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2014 Ballot Measure Recap: League Board Approves Positions for Rainy Day Reserve Fund, MICRA Initiatives

Questions Remain on Fate of Water Bond

July 30, 2014
The League of California Cities board of directors recently met and approved position recommendations from the League’s policy committees on Proposition 44, the Rainy Day Budget Stabilization Fund Act and Prop. 46, the Troy and Alana Pack Patient Safety Act.
 
The following is a brief description of all seven ballot measures that are currently on the 2014 November general election ballot.

Proposition 43: Safe, Clean, and Reliable Drinking Water Supply Act of 2012
Passed by the Legislature and signed by Gov. Arnold Schwarzenegger in 2009, Prop. 43 is an $11.1 billion water bond that includes the following major spending proposals:
  • $1.4 billion for "integrated regional water management projects;"
  • $2.25 billion for projects that "support delta sustainability options;"
  • $3 billion for water storage projects;
  • $1.7 billion for ecosystem and watershed protection and restoration projects in 21 watersheds;
  • $1 billion for groundwater protection and cleanup; and
  • $1.25 billion for "water recycling and advanced treatment technology projects." 
The water bond was originally scheduled to appear on the 2010 ballot as Prop. 18. Due to significant criticism over the size of the bond, the amount of earmarked projects ($2 billion) and a lack of public support, the Legislature voted to postpone the ballot vote until 2012. In 2012, however, the Legislature postponed the measure once again and placed it on the upcoming November general election ballot. 
 
The Legislature is continuing negotiations with Gov. Jerry Brown and stakeholders to potentially replace Prop. 43 with a smaller water bond. Although the official deadline to add measures to the ballot has passed, the Legislature has some flexibility to make changes. Any actions resulting from the negotiations should be complete by the second week in August.  
 
League Position: No position
The League adopted a set of principles earlier this year for items that should be included in a water bond. Once it is clear which version of a water bond will be placed before the voters, the League will consider its position based upon the adopted principles. Any position will be subject to the League board’s approval.
 
Proposition 44: Rainy Day Budget Stabilization Fund Act
The measure establishes new state budget reserve fund requirements and policies and was approved by the Legislature on May 15, 2014, with strong bipartisan support. In conjunction with this action, the Legislature removed ACA 4 of 2009 from the November ballot, a previously adopted state reserve fund proposal that had not yet been submitted to the voters.
 
Specifically, the measure:
  • Requires 1.5 percent of general fund (GF) revenues to be placed annually into a reserve fund called the Budget Stabilization Account (BSA). Caps the reserve at no more than 10 percent of GF revenues, and requires any additional contributions to be spent on infrastructure.
  • Directs 50 percent of funds, that would have otherwise been deposited into the BSA to pay down any of the following through FY 2029-2030:
    • Previous Prop. 98 school obligations;
    • Previous budgetary loans;
    • Local mandates owed pre FY 2004-05; or
    • Supplemental payments to reduce pension and benefit liabilities.
  • Allows for budget reserve withdrawals or deposit suspensions following a gubernatorial finding of a “budget emergency.”  
  • Creates a Prop. 98 reserve where capital gains revenues exceeding 8 percent of GF revenues (that are allocated to the Prop. 98 guarantee) can be placed into a reserve fund. Increases in funding related to capital gains would be retained for future years of decline. Deposits would be made after required increases in enrollment growth and cost-of-living and once the current maintenance factor was paid. 
League Position: Support
The League believes Prop. 44 will bring more stability to the state’s finances and supports the measure’s key principles of fiscal discipline, debt repayment and saving in preparation for the next economic downturn. 
 
Proposition 45: Insurance Rate Public Justification and Accountability Act
Under current law, the California Insurance Commissioner has authority to review health insurance rate changes and determine if the proposed changes are reasonable. Prop. 45 would augment this authority and require that rate changes to individual and small-group health insurance plans be justified by the health insurer and submitted to the Insurance Commissioner for approval prior to taking effect. The measure also prohibits health, auto and home insurance companies from using a person’s credit or prior insurance coverage history to determine eligibility or rates.
 
League Position: No position
 
Proposition 46: Troy and Alana Pack Patient Safety Act of 2014
In response to ever-increasing medical liability costs, the Governor signed the Medical Injury Compensation Reform Act (MICRA) in 1975 to cap medical malpractice damages. Under MICRA, noneconomic damages (pain and suffering, emotional distress) are capped at $250,000, while economic damages (medical costs, lost wages, and lifetime earning potential) are unlimited. Prop. 46 seeks to repeal the cap and increase the state’s medical malpractice damage limits. The nonpartisan Legislative Analyst Office (LAO) predicts that state and local government health care costs would increase “likely ranging from the tens of millions of dollars to several hundred million dollars annually” if the cap were to increase as proposed.    
 
Specifically, the measure:
  • Adjusts the current $250,000 cap on noneconomic damages for inflation, which, according to LAO, would bring the new cap to $1.1 million;
  • Requires reporting of suspected physician drug or alcohol impairment or failure to follow appropriate standard of care;
  • Requires hospitals to conduct alcohol and drug testing on physicians; and
  • Requires health care practitioners and pharmacists to consult the Controlled Substance Utilization and Review Evaluation System (CURES). CURES are an electronic monitoring system for the prescribing and dispensing of specific controlled substances. It is monitored by the California State Department of Justice and is intended to curb prescription drug abuse. 
League Position: Oppose
While the measure contains other provisions of undeniable merit, the League opposes the significant cost increases local governments may incur due to increased medical liability costs resulting from repealing the MICRA cap.
 
Proposition 47: The Safe Neighborhoods and Schools Act
The measure reduces the penalty for specified nonviolent crimes from a felony to a misdemeanor. It also directs monetary savings from lower incarceration/public safety costs to the newly established Safe Neighborhoods and Schools Fund.
 
Felony crimes of shoplifting, theft, forgery and fraud would be reduced to misdemeanor offenses as long as the value of the property stolen/defrauded does not exceed $950. The measure also reduces possession of specified narcotic drugs and concentrated cannabis from a felony to a misdemeanor and imposes new fines and truncated jail sentences.
 
Prop. 47 authorizes the resentencing of individuals convicted of the crimes listed above, unless the defendant has prior convictions for specified violent or serious crimes. Individuals up for resentencing consideration would be subject to a criminal history and risk assessment review prior to resentencing. 
 
According to estimates, reducing these crimes to misdemeanors would result in public safety savings ranging from $150 million to $250 million annually. Savings would be determined by the Department of Finance and monies directed to the Fund according to the following formula:
League Position: Pending
The League’s Public Safety Policy Committee will meet during this year’s Annual Conference & Expo in Los Angeles to evaluate and consider a position recommendation on this measure that will be submitted for final board approval.
 
Proposition 48: Referendum to Overturn Indian Gaming Compacts
Repeals current law prescribed by AB 277 (Hall, Chapter 51, Statues of 2013) ratifying separate tribal-state gaming compacts entered into between the state of California and North Fork   Rancheria Band of Mono Indians and the Wiyot Tribe. The measure would also repeal the California Environmental Quality Act (CEQA) exemptions extended to both tribes under the AB 277 authorizing the building of off-site reservation casino establishments.
 
League Position: No position
 
Proposition 49: Campaign Finance, Legislative Advisory Question
Unlike other measures on the ballot, Prop. 49 poses a non-binding question to voters. It pertains to the overturning the 2010 U.S. Supreme Court ruling that independent political expenditures of corporations, unions and associations were protected political speech under the First Amendment and could therefore not be banned.

Specifically, the measure asks voters:
 
“Shall the Congress of the United States propose, and the California Legislature ratify, an amendment or amendments to the United States Constitution to overturn Citizens United v. Federal Election Commission (2010) 558 U.S. 310, and other applicable judicial precedents, to allow the full regulation or limitation of campaign contributions and spending, to ensure that all citizens, regardless of wealth, may express their views to one another, and to make clear that the rights protected by the United States Constitution are the rights of natural persons only?”
 
Note: Approval of Prop. 49 will not result in a new law. The measure’s purpose is more symbolic and serves as a way to gauge public opinion on the proposed topic. 
 
League Position: No position


 
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