March 23, 2009
Corona Chamber Takes Action on May 19, 2009 Statewide Special Election

The Corona Chamber of Commerce is urging the local business community to familiarize themselves with the impact of six statewide ballot measures on the May 19, 2009 special election ballot. Propositions 1A through 1F are a series of comprehensive proposals ranging from state budget reform to closing the massive state budget deficit.

“The special election is a defining moment for Corona and the state of California,” stated Cynthia Schneider, Chair of the Corona Chamber’s Legislative Action Committee. “This special election gives our business community the opportunity to play a role in fiscal accountability for many years to come,” continued Schneider.

The following propositions will appear on the May 19, 2009 special statewide election ballot:

Proposition 1A – “Rainy Day” Budget Stabilization Fund
Corona Chamber Position: OPPOSE

Proposition 1A aims to stabilize budget spending over the long-term, limit state spending based on 10-year revenue trends, and mandate a bigger rainy day fund, forcing the state to save in good years when money is available and to use when the economy falters.

Proposition 1A will prevent the peaks and valleys that result in tax increases and deep cuts to schools, public safety and other vital services.

If passed, tax increases already included in the February 2009 budget package would be extended for one or two additional years. (The extensions of the tax increases are included in a part of a law that will only go into effect if Proposition 1A passes.)

The sales tax increase of 1 cent 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 tax increases would also be extended for two more years, through the 2012 tax year.

It requires the state to direct 3% of General Fund revenues into a “rainy day” budget stabilization fund each year, except when the fund is full or during economic downturns.

Proposition 1A increases savings in the “rainy day” budget stabilization fund from 5% to 12.5% of General Fund revenues.
 

Money can only be taken out of the rainy-day fund when there is a true budget deficit or an emergency.
 

Proposition 1A ensures that, each year, the state budget is consistent with state revenue trends over the past 10 years.
 

Any money above this amount will be saved into the “rainy-day” budget stabilization fund until it reaches 12.5%.
 

This prevents unsustainable spending of one-time spikes in revenue, which can lead to big deficits when revenues drop.
 

Once the rainy-day fund reaches 12.5% any revenue above and beyond this can only be spent on one-time expenditures, such as infrastructure projects.

Proposition 1B – Education Funding. Payment Plan
Corona Chamber Position: OPPOSE

Proposition 1B ensures that schools receive $9.3 billion over time, so that the billions in cuts California was forced to make during this unprecedented fiscal crisis are not permanent.

Payments to schools will come out of the newly created Rainy Day Fund, but not until 2011-12 when the fiscal outlook is expected to improve.

The funding guarantee in Proposition 1B is tied to the passage in Proposition 1A.

Proposition 1C – Lottery Modernization Act
Corona Chamber Position: OPPOSE

Proposition 1C brings in $5 billion immediately to the state, protecting California from further budget cuts and taxes increases.

Proposition 1C will modernize the Lottery, allowing it to update games and operations to reflect the best practices of other U.S. state lotteries.

Proposition 1C will allow the Lottery to take steps including:

Removing arcane rules that lower ticket sales.
Increasing the number of prizes to players.
Allowing the lottery to make long-term investments in new equipment.

Proposition 1C protects current levels of lottery funding for public education and enacts new accountability standards including independent audits and public reports.

Proposition 1D – Children’s Services Funding
Corona Chamber Position: To be determined on April 21, 2009.

Proposition 1D temporarily redirects a portion of excess funds from a voter-approved tobacco tax. Currently, state and local First 5 commissions are sitting on nearly $2.5 billion in unspent tax funds.

Proposition 1D redirects a portion of these funds to pay for children’s health and social services and to prevent deep cuts to kids’ healthcare and other programs.

Only a portion of the tobacco tax funds will be redirected, so existing programs currently funded by this revenue stream are protected.

Proposition 1E – Mental Health Funding Budget
Corona Chamber Position: To be determined on April 21, 2009.

Proposition 1E temporarily redirects a portion of 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.

Proposition 1F – Elected Officials’ Salaries
Corona Chamber Position: To be determined on April 21, 2009.

Proposition 1F prohibits legislators, the Governor and other state politicians from getting pay raises whenever California is running a budget deficit.

Since 2005, legislators have had their pay increased three separate times.

California’s legislators are among the highest paid in the nation, some earning more than $130,000 a year in salary plus tens of thousands more annually in perks and benefits.