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> May 2009 Propositions
May 1, 2009
Card Check
Impacts Business At All Levels
The Redondo Beach Chamber of Commerce & Visitors Bureau
released its positions on the May 19, 2009 Special Election
ballot measures. The Propositions are part of the 2009-2010
state budget agreement between the Governor and Legislature
designed to help balance the state budget through various
increase in length of time of taxes, shifting of former
voter-approved propositions and borrowing of funds from
future state lottery revenues.
Propositions 1A and 1B, considered the two most important
Propositions which make up most of the investment to pay
down the budget deficit are linked together. Both
Proposition 1A and 1B must pass in order for the funding
guarantee in Proposition 1B to take effect
“We believe our positions reflect the best possible solution
to balancing the state budget and guaranteeing that the
state cannot put itself in a similar position once a rainy
day saving fund is created,” stated Marna Smeltzer,
President/CEO of the Redondo Beach Chamber of Commerce &
Visitors Bureau.
“If these
Propositions do not pass, we feel the alternative could be
even worse than the proposed propositions that extend tax
increase. Ultimately, it’s either everyone pays under these
propositions passing or if they fail, the only other way to
secure the needed revenue is to get it from the business
community,” continued Smeltzer.
Proposition 1A – “Rainy Day” Budget Stabilization Fund
Redondo Beach Chamber Position: SUPPORT
Proposition 1A would stabilize long-term budget spending by
limiting of the state’s spending based on 10-year revenue
trends. It creates a Budget Stabilization Fund, also known
as a “Rainy Day” fund, which will allow the State of
California to save when the economy is prospering and
therefore can be used when the economy is in a decline.
As of April 1, 2009 several categories of taxes increased
based on the budget agreement in February. The passage of
Proposition 1A only allows the length of time of the tax
increases to be extended, not the actual amount of tax. The
tax increases would be extended for one or two additional
years depending on the particular tax. It is estimated that
State tax revenues would increase by about $16 billion.
The following tax increase extensions will only go into
effect if Proposition 1A passes:
• The sales tax increase of 1 % would be extended for one
year through 2011 – 2012.
• The Vehicle License Fee (VLF) tax increase would be
extended for two years through 2012 – 2013 from .65% to
1.15%.
• The personal income tax-related increases would be
extended for two more years, through the 2012 tax year.
Proposition 1B – Education Funding. Payment Plan
Redondo Beach Chamber Position: SUPPORT
Proposition 1B would modify how voter-approved revenue for
education could be used to balance the state budget. The
State would be allowed to borrow from the education fund in
order to give flexibility for balancing the state budget. In
return, Proposition 1B ensures that the schools would be
paid back over time starting in 2011.
Payments to schools will come out of the newly created
Budget Stabilization Fund as outlined in Proposition 1A.
Proposition 1C – Lottery Modernization Act
Redondo Beach Chamber Position: NEUTRAL
Proposition 1C will allow the State to immediately borrow $5
billion from future protected State Lottery revenue in order
to balance the current State Budget deficit. The changes
could increase lottery ticket sales and allow the state to
borrow $5 billion from future lottery profits.
Proposition 1C involves selling an asset (future lottery
profits) to investors through a bond transaction by
converting a stream of future annual payments into a “lump
sum.” This type of borrowing – referred to as securitization
– is somewhat different from most other types of state
borrowing in that it involves no legal commitment to use
General Fund tax revenues to pay investors.
Proposition 1D – Children’s Services Funding
Redondo Beach Chamber Position: NEUTRAL
Proposition 1D temporarily redirects a portion of excess
funds from a prior voter-approved tobacco tax to the general
fund in providing for more flexibility of shifting funds to
balance the state budget.
This would achieve state savings of up to $608 million in
2009 and $268 million annually from 2010 – 2014.
Proposition 1E – Mental Health Funding Budget
Redondo Beach Chamber Position: NEUTRAL
Proposition 1E temporarily redirects funds from the Mental
Health Services Act to fund children’s health programs that
are at risk of elimination due to the budget crisis,
including health care screening, diagnosis and treatment.
Similar to Proposition 1D in that it allows once again more
general flexibility of shifting funds from voter-approved
funding measures in order to help balance the budget.
Proposition 1D and Proposition 1E are consider short term
fixes.
Proposition 1F – Elected Officials’ Salaries
Redondo Beach Chamber Position: SUPPORT
Proposition 1F amends the State Constitution to prevent the
California Citizens Compensation Commission from increasing
the annual salaries of State elected officials when the
state General Fund is expected to end the year with a
deficit.
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