purposes of this section:

(1)Public Safety Services includes the following:

(A)Employing and training public safety officials, including law enforcement personnel, attorneys assigned to criminal proceedings, and court security staff.

(B)Managing local jails and providing housing, treatment, and services for, and supervision of, juvenile and adult offenders.

(C)Preventing child abuse, neglect, or exploitation; providing services to children and youth who are abused, neglected, or exploited, or who are at risk of abuse, neglect, or exploitation, and the families of those children; providing adoption services; and providing adult protective services.

(D)Providing mental health services to children and adults to reduce failure in school, harm to self or others, homelessness, and preventable incarceration or institutionalization.

(E)Preventing, treating, and providing recovery services for substance abuse.

(2)2011 Realignment Legislation means legislation enacted on or before September 30, 2012, to implement the state budget plan, that is entitled 2011 Realignment and provides for the assignment of Public Safety Services responsibilities to local agencies, including related reporting responsibilities. The legislation shall provide local agencies with maximum flexibility and control over the design, administration, and delivery of Public Safety Services consistent with federal law and funding requirements, as determined by the Legislature. However, 2011 Realignment Legislation shall include no new programs assigned to local agencies after January 1, 2012, except for the early periodic screening, diagnosis, and treatment (EPSDT) program and mental health managed care.

(b)(1) Except as provided in subdivision (d), commencing in the 201112 fiscal year and continuing thereafter, the following amounts shall be deposited into the Local Revenue Fund 2011, as established by Section 30025 of the Government Code, as follows:

(A)All revenues, less refunds, derived from the taxes described in Sections 6051.15 and 6201.15 of the Revenue and Taxation Code, as those sections read on July 1, 2011.

(B)All revenues, less refunds, derived from the vehicle license fees described in Section 11005 of the Revenue and Taxation Code, as that section read on July 1, 2011.

(2)On and after July 1, 2011, the revenues deposited pursuant to paragraph (1) shall not be considered General Fund revenues or proceeds of taxes for purposes of Section 8 of Article XVI of the California Constitution.

(c)(1) Funds deposited in the Local Revenue Fund 2011 are continuously appropriated exclusively to fund the provision of Public Safety Services by local agencies. Pending full implementation of the 2011 Realignment Legislation, funds may also be used to reimburse the State for program costs incurred in providing Public Safety Services on behalf of local agencies. The methodology for allocating funds shall be as specified in the 2011 Realignment Legislation.

(2)The county treasurer, city and county treasurer, or other appropriate official shall create a County Local Revenue Fund 2011 within the treasury of each county or city and county. The money in each County Local Revenue Fund 2011 shall be exclusively used to fund the provision of Public Safety Services by local agencies as specified by the 2011 Realignment Legislation.

(3)Notwithstanding Section 6 of Article XIIIB, or any other constitutional provision, a mandate of a new program or higher level of service on a local agency imposed by the 2011 Realignment Legislation, or by any regulation adopted or any executive order or administrative directive issued to implement that legislation, shall not constitute a mandate requiring the State to provide a subvention of funds within the meaning of that section. Any requirement that a local agency comply with Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code, with respect to performing its Public Safety Services responsibilities, or any other matter, shall not be a reimbursable mandate under Section 6 of Article XIIIB.

(4)(A) Legislation enacted after September 30, 2012, that has an overall effect of increasing the costs already borne by a local agency for programs or levels of service mandated by the 2011 Realignment Legislation shall apply to local agencies only to the extent that the State provides annual funding for the cost increase. Local agencies shall not be obligated to provide programs or levels of service required by legislation, described in this subparagraph, above the level for which funding has been provided.

(B)Regulations, executive orders, or administrative directives, implemented after October 9, 2011, that are not necessary to implement the 2011 Realignment Legislation, and that have an overall effect of increasing the costs already borne by a local agency for programs or levels of service mandated by the 2011 Realignment Legislation, shall apply to local agencies only to the extent that the State provides annual funding for the cost increase. Local agencies shall not be obligated to provide programs or levels of service pursuant to new regulations, executive orders, or administrative directives, described in this subparagraph, above the level for which funding has been provided.

(C)Any new program or higher level of service provided by local agencies, as described in subparagraphs (A) and (B), above the level for which funding has been provided, shall not require a subvention of funds by the State nor otherwise be subject to Section 6 of Article XIIIB. This paragraph shall not apply to legislation currently exempt from subvention under paragraph (2) of subdivision (a) of Section 6 of Article XIIIB as that paragraph read on January 2, 2011.

(D)The State shall not submit to the federal government any plans or waivers, or amendments to those plans or waivers, that have an overall effect of increasing the cost borne by a local agency for programs or levels of service mandated by the 2011 Realignment Legislation, except to the extent that the plans, waivers, or amendments are required by federal law, or the State provides annual funding for the cost increase.

(E)The State shall not be required to provide a subvention of funds pursuant to this paragraph for a mandate that is imposed by the State at the request of a local agency or to comply with federal law. State funds required by this paragraph shall be from a source other than those described in subdivisions (b) and (d), ad valorem property taxes, or the Social Services Subaccount of the Sales Tax Account of the Local Revenue Fund.

(5)(A) For programs described in subparagraphs (C) to (E), inclusive, of paragraph (1) of subdivision (a) and included in the 2011 Realignment Legislation, if there are subsequent changes in federal statutes or regulations that alter the conditions under which federal matching funds as described in the 2011 Realignment Legislation are obtained, and have the overall effect of increasing the costs incurred by a local agency, the State shall annually provide at least 50 percent of the nonfederal share of those costs as determined by the State.

(B)When the State is a party to any complaint brought in a federal judicial or administrative proceeding that involves one or more of the programs described in subparagraphs (C) to (E), inclusive, of paragraph (1) of subdivision (a) and included in the 2011 Realignment Legislation, and there is a settlement or judicial or administrative order that imposes a cost in the form of a monetary penalty or has the overall effect of increasing the costs already borne by a local agency for programs or levels of service mandated by the 2011 Realignment Legislation, the State shall annually provide at least 50 percent of the nonfederal share of those costs as determined by the State. Payment by the State is not required if the State determines that the settlement or order relates to one or more local agencies failing to perform a ministerial duty, failing to perform a legal obligation in good faith, or acting in a negligent or reckless manner.

(C)The state funds provided in this paragraph shall be from funding sources other than those described in subdivisions (b) and (d), ad valorem property taxes, or the Social Services Subaccount of the Sales Tax Account of the Local Revenue Fund.

(6)If the State or a local agency fails to perform a duty or obligation under this section or under the 2011 Realignment Legislation, an appropriate party may seek judicial relief. These proceedings shall have priority over all other civil matters.

(7)The funds deposited into a County Local Revenue Fund 2011 shall be spent in a manner designed to maintain the States eligibility for federal matching funds, and to ensure compliance by the State with applicable federal standards governing the States provision of Public Safety Services.

(8)The funds deposited into a County Local Revenue Fund 2011 shall not be used by local agencies to supplant other funding for Public Safety Services.

(d)If the taxes described in subdivision (b) are reduced or cease to be operative, the State shall annually biennially provide moneys to the Local Revenue Fund 2011 in an amount equal to or greater than the aggregate amount that otherwise would have been provided by the taxes described in subdivision (b). The method for determining that amount shall be described in the 2011 Realignment Legislation, and the State shall be obligated to provide that amount for so long as the local agencies are required to perform the Public Safety Services responsibilities assigned by the 2011 Realignment Legislation. If the State fails to annually biennially appropriate that amount, the Controller shall transfer that amount from the General Fund in pro rata monthly shares to the Local Revenue Fund 2011. Thereafter, the Controller shall disburse these amounts to local agencies in the manner directed by the 2011 Realignment Legislation. The state obligations under this subdivision shall have a lower priority claim to General Fund money than the first priority for money to be set apart under Section 8 of Article XVI and the second priority to pay voter-approved debts and liabilities described in Section 1 of Article XVI.

(e)(1) To ensure that public education is not harmed in the process of providing critical protection to local Public Safety Services, the Education Protection Account is hereby created in the General Fund to receive and disburse the revenues derived from the incremental increases in taxes imposed by this section, as specified in subdivision (f).

(2)(A) Before June 30, 2013, and before June 30 of each year from 2014 to 2018, inclusive, the Director of Finance shall estimate the total amount of additional revenues, less refunds, that will be derived from the incremental increases in tax rates made in subdivision (f) that will be available for transfer into the Education Protection Account during the next fiscal year. The Director of Finance shall make the same estimate by January 10, 2013, for additional revenues, less refunds, that will be received by the end of the 201213 fiscal year.

(B)During the last 10 days of the quarter of each of the first three quarters of each fiscal year from 201314 to 201819, inclusive, the Controller shall transfer into the Education Protection Account one-fourth of the total amount estimated pursuant to subparagraph (A) for that fiscal year, except as this amount may be adjusted pursuant to subparagraph (D).

(C)In each of the fiscal years from 201213 to 202021, inclusive, the Director of Finance shall calculate an adjustment to the Education Protection Account, as specified by subparagraph (D), by adding together the following amounts, as applicable:

(i)In the last quarter of each fiscal year from 201213 to 201819, inclusive, the Director of Finance shall recalculate the estimate made for the fiscal year pursuant to subparagraph (A), and shall subtract from this updated estimate the amounts previously transferred to the Education Protecion Protection Account for that fiscal year.

(ii)In June 2015 and in every June from 2016 to 2021, inclusive, the Director of Finance shall make a final determination of the amount of additional revenues, less refunds, derived from the incremental increases in tax rates made in subdivision (f) for the fiscal year ending two years prior. The amount of the updated estimate calculated in clause (i) for the fiscal year ending two years prior shall be subtracted from the amount of this final determination.

(D)If the sum determined pursuant to subparagraph (C) is positive, the Controller shall transfer an amount equal to that sum into the Education Protection Account within 10 days preceding the end of the fiscal year. If that amount is negative, the Controller shall suspend or reduce subsequent quarterly transfers, if any, to the Education Protection Account until the total reduction equals the negative amount herein described. For purposes of any calculation made pursuant to clause (i) of subparagraph (C), the amount of a quarterly transfer shall not be modified to reflect any suspension or reduction made pursuant to this subparagraph.

(3)All moneys in the Education Protection Account are hereby continuously appropriated for the support of school districts, county offices of education, charter schools, and community college districts as set forth in this paragraph.

(A)Eleven percent of the moneys appropriated pursuant to this paragraph shall be allocated quarterly by the Board of Governors of the California Community Colleges to community college districts to provide general purpose funding to community college districts in proportion to the amounts determined pursuant to Section 84750.5 of the Education Code, as that code section read upon voter approval of this section. The allocations calculated pursuant to this subparagraph shall be offset by the amounts specified in subdivisions (a), (c), and (d) of Section 84751 of the Education Code, as that section read upon voter approval of this section, that are in excess of the amounts calculated pursuant to Section 84750.5 of the Education Code, as that section read upon voter approval of this section, provided that no community college district shall receive less than one hundred dollars ($100) per full time equivalent student.

(B)Eighty-nine percent of the moneys appropriated pursuant to this paragraph shall be allocated quarterly by the Superintendent of Public Instruction to provide general purpose funding to school districts, county offices of education, and state general-purpose funding to charter schools in proportion to the revenue limits calculated pursuant to Sections 2558 and 42238 of the Education Code and the amounts calculated pursuant to Section 47633 of the Education Code for county offices of education, school districts, and charter schools, respectively, as those sections read upon voter approval of this section. The amounts so calculated shall be offset by the amounts specified in subdivision (c) of Section 2558 of, paragraphs (1) through (7) of subdivision (h) of Section 42238 of, and Section 47635 of, the Education Code for county offices of education, school districts, and charter schools, respectively, as those sections read upon voter approval of this section, that are in excess of the amounts calculated pursuant to Sections 2558, 42238, and 47633 of the Education Code for county offices of education, school districts, and charter schools, respectively, as those sections read upon voter approval of this section, provided that no school district, county office of education, or charter school shall receive less than two hundred dollars ($200) per unit of average daily attendance.

(4)This subdivision is self-executing and requires no legislative action to take effect. Distribution of the moneys in the Education Protection Account by the Board of Governors of the California Community Colleges and the Superintendent of Public Instruction shall not be delayed or otherwise affected by failure of the Legislature and Governor to enact an annual a budget bill pursuant to Section 12 of Article IV, by invocation of paragraph (h) of Section 8 of Article XVI, or by any other action or failure to act by the Legislature or Governor.

(5)Notwithstanding any other provision of law, the moneys deposited in the Education Protection Account shall not be used to pay any costs incurred by the Legislature, the Governor, or any agency of state government.

(6)A community college district, county office of education, school district, or charter school shall have sole authority to determine how the moneys received from the Education Protection Account are spent in the school or schools within its jurisdiction, provided, however, that the appropriate governing board or body shall make these spending determinations in open session of a public meeting of the governing board or body and shall not use any of the funds from the Education Protection Account for salaries or benefits of administrators or any other administrative costs. Each community college district, county office of education, school district, and charter school shall annually publish on its Internet Web site an accounting of how much money was received from the Education Protection Account and how that money was spent.

(7)The annual independent financial and compliance audit required of community college districts, county offices of education, school districts, and charter schools shall, in addition to all other requirements of law, ascertain and verify whether the funds provided from the Education Protection Account have been properly disbursed and expended as required by this section. Expenses incurred by those entities to comply with the additional audit requirement of this section may be paid with funding from the Education Protection Account, and shall not be considered administrative costs for purposes of this section.

(8)Revenues, less refunds, derived pursuant to subdivision (f) for deposit in the Education Protection Account pursuant to this section shall be deemed General Fund revenues, General Fund proceeds of taxes, and moneys to be applied by the State for the support of school districts and community college districts for purposes of Section 8 of Article XVI.

(f)(1) (A) In addition to the taxes imposed by Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code, for the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers at the rate of 1/4 percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this State on and after January 1, 2013, and before January 1, 2017.

(B)In addition to the taxes imposed by Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code, an excise tax is hereby imposed on the storage, use, or other consumption in this State of tangible personal property purchased from any retailer on and after January 1, 2013, and before January 1, 2017, for storage, use, or other consumption in this state at the rate of 1/4 percent of the sales price of the property.

(C)The Sales and Use Tax Law, including any amendments enacted on or after the effective date of this section, shall apply to the taxes imposed pursuant to this paragraph.

(D)This paragraph shall become inoperative on January 1, 2017.

(2)For any taxable year beginning on or after January 1, 2012, and before January 1, 2019, with respect to the tax imposed pursuant to Section 17041 of the Revenue and Taxation Code, the income tax bracket and the rate of 9.3 percent set forth in paragraph (1) of subdivision (a) of Section 17041 of the Revenue and Taxation Code shall be modified by each of the following:

(A)(i) For that portion of taxable income that is over two hundred fifty thousand dollars ($250,000) but not over three hundred thousand dollars ($300,000), the tax rate is 10.3 percent of the excess over two hundred fifty thousand dollars ($250,000).

(ii)For that portion of taxable income that is over three hundred thousand dollars ($300,000) but not over five hundred thousand dollars ($500,000), the tax rate is 11.3 percent of the excess over three hundred thousand dollars ($300,000).

(iii)For that portion of taxable income that is over five hundred thousand dollars ($500,000), the tax rate is 12.3 percent of the excess over five hundred thousand dollars ($500,000).

(B)The income tax brackets specified in clauses (i), (ii), and (iii) of subparagraph (A) shall be recomputed, as otherwise provided in subdivision (h) of Section 17041 of the Revenue and Taxation Code, only for taxable years beginning on and after January 1, 2013.

(C)(i) For purposes of subdivision (g) of Section 19136 of the Revenue and Taxation Code, this paragraph shall be considered to be chaptered on the date it becomes effective.

(ii)For purposes of Part 10 (commencing with Section 17001) of, and Part 10.2 (commencing with Section 18401) of, Division 2 of the Revenue and Taxation Code, the modified tax brackets and tax rates established and imposed by this paragraph shall be deemed to be established and imposed under Section 17041 of the Revenue and Taxation Code.

(D)This paragraph shall become inoperative on December 1, 2019.

(3)For any taxable year beginning on or after January 1, 2012, and before January 1, 2019, with respect to the tax imposed pursuant to Section 17041 of the Revenue and Taxation Code, the income tax bracket and the rate of 9.3 percent set forth in paragraph (1) of subdivision (c) of Section 17041 of the Revenue and Taxation Code shall be modified by each of the following:

(A)(i) For that portion of taxable income that is over three hundred forty thousand dollars ($340,000) but not over four hundred eight thousand dollars ($408,000), the tax rate is 10.3 percent of the excess over three hundred forty thousand dollars ($340,000).

(ii)For that portion of taxable income that is over four hundred eight thousand dollars ($408,000) but not over six hundred eighty thousand dollars ($680,000), the tax rate is 11.3 percent of the excess over four hundred eight thousand dollars ($408,000).

(iii)For that portion of taxable income that is over six hundred eighty thousand dollars ($680,000), the tax rate is 12.3 percent of the excess over six hundred eighty thousand dollars ($680,000).

(B)The income tax brackets specified in clauses (i), (ii), and (iii) of subparagraph (A) shall be recomputed, as otherwise provided in subdivision (h) of Section 17041 of the Revenue and Taxation Code, only for taxable years beginning on and after January 1, 2013.

(C)(i) For purposes of subdivision (g) of Section 19136 of the Revenue and Taxation Code, this paragraph shall be considered to be chaptered on the date it becomes effective.

(ii)For purposes of Part 10 (commencing with Section 17001) of, and Part 10.2 (commencing with Section 18401) of, Division 2 of the Revenue and Taxation Code, the modified tax brackets and tax rates established and imposed by this paragraph shall be deemed to be established and imposed under Section 17041 of the Revenue and Taxation Code.

(D)This paragraph shall become inoperative on December 1, 2019.

(g)(1) The Controller, pursuant to his or her statutory authority, may perform audits of expenditures from the Local Revenue Fund 2011 and any County Local Revenue Fund 2011, and shall audit the Education Protection Account to ensure that those funds are used and accounted for in a manner consistent with this section.

(2)The Attorney General or local district attorney shall expeditiously investigate, and may seek civil or criminal penalties for, any misuse of moneys from the County Local Revenue Fund 2011 or the Education Protection Account.

(a)The total annual appropriations subject to limitation of the State and of each local government for each two-year fiscal period shall not exceed the appropriations limit of the entity of government for the prior year State for the prior two-year fiscal period adjusted for the change in the cost of living and the change in population, except as otherwise provided in this article. For purposes of the 201921 fiscal period, prior two-year fiscal period, as used in this subdivision, means the 201718 and 201819 fiscal years.

(a)(1)Fifty percent of all revenues received by the State in a fiscal year and in the fiscal year immediately following it two-year fiscal period in excess of the amount which that may be appropriated by the State in compliance with this article during that fiscal year and the fiscal year immediately following it two-year fiscal period shall be transferred and allocated, from a fund established for that purpose, pursuant to Section 8.5 of Article XVI.

(2)Fifty percent of all revenues received by the State in a fiscal year and in the fiscal year immediately following it two-year fiscal period in excess of the amount which that may be appropriated by the State in compliance with this article during that fiscal year and the fiscal year immediately following it two-year fiscal period shall be returned by a revision of tax rates or fee schedules within the next two subsequent fiscal years. two-year fiscal period.

(b)All revenues received by an entity of government, other than the State, in a fiscal year and in the subsequent fiscal year immediately following it in excess of the amount which that may be appropriated by the entity in compliance with this article during that fiscal year and the subsequent fiscal year immediately following it shall be returned by a revision of tax rates or fee schedules within the next two subsequent fiscal years.

The appropriations limit for any two-year fiscal period, in the case of the State, or for any fiscal year year, in the case of an entity of government other than the State, pursuant to Sec. Section 1 shall be adjusted as follows:

(a)In the event that If the financial responsibility of providing services is transferred, in whole or in part, whether by annexation, incorporation or otherwise, from one entity of government to another, then then, for the year fiscal year, or two-year fiscal period in the case of the State, in which such transfer becomes effective the appropriations limit of the transferee entity shall be increased by such reasonable amount as the said entities shall mutually agree to and the appropriations limit of the transferor entity shall be decreased by the same amount.

(b)In the event that If the financial responsibility of providing services is transferred, in whole or in part, from an entity of government to a private entity, or the financial source for the provision of services is transferred, in whole or in part, from other revenues of an entity of government, to regulatory licenses, user charges or user fees, then, for the year fiscal year, or two-year fiscal period in the case of the State, of such that transfer, the appropriations limit of such entity of government shall be decreased accordingly.

(c)(1)In the event If an emergency is declared by the legislative body of an entity of government, the appropriations limit of the affected entity of government may be exceeded provided that the appropriations limits in the following three years two fiscal periods, in the case of the State, or three fiscal years, in the case of the local government, are reduced accordingly to prevent an aggregate increase in appropriations resulting from the emergency.

(2)In the event If an emergency is declared by the Governor, appropriations approved by a two-thirds vote of the legislative body of an affected entity of government to an emergency account for expenditures relating to that emergency shall not constitute appropriations subject to limitation. As used in this paragraph, emergency means the existence, as declared by the Governor, of conditions of disaster or of extreme peril to the safety of persons and property within the State, or parts thereof, caused by such conditions as attack or probable or imminent attack by an enemy of the United States, fire, flood, drought, storm, civil disorder, earthquake, or volcanic eruption.

(a)Whenever the Legislature or any state agency mandates a new program or higher level of service on any local government, the State shall provide a subvention of funds to reimburse that local government for the costs of the program or increased level of service, except that the Legislature may, but need not, provide a subvention of funds for the following mandates:

(1)Legislative mandates requested by the local agency affected.

(2)Legislation defining a new crime or changing an existing definition of a crime.

(3)Legislative mandates enacted prior to before January 1, 1975, or executive orders or regulations initially implementing legislation enacted prior to before January 1, 1975.

(4)Legislative mandates contained in statutes within the scope of paragraph (7) of subdivision (b) of Section 3 of Article I.

(b)(1)Except as provided in paragraph (2), for the 200506 fiscal year and every subsequent fiscal year, year through the 201819 fiscal year, and for the 201921 fiscal period and every subsequent two-year fiscal period, for a mandate for which the costs of a local government claimant have been determined in a preceding fiscal year or two-year fiscal period, as applicable to be payable by the State pursuant to law, the Legislature shall either appropriate, in the annual Budget Act, the full payable amount that has not been previously paid, or suspend the operation of the mandate for the fiscal year two-year fiscal period for which the annual Budget Act is applicable applies in a manner prescribed by law.

(2)Payable claims for costs incurred prior to before the 200405 fiscal year that have not been paid prior to before the 200506 fiscal year may be paid over a term of years, as prescribed by law.

(3)Ad valorem property tax revenues shall not be used to reimburse a local government for the costs of a new program or higher level of service.

(4)This subdivision applies to a mandate only as it affects a city, county, city and county, or special district.

(5)This subdivision shall not apply to a requirement to provide or recognize any procedural or substantive protection, right, benefit, or employment status of any local government employee or retiree, or of any local government employee organization, that arises from, affects, or directly relates to future, current, or past local government employment and that constitutes a mandate subject to this section.

(c)A mandated new program or higher level of service includes a transfer by the Legislature from the State to cities, counties, cities and counties, or special districts of complete or partial financial responsibility for a required program for which the State previously had complete or partial financial responsibility.

As used in this article and except as otherwise expressly provided herein:

(a)Appropriations subject to limitation of the State means any authorization to expend during a fiscal year two-year fiscal period the proceeds of taxes levied by or for the State, exclusive of state subventions for the use and operation of local government (other other than subventions made pursuant to Section 6) 6, and further exclusive of refunds of taxes, benefit payments from retirement, unemployment insurance, and disability insurance funds.

(b)Appropriations subject to limitation of an entity of local government means any authorization to expend during a fiscal year the proceeds of taxes levied by or for that entity and the proceeds of state subventions to that entity (other other than subventions made pursuant to Section 6) 6, exclusive of refunds of taxes.

(c)Proceeds of taxes shall include, includes, but not be is not restricted to, all tax revenues and the proceeds to an entity of government, government from (1) regulatory licenses, user charges, and user fees to the extent that those proceeds exceed the costs reasonably borne by that entity in providing the regulation, product, or service, and (2) the investment of tax revenues. With respect to any local government, proceeds of taxes shall include includes subventions received from the State, other than pursuant to Section 6, and, with respect to the State, proceeds of taxes shall exclude such proceeds of taxes excludes these subventions.

(d)Local government means any city, county, city and county, school district, special district, authority, or other political subdivision of or within the State.

(e)(1)Change in the cost of living for the State, a school district, or a community college district means the percentage change in California per capita personal income from the preceding year. two-year fiscal period, in the case of the State, or the preceding fiscal year, in the case of a school district or community college district.

(2)Change in the cost of living for an entity of local government, other than a school district or a community college district, shall be either (A) the percentage change in California per capita personal income from the preceding year, or (B) the percentage change in the local assessment roll from the preceding year for the jurisdiction due to the addition of local nonresidential new construction. Each entity of local government shall select its change in the cost of living pursuant to this paragraph annually by a recorded vote of the entitys governing body.

(f)(1)Change in population of any entity of government, other than the State, a school district, or a community college district, shall be determined by a method prescribed by the Legislature.

(2)Change in population of a school district or a community college district shall be means the percentage change in the average daily attendance of the school district or the number of full-time equivalent students of the community college district from the preceding fiscal year, as determined by a method prescribed by the Legislature.

(3)Change in population of the State shall be determined by adding (1) the percentage change in the States population multiplied by the percentage of the States budget in the prior fiscal year preceding two-year fiscal period that is expended for other than educational purposes for kindergarten and grades one to 12, inclusive, and the community colleges, and (2) the percentage change in the total statewide average daily attendance in kindergarten and grades one to 12, inclusive, and the number of full-time equivalent students of the community colleges, multiplied by the percentage of the States budget in the prior fiscal year preceding two-year fiscal period that is expended for educational purposes for kindergarten and grades one to 12, inclusive, and the community colleges.

(4)Any determination of population pursuant to this subdivision, other than that measured by average daily attendance, attendance or the number of full-time equivalent students, shall be revised, as necessary, to reflect the periodic census conducted by the United States Department of Commerce, or successor department.

(g)Debt service means appropriations required to pay the cost of interest and redemption charges, including the funding of any reserve or sinking fund required in connection therewith, on indebtedness existing or legally authorized as of January 1, 1979, or on bonded indebtedness thereafter approved according to law by a vote of the electors of the issuing entity voting in an election for that purpose.

(h)The appropriations limit of each entity of government for each fiscal year or two-year fiscal period, as applicable, is that amount which that total annual appropriations subject to limitation may not exceed under Sections 1 and 3. However, the appropriations limit of each entity of government for the 197879 fiscal year 197879 is the total of the appropriations subject to limitation of the entity for that fiscal year. For the 197879 fiscal year 197879, year, state subventions to local governments, exclusive of federal grants, are deemed to have been derived from the proceeds of state taxes.

(i)Except as otherwise provided in Section 5, appropriations subject to limitation do not include local agency loan funds or indebtedness funds, investment (or authorizations to invest) funds of the State, or of an entity of local government in accounts at banks or savings and loan associations or in liquid securities.

(a)For fiscal years beginning on or after July 1, 1990, the appropriations limit of each entity of government shall be the appropriations limit for the 198687 fiscal year year, adjusted for the changes made from that fiscal year pursuant to this article, as amended by the measure adding this section, adjusted for the changes required by Section 3.

State subventions provided during a two-year fiscal period commencing on or after July 1, 2019, to an entity of local government shall be applied to an appropriate fiscal year as specified by statute, for purposes of determining appropriations subject to limitation for that entity.

(a)From all state revenues there shall first be set apart the moneys to be applied by the State for support of the public school system and public institutions of higher education.

(b)Commencing with the 199091 fiscal year, For the 201921 fiscal period and each subsequent two-year fiscal period, the moneys to be applied by the State for the support of school districts and community college districts shall be not less than the greater of the following amounts:

(1)The amount which, that, as a percentage of General Fund revenues which that may be appropriated pursuant to Article XIIIB, equals the percentage of General Fund revenues appropriated for school districts and community college districts, respectively, in fiscal year 198687. the 198687 fiscal year.

(2)The amount required to ensure that the total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIIIB and allocated local proceeds of taxes shall not be less than the total amount from these sources in the prior fiscal year, two-year fiscal period, excluding any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for changes in enrollment and adjusted for the change in the cost of living pursuant to paragraph (1) of subdivision (e) of Section 8 of Article XIIIB. This paragraph shall be operative only in a fiscal year two-year fiscal period in which the percentage growth in California per capita personal income is less than or equal to the percentage growth in per capita General Fund revenues plus one half of one one-half of 1 percent. For purposes of the 201921 fiscal period, prior two-year fiscal period, as used in this paragraph and paragraph (3), means the 201718 and 201819 fiscal years.

(3)(A)The amount required to ensure that the total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIIIB and allocated local proceeds of taxes shall equal the total amount from these sources in the prior fiscal year, two-year fiscal period, excluding any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for changes in enrollment and adjusted for the change in per capita General Fund revenues.

(B)In addition, an amount equal to one-half of one 1 percent times the prior year two-year fiscal period total allocations to school districts and community colleges college districts from General Fund proceeds of taxes appropriated pursuant to Article XIIIB and allocated local proceeds of taxes, excluding any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for changes in enrollment.

(C)This paragraph (3) shall be operative only in a fiscal year two-year fiscal period in which the percentage growth in California per capita personal income in a fiscal year two-year fiscal period is greater than the percentage growth in per capita General Fund revenues plus one half of one one-half of 1 percent.

(c)In any fiscal year, two-year fiscal period, if the amount computed pursuant to paragraph (1) of subdivision (b) exceeds the amount computed pursuant to paragraph (2) of subdivision (b) by a difference that exceeds one and one-half 1¹/₂ percent of General Fund revenues, the amount in excess of one and one-half 1¹/₂ percent of General Fund revenues shall not be considered allocations to school districts and community colleges college districts for purposes of computing the amount of state aid pursuant to paragraph (2) or 3 (3) of subdivision (b) in the subsequent fiscal year. two-year fiscal period.

(d)In any fiscal year two-year fiscal period in which school districts and community college districts are allocated funding pursuant to paragraph (3) of subdivision (b) or pursuant to subdivision (h), (g), they shall be entitled to a maintenance factor, equal to the difference between (1) the amount of General Fund moneys which that would have been appropriated pursuant to paragraph (2) of subdivision (b) if that paragraph had been operative or the amount of General Fund moneys which that would have been appropriated pursuant to subdivision (b) had subdivision (b) not been suspended, and (2) the amount of General Fund moneys actually appropriated to school districts and community college districts in that fiscal year. two-year fiscal period.

(e)The maintenance factor for school districts and community college districts determined pursuant to subdivision (d) shall be adjusted annually each two-year fiscal period for changes in enrollment, and adjusted for the change in the cost of living pursuant to paragraph (1) of subdivision (e) of Section 8 of Article XIIIB, until it has been allocated in full. The maintenance factor shall be allocated in a manner determined by the Legislature in each fiscal year two-year fiscal period in which the percentage growth in per capita General Fund revenues exceeds the percentage growth in California per capita personal income. The maintenance factor shall be reduced each year two-year fiscal period by the amount allocated by the Legislature in that fiscal year. two-year fiscal period. The minimum maintenance factor amount to be allocated in a fiscal year two-year fiscal period shall be equal to the product of General Fund revenues from proceeds of taxes and one-half of the difference between the percentage growth in per capita General Fund revenues from proceeds of taxes and in California per capita personal income, not to exceed the total dollar amount of the maintenance factor. The adjustments and repayment shall also include the maintenance factors, if any, determined pursuant to subdivision (d) before December 3, 2018.

(f)For purposes of this section, changes in enrollment shall be measured by the percentage change in average daily attendance. However, in any fiscal year, two-year fiscal period, there shall be no adjustment for decreases in enrollment between the prior fiscal year two-year fiscal period and the current fiscal year two-year fiscal period unless there have been decreases in enrollment between the second prior fiscal year two-year fiscal period and the prior fiscal year and between the third prior fiscal year and the second prior fiscal year. two-year fiscal period. For purposes of this subdivision, prior two-year fiscal period, as applied before July 1, 2019, is deemed to refer to the average of the enrollments for two fiscal years, as appropriate.

(g)Subparagraph (B) of paragraph (3) of subdivision (b) may be suspended for one year two-year fiscal period only when made part of or included within any bill enacted pursuant to Section 12 of Article IV. All other provisions of subdivision (b) may be suspended for one year two-year fiscal period by the enactment of an urgency statute pursuant to Section 8 of Article IV, provided that the urgency statute may not be made part of or included within any bill enacted pursuant to Section 12 of Article IV.

(a)In addition to the amount required to be applied for the support of school districts and community college districts pursuant to Section 8, the Controller shall during each fiscal year during each two-year fiscal period the Controller shall transfer and allocate all revenues available pursuant to paragraph 1 (1) of subdivision (a) of Section 2 of Article XIIIB to that portion of the State School Fund restricted for elementary and high school purposes, and to that portion of the State School Fund restricted for community college purposes, respectively, in proportion to the enrollment in school districts and community college districts respectively.

(1)With respect to funds allocated to that portion of the State School Fund restricted for elementary and high school purposes, no transfer or allocation of funds pursuant to this section shall be required at any time that the Director of Finance and the Superintendent of Public Instruction mutually determine that current annual expenditures per student equal or exceed the average annual expenditure per student of the 10 states with the highest annual expenditures per student for elementary and high schools, and that average class size equals or is less than the average class size of the 10 states with the lowest class size for elementary and high schools.

(2)With respect to funds allocated to that portion of the State School Fund restricted for community college purposes, no transfer or allocation of funds pursuant to this section shall be required at any time that the Director of Finance and the Chancellor of the California Community Colleges mutually determine that current annual expenditures per student for community colleges in this State equal or exceed the average annual expenditure per student of the 10 states with the highest annual expenditures per student for community colleges.

(b)Notwithstanding the provisions of Article XIIIB, funds allocated pursuant to this section shall do not constitute appropriations subject to limitation.

(c)From any funds transferred to the State School Fund pursuant to subdivision (a), the Controller shall each year shall, each two-year fiscal period, allocate to each school district and community college district an equal amount per enrollment in school districts from the amount in that portion of the State School Fund restricted for elementary and high school purposes and an equal amount per enrollment in community college districts from that portion of the State School Fund restricted for community college purposes.

(d)All revenues allocated pursuant to subdivision (a) shall be expended solely for the purposes of instructional improvement and accountability as required by law.

(e)Any school district maintaining an elementary or secondary school shall develop and cause to be prepared an annual audit accounting for such funds and shall adopt a School Accountability Report Card for each school.

(a)(1)The Budget Stabilization Account is hereby created in the General Fund.

(2)For the 201516 fiscal year and each fiscal year 201921 fiscal period and each two-year fiscal period thereafter, based on the Budget Act for the fiscal year, two-year fiscal period, the Controller shall transfer from the General Fund to the Budget Stabilization Account, no later than October 1, 1 of the second year of the two-year fiscal period, a sum equal to 1.5 percent of the estimated amount of General Fund revenues for that fiscal year. two-year fiscal period.

(b)(1)For the 201516 fiscal year and each fiscal year 201921 fiscal period and each two-year fiscal period thereafter, based on the Budget Act for the fiscal year, two-year fiscal period, the Department of Finance shall provide to the Legislature all of the following information:

(A)An estimate of the amount of General Fund proceeds of taxes that may be appropriated pursuant to Article XIIIB for that fiscal year. two-year fiscal period.

(B)(i)An estimate of that portion of the General Fund proceeds of taxes identified in subparagraph (A) that is derived from personal income taxes paid on net capital gains.

(ii)The portion of the estimate in clause (i) that exceeds 8 percent of the estimate made under subparagraph (A).

(C)That portion of the states funding obligation under Section 8 that results from including the amount calculated under clause (ii) of subparagraph (B), if any, as General Fund proceeds of taxes.

(D)The amount of any appropriations described in clause (ii) of subparagraph (B) of paragraph (1) of, or subparagraph (C) of paragraph (2) of, subdivision (c), that are made from the revenues described in clause (ii) of subparagraph (B) of this paragraph.

(E)The amount resulting from subtracting the combined values calculated under subparagraphs (C) and (D) from the value calculated under clause (ii) of subparagraph (B). If less than zero, the amount shall be considered zero for this purpose.

(F)The lesser of the amount calculated under subparagraph (E) or the amount of transfer resulting in the balance in the Budget Stabilization Account reaching the limit specified in subdivision (e).

(2)In the 201617 fiscal year, with respect to the 201516 fiscal year only, and in the 201718 fiscal year and each fiscal year thereafter, separately with respect to each of the two next preceding fiscal years, 201921 fiscal period and each two-year fiscal period thereafter, separately with respect to each of the two next preceding two-year fiscal periods, the Department of Finance shall calculate all of the following, using the same methodology used for the relevant fiscal year, two-year fiscal period and provide those calculations to the Legislature:

(A)An updated estimate of the amount of General Fund proceeds of taxes that may be appropriated pursuant to Article XIIIB.

(B)(i)An updated estimate of that portion of the General Fund proceeds of taxes identified in subparagraph (A) that is derived from personal income taxes paid on net capital gains.

(ii)That portion of the updated estimate in clause (i) that exceeds 8 percent of the updated estimate made under subparagraph (A).

(C)The updated calculation of that portion of the states funding obligation under Section 8 that results from including the updated amount calculated under clause (ii) of subparagraph (B), if any, as General Fund proceeds of taxes.

(D)The amount of any appropriations described in clause (ii) of subparagraph (B) of paragraph (1) of, or subparagraph (C) of paragraph (2) of, subdivision (c), that are made from the revenues described in clause (ii) of subparagraph (B) of paragraph (1).

(E)The amount resulting from subtracting the combined values calculated under subparagraphs (C) and (D) from the value calculated under clause (ii) of subparagraph (B). If less than zero, the amount shall be considered zero for this purpose.

(F)The amount previously transferred for the fiscal year two-year fiscal period by the Controller from the General Fund to the Budget Stabilization Account pursuant to subdivisions (c) and (d).

(G)The lesser of (i) the amount, not less than zero, resulting from subtracting, from the amount calculated under subparagraph (E), the value of any suspension or reduction of transfer pursuant to paragraph (1) of subdivision (a) of Section 22 previously approved by the Legislature for the relevant fiscal year, two-year fiscal period, and the amount previously transferred for that fiscal year two-year fiscal period by the Controller as described in subparagraph (F), or (ii) the amount of transfer resulting in the balance in the Budget Stabilization Account reaching the limit as specified in subdivision (e).

(c)(1)(A)By October 1 of the 201516 fiscal year and each fiscal year second year of the 201921 fiscal period and each two-year fiscal period thereafter to the 202930 fiscal year, 202931 fiscal period, inclusive, based on the estimates set forth in the annual Budget Act pursuant to paragraphs (2) and (3) of subdivision (h), and the sum identified in paragraph (2) of subdivision (a), the Controller shall transfer amounts from the General Fund and the Budget Stabilization Account, pursuant to a schedule provided by the Director of Finance, as provided in subparagraph (B).

(B)Notwithstanding any other provision of this section, in the fiscal year two-year fiscal period to which the Budget Act identified in subparagraph (A) applies:

(i)Fifty percent of both the amount identified in paragraph (2) of subdivision (a), and the amount resulting from subtracting the value calculated under subparagraph (C) of paragraph (1) of subdivision (b) from the value calculated under clause (ii) of subparagraph (B) of paragraph (1) of subdivision (b), shall be transferred from the General Fund to the Budget Stabilization Account.

(ii)The remaining 50 percent shall be appropriated by the Legislature for one or more of the following obligations and purposes:

(I)Unfunded prior fiscal year General Fund obligations pursuant to Section 8 that existed on July 1, 2014.

(II)Budgetary loans to the General Fund, from funds outside the General Fund, that had outstanding balances on January 1, 2014.

(III)Payable claims for mandated costs incurred prior to before the 200405 fiscal year that have not yet been paid, and that pursuant to paragraph (2) of subdivision (b) of Section 6 of Article XIIIB are permitted to be paid over a term of years, as prescribed by law.

(IV)Unfunded liabilities for state-level pension plans and prefunding other postemployment benefits, in excess of current base amounts as established for the fiscal year two-year fiscal period in which the funds would otherwise be transferred to the Budget Stabilization Account. For the purpose of this subclause, current base amounts are those required to be paid pursuant to law, an approved memorandum of understanding, benefit schedules established by the employer or entity authorized to establish those contributions for employees excluded or exempted from collective bargaining, or any combination of these. To qualify under this subclause, the appropriation shall supplement and not supplant funding that would otherwise be made available to pay for the obligations described in this subclause for the fiscal year two-year fiscal period or the subsequent fiscal year. two-year fiscal period.

(2)(A)By October 1 of the 203031 fiscal year and each fiscal year second year of the 203133 fiscal period and each two-year fiscal period thereafter, based on the estimates set forth in the annual Budget Act pursuant to paragraphs (2) and (3) of subdivision (h), the Controller shall transfer amounts from the General Fund to the Budget Stabilization Account, pursuant to a schedule provided by the Director of Finance, as provided in subparagraph (B).

(B)In the fiscal year two-year fiscal period to which the Budget Act identified in subparagraph (A) applies, both the amount identified in paragraph (2) of subdivision (a), and the amount resulting from subtracting the value calculated under subparagraph (C) of paragraph (1) of subdivision (b) from the value calculated under clause (ii) of subparagraph (B) of paragraph (1) of subdivision (b), shall be transferred from the General Fund to the Budget Stabilization Account.

(C)Notwithstanding any other provision of this section, the Legislature may appropriate up to 50 percent of both the amount identified in paragraph (2) of subdivision (a), and of the amount resulting from subtracting the value calculated under subparagraph (C) of paragraph (1) of subdivision (b) from the value calculated under clause (ii) of subparagraph (B) of paragraph (1) of subdivision (b), for one or more of the obligations and purposes described in clause (ii) of subparagraph (B) of paragraph (1).

(3)The transfers described in this subdivision are subject to suspension or reduction pursuant to paragraph (1) of subdivision (a) of Section 22.

(d)By October 1 of the 201617 fiscal year and each fiscal year second year of the 201921 fiscal period and each two-year fiscal period thereafter, based on the estimates set forth in the annual biennial Budget Act pursuant to paragraphs (4) and (5) of subdivision (h), the Controller shall transfer amounts between the General Fund and the Budget Stabilization Account pursuant to a schedule provided by the Director of Finance, as follows:

(1)If the amount in subparagraph (G) of paragraph (2) of subdivision (b) is greater than zero, transfer that amount from the General Fund to the Budget Stabilization Account, subject to any suspension or reduction of this transfer pursuant to paragraph (1) of subdivision (a) of Section 22.

(2)If the amount described in subparagraph (F) of paragraph (2) of subdivision (b) is greater than the amount calculated under subparagraph (E) of paragraph (2) of subdivision (b), transfer that excess amount from the Budget Stabilization Account back to the General Fund.

(e)Notwithstanding any other provision of this section, the amount of a transfer to the Budget Stabilization Account pursuant to paragraph (2) of subdivision (a) and subdivisions (c) and (d) for any fiscal year two-year fiscal period shall not exceed an amount that would result in a balance in the account that, when the transfer is made, exceeds 10 percent of the amount of General Fund proceeds of taxes for the fiscal year two-year fiscal period estimated pursuant to subdivision (b). For any fiscal year, two-year fiscal period, General Fund proceeds of taxes that, but for this paragraph, would have been transferred to the Budget Stabilization Account may be expended only for infrastructure, as defined by Section 13101 of the Government Code, as that section read on January 1, 2014, including deferred maintenance thereon. on infrastructure.

(f)The funds described in subdivision (b) as General Fund proceeds of taxes are General Fund proceeds of taxes for purposes of Section 8 for the fiscal year two-year fiscal period to which those proceeds are attributed, but are not deemed to be additional General Fund proceeds of taxes on the basis that the funds are thereafter transferred from the Budget Stabilization Account to the General Fund.

(g)The Controller may utilize use funds in the Budget Stabilization Account, that he or she determines to currently be unnecessary for the purposes of this section, to help manage General Fund daily cashflow needs. Any use pursuant to this subdivision shall not interfere with the purposes of the Budget Stabilization Account.

(h)The annual Budget Act shall include the estimates described in all of the following:

(1)Paragraph (2) of subdivision (a).

(2)Clause (ii) of subparagraph (B) of paragraph (1) of subdivision (b).

(3)Subparagraph (F) of paragraph (1) of subdivision (b).

(4)Clause (ii) of subparagraph (B) of paragraph (2) of subdivision (b).

(5)Subparagraph (G) of paragraph (2) of subdivision (b).

(a)The Public School System Stabilization Account is hereby created in the General Fund.

(b)On or before October 1 of each fiscal year, the second year of each two-year fiscal period, commencing with the 201516 fiscal year, 201921 fiscal period, based on the amounts identified in the annual Budget Act pursuant to subdivision (b) of Section 20, the Controller shall transfer, pursuant to a schedule provided by the Director of Finance, amounts from the General Fund to the Public School System Stabilization Account as follows:

(1)(A)For the 201516 fiscal year, and for each fiscal year 201921 fiscal period, and for each two-year fiscal period thereafter, any positive amount identified in subparagraph (C) of paragraph (1) of subdivision (b) of Section 20 shall be transferred from the General Fund to the Public School System Stabilization Account in the amount calculated under subparagraph (B), subject to any reduction or suspension of this transfer pursuant to any other provision of this section or paragraph (3) of subdivision (a) of Section 22.

(B)The Director of Finance shall calculate the amount by which the positive amount identified in subparagraph (C) of paragraph (1) of subdivision (b) of Section 20, in combination with all other moneys required to be applied by the State for the support of school districts and community college districts for that fiscal year two-year fiscal period pursuant to Section 8, exceeds the sum of the total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIIIB and allocated local proceeds of taxes in the prior fiscal year, two-year fiscal period, plus any allocations from the Public School System Stabilization Account in the prior fiscal year, two-year fiscal period, less any transfers to the Public School System Stabilization Account pursuant to this section in the prior fiscal year two-year fiscal period, and any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for the percentage change in average daily attendance and adjusted for the higher of the change in the cost of living pursuant to paragraph (1) of subdivision (e) of Section 8 of Article XIIIB or the cost of living adjustment applied to school district and community college district general purpose apportionments.

(2)(A)Commencing with the 201617 fiscal year, and for each fiscal year 201921 fiscal period, and for each two-year fiscal period thereafter, to the extent the amount calculated under this paragraph exceeds the amounts previously transferred by the Controller from the General Fund to the Public School System Stabilization Account for a preceding fiscal year, prior two-year fiscal period, any positive amount calculated pursuant to subparagraph (C) of paragraph (2) of subdivision (b) of Section 20 for that fiscal year two-year fiscal period shall be transferred from the General Fund to the Public School System Stabilization Account in the amount calculated under subparagraph (B), subject to any reduction or suspension of this transfer pursuant to any other provision of this section or paragraph (3) of subdivision (a) of Section 22.

(B)The Director of Finance shall calculate the amount by which the positive amount identified in subparagraph (C) of paragraph (2) of subdivision (b) of Section 20, in combination with all other moneys required to be applied by the State for the support of school districts and community college districts for that fiscal year two-year fiscal period pursuant to Section 8, exceeds the sum of the total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIIIB and allocated local proceeds of taxes in the prior fiscal year, two-year fiscal period, plus any allocations from the Public School System Stabilization Account in the prior fiscal year, two-year fiscal period, less any transfers to the Public School System Stabilization Account pursuant to this section in the prior fiscal year two-year fiscal period, and any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for the percentage change in average daily attendance and adjusted for the higher of the change in the cost of living pursuant to the paragraph (1) of subdivision (e) of Section 8 of Article XIIIB or the cost of living adjustment applied to school district and community college district general purpose apportionments.

(c)Commencing with the 201617 fiscal year, and for each fiscal year 201921 fiscal period, and for each two-year fiscal period thereafter, if the amount calculated pursuant to subparagraph (C) of paragraph (2) of subdivision (b) of Section 20 for a fiscal year two-year fiscal period is less than the amounts previously transferred by the Controller from the General Fund to the Public School System Stabilization Account for that fiscal year, two-year fiscal period, the amount of this difference shall be appropriated and allocated by the State from the Public School System Stabilization Account for the support of school districts and community college districts.

(d)Notwithstanding any other provision of this section, the amount transferred to the Public School System Stabilization Account pursuant to subdivision (b) for a fiscal year two-year fiscal period shall not exceed the amount by which the amount of state support calculated pursuant to paragraph (1) of subdivision (b) of Section 8 exceeds the amount of state support calculated pursuant to paragraph (2) of subdivision (b) of Section 8 for that fiscal year. two-year fiscal period. If the amount of state support calculated pursuant to paragraph (1) of subdivision (b) of Section 8 does not exceed the amount of state support calculated pursuant to paragraph (2) of subdivision (b) of Section 8 for a fiscal year, two-year fiscal period, no amount shall be transferred to the Public School System Stabilization Account pursuant to subdivision (b) for that fiscal year. two-year fiscal period.

(e)Notwithstanding any other provision of this section, no amount shall be transferred to the Public School System Stabilization Account pursuant to subdivision (b) for a fiscal year two-year fiscal period for which a maintenance factor is determined pursuant to subdivision (d) of Section 8.

(f)Notwithstanding any other provision of this section, no amount shall be transferred to the Public School System Stabilization Account pursuant to subdivision (b) until the maintenance factor determined pursuant to subdivisions (d) and (e) of Section 8 for fiscal years prior to before the 201415 fiscal year has been fully allocated. Transfers may be made beginning in the fiscal year two-year fiscal period following the fiscal year two-year fiscal period in which it is determined, based on the Budget Act for that fiscal year, two-year fiscal period, that this condition will be met. If a transfer is made for a fiscal year two-year fiscal period for which it is later determined that this condition has not been met, the amount of the transfer shall be appropriated and allocated from the Public School System Stabilization Account for the support of school districts and community college districts. No transfer shall be made for a year two-year fiscal period for which it was determined, based on the Budget Act for that fiscal year, two-year fiscal period, that this condition would not be met but was subsequently determined to have been met in that year or a prior fiscal year. two-year fiscal period or a prior two-year fiscal period.

(g)Notwithstanding any other provision of this section, no amount shall be transferred to the Public School System Stabilization Account for any fiscal year two-year fiscal period for which any of the provisions of subdivision (b) of Section 8 are suspended pursuant to subdivision (h) (g) of Section 8.

(h)Notwithstanding any other provision of this section, for any fiscal year, two-year fiscal period the amount of a transfer to the Public School System Stabilization Account pursuant to subdivision (b) shall not exceed an amount that would result in a balance in the account that is in excess of 10 percent of the total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIIIB and allocated local proceeds of taxes for that fiscal year two-year fiscal period pursuant to Section 8. For any fiscal year, two-year fiscal period, General Fund proceeds of taxes that, but for this subdivision, would have been transferred to the Public School System Stabilization Account shall be applied by the State for the support of school districts and community colleges.

(i)In any fiscal year two-year fiscal period in which the amount required to be applied by the State for the support of school districts and community college districts for that fiscal year two-year fiscal period pursuant to Section 8 is less than the total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIIIB and allocated local proceeds of taxes in the prior fiscal year, two-year fiscal period plus any allocations from the Public School System Stabilization Account in the prior fiscal year, two-year fiscal period, less any transfers to the Public School System Stabilization Account in the prior fiscal year two-year fiscal period and any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for the percentage change in average daily attendance and adjusted for the higher of the change in the cost of living pursuant to paragraph (1) of subdivision (e) of Section 8 of Article XIIIB or the cost of living adjustment applied to school district and community college district general purpose apportionments, the amount of the deficiency shall be appropriated and allocated by the State from the Public School System Stabilization Account for the support of school districts and community college districts.

(j)Funds transferred to the Public School System Stabilization Account shall be deemed, for purposes of Section 8, to be moneys applied by the State for the support of school districts and community college districts in the fiscal year two-year fiscal period for which the transfer is made, and not in the fiscal year two-year fiscal period in which moneys are appropriated from the account.

(k)Nothing in this This section shall not be construed to reduce the amount of the moneys required to be applied by the State for the support of school districts and community college districts pursuant to Sections 8 and 8.5.

(l)The Controller may utilize use funds in the Public School System Stabilization Account, Account that he or she determines to currently be unnecessary for the purposes of this section, to help manage General Fund daily cashflow needs. Any use of funds by the Controller pursuant to this subdivision shall not interfere with the purposes of the Public School System Stabilization Account.

(a)Upon the Governors proclamation declaring a budget emergency and identifying the conditions constituting the emergency, the Legislature may pass a bill that does any of the following:

(1)Suspends or reduces by a specified dollar amount for one fiscal year two-year fiscal period the transfer of moneys from the General Fund to the Budget Stabilization Account required by Section 20.

(2)(A)Returns funds that have been transferred to the Budget Stabilization Account pursuant to Section 20 to the General Fund for appropriation to address the budget emergency.

(B)Not more than 50 percent of the balance in the Budget Stabilization Account may be returned to the General Fund for appropriation pursuant to subparagraph (A) in any fiscal year, two-year fiscal period, unless funds in the Budget Stabilization Account have been returned to the General Fund for appropriation in the immediately preceding fiscal year. two-year fiscal period. For purposes of the 201921 fiscal period, immediately preceding two-year fiscal period, as used in this subparagraph, means the 201718 and 201819 fiscal years.

(3)Suspends or reduces by a specified dollar amount for one fiscal year two-year fiscal period the transfer of moneys from the General Fund to the Public School System Stabilization Account required by Section 21.

(4)Appropriates funds transferred to the Public School System Stabilization Account pursuant to Section 21 and allocates those funds for the support of school districts and community college districts.

(b)For purposes of this section, budget emergency means any of the following:

(1)An emergency declared by the Governor, within the meaning of paragraph (2) of subdivision (c) of Section 3 of Article XIIIB.

(2)(A)A determination by the Governor that estimated resources are inadequate to fund General Fund expenditures for the current or ensuing fiscal year, two-year fiscal period, after setting aside funds for the reserve for liquidation of encumbrances, at a level equal to the highest amount of total General Fund expenditures estimated at the time of enactment of any of the three most recent Budget Acts, adjusted for both of the following:

(i)The annual percentage change in the cost of living for the State, as measured by the California Consumer Price Index.

(ii)The annual percentage growth in the civilian population of the State pursuant to subdivision (b) of Section 7901 of the Government Code.

(B)The maximum amount that may be withdrawn for a budget emergency determined under this paragraph shall not exceed either an amount that would result in a total General Fund expenditure level for a fiscal year two-year fiscal period that is greater than the highest amount of total General Fund expenditures estimated at the time of enactment of any of the three most recent Budget Acts, as calculated pursuant to subparagraph (A), or any limit imposed by subparagraph (B) of paragraph (2) of subdivision (a).

(a)For the 200304 fiscal year and each fiscal year 201921 fiscal period and each two-year fiscal period thereafter, all revenues that are collected during the fiscal year two-year fiscal period from taxes under the Sales and Use Tax Law (Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code), or any successor to that law, upon the sale, storage, use, or other consumption in this State of motor vehicle fuel, as defined for purposes of the Motor Vehicle Fuel License Tax Law (Part 2 (commencing with Section 7301) of Division 2 of the Revenue and Taxation Code), shall be deposited into the Transportation Investment Fund or its successor, which is hereby created in the State Treasury and which is hereby declared to be a trust fund. The Legislature may not change the status of the Transportation Investment Fund as a trust fund.

(b)For the 200809 fiscal year and each fiscal year 201921 fiscal period and each two-year fiscal period thereafter, moneys in the Transportation Investment Fund shall be allocated solely for the following purposes:

(1)Public transit and mass transportation. Moneys appropriated for public transit and mass transportation shall be allocated as follows: (i) Twenty-five percent pursuant to subdivision (b) of Section 99312 of the Public Utilities Code, as that section read on July 30, 2009; (ii) Twenty-five percent pursuant to subdivision (c) of Section 99312 of the Public Utilities Code, as that section read on July 30, 2009; and (iii) Fifty percent for the purposes of subdivisions (a) and (b) of Section 99315 of the Public Utilities Code, as that section read on July 30, 2009.

(2)Transportation capital improvement projects, subject to the laws governing the State Transportation Improvement Program, or any successor to that program.

(3)Street and highway maintenance, rehabilitation, reconstruction, or storm damage repair conducted by cities, including a city and county.

(4)Street and highway maintenance, rehabilitation, reconstruction, or storm damage repair conducted by counties, including a city and county.

(c)For the 200809 fiscal year and each fiscal year 201921 fiscal period and each two-year fiscal period thereafter, moneys in the Transportation Investment Fund are hereby continuously appropriated to the Controller without regard to fiscal years, two-year fiscal periods, which shall be allocated as follows:

(1)Twenty percent of the moneys for the purposes set forth in subparagraph (A) of paragraph (2) (1) of subdivision (b).

(2)Forty percent of the moneys for the purposes set forth in subparagraph (B) of paragraph (2) of subdivision (b).

(3)Twenty percent of the moneys for the purposes set forth in subparagraph (C) of paragraph (2) (3) of subdivision (b).

(4)Twenty percent of the moneys for the purposes set forth in subparagraph (D) of paragraph (2) (4) of subdivision (b).

(d)The Legislature may not enact a statute that modifies the percentage shares set forth in subdivision (c) until all of the following have occurred:

(1)The California Transportation Commission has held no less than four public hearings in different parts of the State to receive public input about the need for public transit, mass transportation, transportation capital improvement projects, and street and highway maintenance;

(2)The California Transportation Commission has published a report describing the input received at the public hearings and how the modification to the statutory allocation is consistent with the orderly achievement of local, regional and statewide goals for public transit, mass transportation, transportation capital improvements, and street and highway maintenance in a manner that is consistent with local general plans, regional transportation plans, and the California Transportation Plan;

(3)Ninety days have passed since the publication of the report by the California Transportation Commission.

(4)The statute enacted by the Legislature pursuant to this subdivision must be by a bill passed in each house of the Legislature by rollcall vote entered in the journal, two-thirds of the membership concurring, provided that if the bill does not contain any other unrelated provision and that if the revenues described in subdivision (a) are expended solely for the purposes set forth in paragraph (2) of subdivision (b).

(e)(1)An amount equivalent to the total amount of revenues that were not transferred from the General Fund of the State to the Transportation Investment Fund, as of July 1, 2007, because of a suspension of transfer of revenues pursuant to this section as it read on January 1, 2006, but excluding the amount to be paid to the Transportation Deferred Investment Fund pursuant to Section 63048.65 of the Government Code, shall be transferred from the General Fund to the Transportation Investment Fund no later than June 30, 2016. Until this total amount has been transferred, the amount of transfer payments to be made in each fiscal year shall not be less than one-tenth of the total amount required to be transferred by June 30, 2016. The transferred revenues shall be allocated solely for the purposes set forth in this section as if they had been received in the absence of a suspension of transfer of revenues.

(2)The Legislature may provide by statute for the issuance of bonds by the state or local agencies, as applicable, that are secured by the minimum transfer payments required by paragraph (1). Proceeds from the sale of those bonds shall be allocated solely for the purposes set forth in this section as if they were revenues subject to allocation pursuant to paragraph (2) of subdivision (b).

(f)This section constitutes the sole method of allocating, distributing, and using the revenues described in subdivision (a). The purposes described in paragraph (2) of subdivision (b) are the sole purposes for which the revenues described in subdivision (a) may be used. The Legislature may shall not enact a statute or take any other action which, permanently or temporarily, does any of the following:

(1)Transfers, diverts, or appropriates the revenues described in subdivision (a) for any other purposes than those described in paragraph (2) of subdivision (b);

(2)Authorizes the expenditures of the revenues described in subdivision (a) for any other purposes than those described in paragraph (2) of subdivision (b) or;

(3)Borrows or loans the revenues described in subdivision (a), regardless of whether these revenues remain in the Transportation Investment Fund or are transferred to another fund or account such as the Public Transportation Account, a trust fund in the State Transportation Fund.

(g)For purposes of this article, mass transportation, public transit and mass transit have the same meanings as public transportation. Public transportation means:

(1)(A)Surface transportation service provided to the general public, complementary paratransit service provided to persons with disabilities as required by 42 U.S.C. 12143, or similar transportation provided to people with disabilities or the elderly; (B) operated by bus, rail, ferry, or other conveyance on a fixed route, demand response, or otherwise regularly available basis; (C) generally for which a fare is charged; and (D) provided by any transit district, included transit district, municipal operator, included municipal operator, eligible municipal operator, or transit development board, as those terms were defined in Article 1 (commencing with Section 99200) of Chapter 4 of Part 11 of Division 10 of the Public Utilities Code on January 1, 2009, a joint powers authority formed to provide mass transportation services, an agency described in subdivision (f) of Section 15975 of the Government Code, as that section read on January 1, 2009, any recipient of funds under Sections 99260, 99260.7, 99275, or subdivision (c) of Section 99400 of the Public Utilities Code, as those sections read on January 1, 2009, or a consolidated agency as defined in Section 132353.1 of the Public Utilities Code, as that section read on January 1, 2009.

(2)Surface transportation service provided by the Department of Transportation pursuant to subdivision (a) of Section 99315 of the Public Utilities Code, as that section read on July 30, 2009.

(3)Public transit capital improvement projects, including those identified in subdivision (b) of Section 99315 of the Public Utilities Code, as that section read on July 30, 2009.

(h)If the Legislature reduces or repeals the taxes described in subdivision (a) and adopts an alternative source of revenue to replace the moneys derived from those taxes, the replacement revenue shall be deposited into the Transportation Investment Fund, dedicated to the purposes listed in paragraph (2) of subdivision (b), and allocated pursuant to subdivision (c). All other provisions of this article shall apply to any revenues adopted by the Legislature to replace the moneys derived from the taxes described in subdivision (a).

Funds authorized for, or made available to, the institute shall be continuously appropriated without regard to fiscal year, two-year fiscal period, be available and used only for the purposes provided in this article, and shall not be subject to appropriation or transfer by the Legislature or the Governor for any other purpose.

Resolved by the Assembly, the Senate concurring, That the Legislature of the State of California at its 201516 Regular Session commencing on the first day of December 2014, two-thirds of the membership of each house concurring, hereby proposes to the people of the State of California, that the Constitution of the State be amended as follows:

That it is the intent of the Legislature to propose to the people of the State of California amendments to the California Constitution that, commencing in 2019, would provide for all of the following:

(a)The Governor would submit a budget proposal for the next two-year fiscal period during the first 10 days of the first calendar year of the biennium of a legislative session.

(b)In the regular session in each odd-numbered year, the Legislature would do both of the following:

(1)Only consider or act upon the budget bill, other bills providing for appropriations related to the budget bill, and bills introduced by a standing committee.

(2)Only conduct hearings for either of the following purposes:

(A)To consider, develop, and adopt the budget for the next two-year fiscal period.

(B)(i)Oversight of state department operations and state programs.

(ii)A standing committee of the Legislature would be able to introduce up to five bills authored by a majority of the standing committee if the bill would improve state department operations or state programs deficiencies discussed during an oversight hearing.

(c)In the regular session of each even-numbered year, the Legislature would only consider or act upon legislation other than the budget bill or other bills providing for appropriations related to the budget bill.

(d)(1)After the budget for the next two-year fiscal period has been enacted, the Governor would be able to submit budget updates to the Joint Legislative Budget Committee for its approval.

(2)(A)The Joint Legislative Budget Committee would be able to approve any budget updates proposed by the Governor to the enacted budget by a resolution adopted by a majority of the committee members. A budget update so approved would take immediate effect as a statute.

(B)The Legislature would be able to pass a bill, approved by two-thirds of the membership, that makes a change to the enacted budget without the Governor proposing the change or changes.

(e)(1)The Joint Legislative Budget Committee would be established to ascertain facts and make recommendations to the Legislature and to the houses thereof concerning the State Budget, the revenues and expenditures of the state, and the organization and functions of the state and its departments, subdivisions, and agencies.

(2)Each political party represented in each house would, to the greatest extent possible, be proportionately represented in the Joint Legislative Budget Committee and the membership of the committee would be as follows:

(A)Eight members of the Assembly appointed by the Speaker of the Assembly.

(B)Eight members of the Senate appointed by the Senate Committee on Rules.

That it is the intent of the Legislature that the amendments to the California Constitution proposed to the people of the State of California by this measure would not affect any of the following:

(a)The Legislatures requirements and deadlines related to passing a Budget Bill, including, but not limited to, passing a Budget Bill by June 15.

(b)The Governors authority to issue a proclamation declaring a fiscal emergency and the provisions related thereto.

(c)The requirements to set apart the moneys to be applied for support of the public school system and public institutions of higher education, as required by Sections 8 and 8.5 of Article XVI of the California Constitution.

(d)The requirement to deposit moneys into the Budget Stabilization Account or the Public School System Stabilization Account, as required by Sections 20 and 21 of Article XVI of the California Constitution.

(e)The Legislatures authority to introduce and adopt urgency legislation.

(f)The Governors authority to call a special session, as described in subdivision (b) of Section 3 of Article IV of the California Constitution.

Date of Hearing: May 7, 2015

ASSEMBLY COMMITTEE ON BUDGET

Shirley Weber, Chair

ABPCA Bill Id:ACA 5 (

Author:Grove) – As Amended Ver:April 30, 2015

SUBJECT: Legislature: 2-year budget.

SUMMARY: Converts the State to a bi-annual budget process.   Specifically, this bill:

Creates a biannual budget process that would occur the first year of a Legislative Session.

1)     Specifies that, starting in 2019, the legislative session would be organized in two annual phases, with the first year being dedicated to the budget and oversight by committees of the legislature and the second year being dedicated to all other legislation. 

2)     Allows that after budget is passed, the Governor could submit amendments to the budget bill to the Joint Legislative Budget Committee.  The Committee could approve these changes with a simple majority vote of committee members.  In addition, the Legislature could amend the budget during the session with a two-thirds vote.

3)     Specifies that the Joint Legislative Budget Committee be compromised of sixteen members, eight from both houses, with the membership being proportionate to the representation of each political party in each house.

4)     Restricts the introduction of bills during the first year of a legislative session to bills related to the budget and for oversight.   During this first year, legislative committees could issue up to five bills each in the first year of the biannual session.

5)     Makes various changes to the Constitution to implement a two-year fiscal period, including amending the State Appropriation Limit and the calculations of Proposition 98 and Proposition 2.

EXISTING LAW: The California Constitution provides that the Legislature meets in a biennial regular session, commencing with the first Monday in December in each even-numbered year, when each house is required to immediately organize, and concluding at midnight on November 30 of the next even-numbered year. The California Constitution requires the Governor to submit to the Legislature a budget for the ensuing fiscal year within the first 10 days of each calendar year and requires the Legislature to pass the Budget Bill by midnight on June 15 of each year. The California Constitution authorizes the Legislature or either house, by resolution, to provide for the selection of committees necessary for the conduct of its business.

FISCAL EFFECT: Possible impacts of the measure are discussed below.

COMMENTS: This measure would impose a two-year budget process and define the Legislature’s role during the Legislative Session.   According to the author, “The current budget process occurs on an annual basis with no formal role for oversight or long-term fiscal planning.”

There are three major changes that would result from this measure: (1) the State fiscal process would be less responsive to the dynamic of changing expenditures and revenues; (2) the Legislature would lose influence over State fiscal matters as well as the ability to control its own purpose during the session; and (3) the Administrative Branch of government would see further increases in power at the expense of the Legislative Branch.

Reduced Ability to Respond to State Fiscal Matters

Currently, the State refreshes estimates of revenue and expenditure data twice a year. First, in November, which serves as the basis for the Governor's budget. The second time is in May, which provides the foundation for the May Revision. Historically, at times of economic expansion or recession, there have been substantial differences in the projections during these two time periods because of the nature of California's dynamic economy. During the recent recovery, this has meant that revenues have increased at a robust pace, but during downturns the State has seen huge reductions in revenues. California's major revenue sources – Personal Income Tax, Sales and Use Taxes and Corporate taxes – all correlate with the general condition of the economy as a whole. Likewise, caseloads for health and human services programs grow and shrink to reflect trends in the larger economy.

The Department of Finance includes a five-year projection of revenues and expenditures that provides a rough estimate of whether the State budget is structurally balanced in the long run. The Legislative Analyst's Office also includes a multi-year forecast in the November Budget Outlook publication, which frames the forthcoming budget process. However, while these projections are useful for making decisions about spending decisions in the short run, they are sensitive to economic (i.e. the dot com boom and crash) and world events (i.e. Great Recession) that cannot be foreseen when the projections are first made.

This measure would lock in the budget projections for an entire year. This would likely put the State on an autopilot course that would either result in an unexpected surplus or deficit at the conclusion of the fiscal year. Without the ability to course-correct, the State would not be able to respond to change in times of financial uncertainty.

This measure does provide two mechanisms for amending a budget, which theoretically could be used to change the budget. The first is the ability for the Governor to amend the budget through a request to the Joint Legislative Budget Committee, which could be adopted by a majority of the committee. This tool would allow for some minor adjustments to the State spending plan, but because it does not include the ability to approve budget-related statutes, it would not provide a mechanism to adjust many of the main drivers of the overall budget such as the Proposition 98 guarantee estimate, the benefit levels of health and human service programs, or the ratification of memoranda of understanding with State labor unions.

The second mechanism for amending the budget would be through the adoption of a bill, with two-thirds of the members voting in favor. This second tool would re-impose the supermajority voting threshold on any changes to the budget. Thus, it would be more difficult for the Legislature the change the budget plan once it had been established.

Reduction in Legislative Power

This measure would cede existing legislative power to the executive branch. The Legislature's power to appropriate funds would only be fully available to the two houses for the first seven months of the legislative session, while the budget is being crafted. After that time, the Governor can amend the spending plan with the agreement of only nine members of the Legislature, per the new Joint Legislative Budget Committee's role in this measure. However, the Legislature can only make changes to the State spending plan if two-thirds of both houses concur on a bill. This would increase the Administration's flexibility, while reducing the ability of the legislature to act.

Outside of the budget process, this measure would impose a legislative process upon the Legislature in the Constitution in a manner that is normally contained in the rules of each house. This approach gives the Legislature little flexibility to structure its operations, calendar, and focus. Again, this would reduce the ability of the State to respond to the current needs of Californians.

REGISTERED SUPPORT / OPPOSITION:

Support

None on File

Opposition

None on File

Analysis Prepared by: Christian Griffith / BUDGET / 916-319-2099