Cal-Tax Research Bulletin


February
1996


Summaries of March 26, 1996 Ballot Propositions


Click here to see Cal-Tax's positions on these measures.

Proposition 192

Seismic Retrofit Bond Act of 1996

Legislative Statute (SB 146, Maddy)

Sponsor: Senators Ken Maddy and Bill Lockyer, Assembly Members Doris Allen, Willie Brown and Jim Brulte

Major Provisions:

Background:

After the 1989 Loma Prieta earthquake caused collapses of the Cypress viaduct on Route 880 and a section of the Bay Bridge, the Legislature enacted legislative priorities for the seismic retrofit of highway bridges throughout the state. Caltrans identified 1,039 bridges in need of retrofitting at a cost of approximately $722 million, funded from the State Highway Account (gas tax revenue). Following the 1994 Northridge earthquake, Caltrans identified an additional 1,330 highway bridges in need of seismic retrofitting. The Legislature placed an unsuccessful $2 billion general obligation bond on the June 1994 ballot, with $950 million earmarked for seismic retrofitting of highways and bridges. The remainder would have been directed to repair of damage and housing assistance for the Northridge earthquake. Proposition 1A was defeated, getting 47.5% of the vote.

Retrofitting of the 1,330 highway bridges identified in Phase II carries a price tag estimated at $1.35 billion. The retrofit of eight state-owned toll bridges (six in the San Francisco Bay area) will cost an additional $650 million, totaling $2 billion. To date, it has been assumed that the State Highway Account would pay for the highway bridge retrofitting and toll revenues would pay for the toll bridge retrofitting.

Work has begun on Phase II projects, funded from the State Highway Account. In addition, $56 million in toll bridge retrofitting funding has been authorized through March 1996, funded 20 percent from the State Highway Account and 80 percent from the Toll Bridge Revenues Account. If approved by voters, funds already expended from the State Highway Account for Phase II projects and the $56 million for toll bridge projects would be reimbursed from bond proceeds.

Fiscal Impact:

Assuming 25-year bonds are sold at an interest rate of 6 percent, the total cost would be $3.6 billion ($2 billion in principal, $1.6 billion in interest). The average annual payment from the General Fund would be about $142 million. (This is a static analysis. It does not consider that investment in public facilities creates an economic stimulus which creates private sector jobs. Higher levels of employment resulting from public facilities investment will partially offset debt service costs associated with borrowing during development and construction stages.)

Support Arguments:

Support arguments signed by: Kirk West, president, California Chamber of Commerce; George Deukmejian, former governor, State of California; Richard Andrews, director, State Office of Emergency Services; George Housner, professor emeritus, California Institute of Technology; Maurice Hannigan, retired commissioner, California Highway Patrol, and Glen Craig, former commissioner, California Highway Patrol.

Opposition Arguments:

Opposition arguments signed by: Assemblyman Bernie Richter, Assemblyman George House and Assemblyman Bruce Thompson.


Proposition 193

Property Taxation: Purchase or Change in Ownership: Parent-Child Transfer Exclusion.

Legislative Constitutional Amendment (ACA 17 of 1994, Knowles)

Sponsor: Assemblyman David Knowles

Major Provisions:

Background:

Under Proposition 13, real property in California is taxed on the basis of its acquisition value, and is reassessed when there is a change in ownership or when new construction occurs. "Special valuation" provisions have been created since passage of Proposition 13 for a variety of circumstances. Voters approved an amendment in November 1986 (Proposition 58), which allowed the Legislature to exempt from reassessment property transfers between parents and children.

Fiscal Impact:

State Government: Existing law would require the state to backfill any property tax loss to schools, which would be about half of any local property tax loss.

Local Government: According to the Legislative Analyst, because these purchases and transfers occur infrequently, the property tax revenue loss would not be significant. After several years, the loss statewide could be about $1 million annually.

Support Arguments:

Support arguments signed by: Assemblyman David Knowles, Senator K. Maurice Johannessen, and Assemblyman Bill Hoge.

Opposition Arguments:

Opposition arguments signed by: Gary B. Wesley, attorney at law.


Proposition 194

Prisoners: Joint Venture Program: Unemployment Benefits. Parole.

Legislative Statute (SB 103, Hurtt)

Sponsor: Senator Rob Hurtt

Major Provision:

Would prohibit inmates who participate in the Joint Venture Program (JVP), and then are released from prison, from collecting unemployment insurance benefits based on their work experience in the JVP.

Background:

Under the JVP in the state prison system, businesses may contract with the Department of Corrections to hire inmates to produce, on the grounds of state prisons, various goods and services for sale. According to the Legislative Analyst, about 200 inmates participated in Joint Venture businesses at any one time in 1995.

Businesses participating in the JVP pay the same types of payroll taxes as businesses not involved in the program, including unemployment insurance taxes. Existing law allows inmates to collect unemployment insurance benefits after their release from state prison based on their employment in the JVP.

The reason this measure must be approved by voters is because the JVP was approved by voters in 1990, and thus any amendments to the program must also be approved by voters.

Fiscal Impact:

State Government: According to the Legislative Analyst, the overall fiscal effect of the measure is likely to be minor.

Support Arguments:

Support arguments signed by: Rob Hurtt, Senate Republican leader; Jeff Thompson, legislative director, California Correctional Peace Officers Association; Tom McClintock, taxpayer advocate; Assemblyman Howard Kaloogian, and Dean Andal, member, State Board of Equalization.

Opposition Arguments:

Opposition arguments signed by: Stephen C. Birdlebough, member, Friends Committee on Legislation.


Proposition 195

Murder. Special Circumstances.

Legislative Statute (SB 32, Peace)

Sponsor: Senator Steve Peace

Major Provisions:

Background:

Current law imposes a sentence of 25 years to life for first-degree murder, unless one of 19 special circumstances is found to have existed which results in the imposition of the death penalty or life imprisonment without the possibility of parole. Many first-degree murders are also special circumstances and therefore carry a death penalty or life imprisonment sentence. Murders committed during carjacking and kidnap-carjacking are not defined as special circumstances. However, robbery is a special circumstance, and prosecutors have been able to use the robbery circumstance in carjacking prosecutions.

Murder of witnesses, prosecutors and judges in retaliation for, or to prevent the performance of, their official duty are also special circumstances requiring the death penalty or life imprisonment without parole.

Fiscal Impact:

According to the Legislative Analyst's Office, this measure would have minor additional state costs. Potential costs are diminished by the fact that many carjacking murders are currently prosecuted with the robbery special circumstance, which has the same effect as creating a special circumstance specifically for carjacking. The added special circumstance for murdering a juror would have little effect, because that crime occurs infrequently.

Support Arguments:

Support arguments signed by: Senator Steve Peace, Assemblyman Peter Frusetta, Michael Bradbury, district attorney of Ventura County; Assemblywoman Susan A. Davis, Assemblyman Jim Morrissey, and Michael Ferguson, district attorney of Nevada County.

Opposition Arguments:

Opposition arguments signed by: Senator Milton Marks, Right Reverend Jerry A. Lamb, bishop, Episcopal Diocese of Northern California; Mike Farrell, president, M, J & E Productions, Inc.; Rabbi Leonard I. Beerman, Los Angeles; Jeanette Arnquist, director of human concerns, Roman Catholic Diocese of San Bernardino, and Sam Reese Sheppard, director, Murder Victims' Families for Reconciliation.


Proposition 196

Murder. Punishment.

Legislative Statute (SB 9, Ayala)

Sponsor: Senator Ruben Ayala

Major Provision:

Would add first-degree murder by drive-by shooting to the list of special circumstances that require the death penalty or life imprisonment without parole.

Background:

Current law imposes a sentence of 25 years to life for first-degree murder, unless one of 19 special circumstances is found to have existed which results in the imposition of the death penalty or life imprisonment without the possibility of parole. Many first-degree murders are also special circumstances and therefore carry a death penalty or life imprisonment sentence. Murders committed during a drive-by shooting are not defined as special-circumstances.

Fiscal Impact:

The Legislative Analyst's Office says this measure would increase state costs, primarily as a result of longer prison sentences for those sentenced to life imprisonment without the possibility of parole. Costs are unknown, potentially ranging into several millions of dollars annually.

Support Arguments:

Support arguments signed by: Governor Pete Wilson, Senator Ruben Ayala, and Greg Totten, executive director, California District Attorneys Association.

Opposition Arguments:

Opposition arguments signed by: Senator Milton Marks, Robert P. Owens, retired chief of police, Oxnard; Right Reverend Jerry A. Lamb, bishop, Episcopal Diocese of Northern California; Michael Hennessy, sheriff, San Francisco, and Wilson C. Riles Jr., executive director, American Friends Service Committee of Northern California.


Proposition 197

Wildlife. Mountain Lions.

Legislative Statute (SB 28, Leslie)

Sponsor: Senator Tim Leslie

Major Provisions:

Background:

Proposition 117 established special protections for mountain lions and created the Habitat Conservation Fund (HCF), earmarking $30 million a year from the general fund and various environmental special funds. The HCF generally provides funds for acquisition of habitat lands for mountain lions, deer, other rare animals and plants, wetlands, and parks.

Proposition 117 prohibits the killing or taking of mountain lions except when public safety is threatened, livestock are damaged, or people are attacked. In 1994, 131 lions were killed because of safety or damage concerns.

Mountain lion populations have increased from an estimated 3,000 in the 1970s to about 6,000 in 1994. In 1994, there were 322 confirmed incidents of lion-inflicted damage to livestock and pets. Five people have been killed by mountain lions since 1890, and two of those killings happened in 1994. Other attacks have also been reported, heightening public perceptions of danger.

Fiscal Impact:

The measure would reallocate up to $250,000 annually for three years from land acquisition to the Department of Fish and Game for preparation and implementation of the mountain lion management plan. After 1998-99, the measure calls for a maximum of $100,000 annually until 2020. The measure also declares legislative intent that an additional amount up to $250,000 per year be appropriated from other unidentified sources, to be used for public safety and information programs related to mountain lions.

Support Arguments:

Support argument signed by: Jack Parnell, former director, California Department of Fish and Game; Donald Neal, wildlife ecologist; Senator Tim Leslie; Terrence Eagan, former undersecretary, California Resources Agency; Wayne Long, former chair, California Resource Conservation Commission, and Steven J. Arroyo, father of mountain lion attack victim.

Opposition Arguments:

Opposition argument signed by: Senator Henry Mello; Maurice Getty, president, California Park Rangers Association; Wayne Pacelle, vice president of government affairs, Humane Society of the United States; Patricia Forkan, president, Humane Society of the United States; Bernadette M. Ertl, Sierra Club of California, and Jill Dampier, California Park Rangers Association.


Proposition 198

Elections. Open Primary.

Initiative Statute

Sponsor: Richard B. Ferrari and Trish Hooper

Major Provisions:

Background:

Open primaries in California are considered one response to increased polarization and partisanship in the California Legislature. It would also offer a growing number or independent voters an opportunity to vote in primary elections.

For years, California had a cross filing system where candidates could enter all parties' primaries. This tended to minimize partisanship but was repealed in 1959. Proposition 198 is analogous to the current special election procedure where all candidates are listed on a single ballot.

Fiscal Impact:

Local governments should realize some savings primarily due to preparation of fewer ballots. Net savings would be insignificant.

Support Arguments:

Support arguments signed by: Becky Morgan, former state senator; Senator Lucy Killea; Eugene C. Lee, director of the Institute of Governmental Studies, University of California (1967-1988); Dan Stanford, chairman, California Fair Political Practices Commission (1983-1986), and Houston Flournoy, state controller (1966-1974).

Opposition Arguments:

Opposition arguments signed by: John S. Herrington, chair, California Republican Party; Bill Press, chair, California Democratic Party; Bruce Herschensohn, senior fellow, Claremont Institute; John Van de Kamp, former California Attorney General, and Alison Dundes Renteln, acting director, USC Unruh Institute of Politics.


Proposition 199

Mobilehome Rent Assistance. Mobilehome Rent Control Restrictions.

Initiative Statute

Sponsor: Californians for Mobilehome Fairness

Major Provisions:

Background:

Roughly 400,000 California households live in factory-built mobilehomes. Mobilehomes are most often placed in rented spaces in mobilehome parks. Mobilehomes are difficult and expensive to move. Typically, mobilehomes are sold when the owners move to another location.

Local rent control laws exist in about 100 cities and counties, limiting the amount of rent mobilehome park owners may charge those renting space. The laws typically limit increases to amounts equal to or less than inflation. Some local ordinances allow rent increases when the mobilehome is sold, transferred or sublet. Rent control laws apply to nearly 150,000 mobilehomes in California.

Fiscal Impact:

According to the Legislative Analyst, cities and counties may experience increased costs to administer phase-out of rent control. Cost savings could also result. Local government would have decreased responsibility to oversee rent increases. In the long term, local agencies would experience savings up to several million dollars annually when local rent control is eliminated.

Support Arguments:

Support arguments signed by: Lewis K. Uhler, president, National Tax Limitation Committee; Sandra L. Butler, president, United Seniors Association, and Vickie M. Talley, executive director, Manufacturing Housing Educational Trust of Orange, Riverside and San Bernardino Counties.

Opposition Arguments:

Opposition arguments signed by: Dave Hennessey, president, Golden State Mobilehome Owners League; Mary Tucker, state legislative committee chair, American Association of Retired Persons, and Lois Wellington, president, Congress of California Seniors.


Proposition 200

No-Fault Motor Vehicle Insurance. Tort Liability.

Initiative Statute

Sponsor: Alliance to Revitalize California

Major Provisions:

Background:

Legal costs in California are high, both for the private sector and for government. Cal-Tax's California Taxing and Spending publication shows that California state and local governments rank fourth highest in the nation in spending on the judicial and legal system. These costs are 51% higher than the national average.

Backers of this measure say bodily injury claims make up the bulk of insurance costs and invite the most fraud. They state that more than $2 billion per year in legal fees - almost 20% of auto insurance premiums - is paid to auto accident attorneys.

Fiscal Impact:

The Legislative Analyst's Office estimates state and local government savings and costs as follows:

The net effect of the above estimates is uncertain, but probably a net savings to state and local governments.

Private companies would likely realize savings from reduced liability costs, especially companies with large vehicle fleets. Proponents claim that companies will save the entire cost of their current auto liability insurance because employees' bodily injury claims would be covered under workers' compensation insurance. Medical insurance costs could decrease also, since PIP insurance would pay benefits first for auto accident injuries.

Support Arguments:

Support arguments signed by: Jennifer Frank, director, Voter Revolt to Cut Insurance Rates; Andrew Tobias, winner, Consumer Federation of America Media Service Award; Jim Conran, executive director, Consumers First, and M. J. Hannigan, former commissioner, California Highway Patrol.

Opposition Arguments:

Opposition arguments signed by: Wendell Phillips, president, California Council of Police and Sheriffs; Dr. Eugene Mitchell, president, Consumer Federation of California, and Harvey Rosenfield, author of Proposition 103.


Proposition 201

Attorneys' Fees. Shareholder Actions. Class Actions.

Initiative Statute

Sponsor: Alliance to Revitalize California

Major Provisions:

Background:

When a corporation's stock price fluctuates, investors sometimes sue the company to try to recoup their losses, claiming that the company did not provide proper information to investors. Shareholder litigation is a growing and serious problem, especially with younger companies which have more volatile stock prices. Silicon Valley high-technology companies have been significantly affected by these lawsuits, causing losses of millions of dollars.

Recently enacted federal legislation makes similar changes to federal court procedures, and this measure seeks to change California state court procedures to ensure that future shareholder lawsuits do not simply shift from federal courts to the state courts.

Fiscal Impact:

According to the Legislative Analyst's Office, the fiscal effect of this measure is unknown, but probably insignificant, since few of these cases are tried in state courts. This analysis was written before the federal law was approved, and does not account for potential shifts of cases from federal courts to the state courts if this proposal is not enacted.

Support Arguments:

Support arguments signed by: Charles Schwab, CEO, Charles Schwab & Co.; Kirk West, president, California Chamber of Commerce; Lewis K. Uhler, president, National Tax Limitation Committee, and Alan Shugart, chairman, Seagate Technology, Inc.

Opposition Arguments:

Opposition arguments signed by: Howard L. Owens, legislative director, Congress of California Seniors, Inc., and Leah Kane, chair, Keating Victims Association of Leisure World, Laguna Hills, California.


Proposition 202

Attorneys' Contingent Fees. Limits.

Initiative Statute

Sponsor: Alliance to Revitalize California

Major Provisions:

Background:

Backers of this measure say that large contingency fees (33% to 50%) are an incentive for attorneys to file numerous frivolous lawsuits in hopes that a few suits may "hit the jackpot." The expenses caused by a high volume of lawsuits are borne by both the private and public sectors, requiring greater tax resources to be dedicated to courts, rather than to more productive public spending, and exposing companies to large financial risks.

Fiscal Impact:

In concept, this measure could lead to reduced litigation costs for both the public and private sectors by providing an incentive for early settlement of litigation. It may reduce the number of "nuisance" lawsuits by reducing attorneys' monetary incentives to file those suits.

Support Arguments:

Support arguments signed by: Mary Anderson, executive director, California Business Roundtable; Garry DeLoss, former executive director, Utility Consumer Action Network; Thomas Proulx, author of Quicken personal finance software, and Michael Johnson, policy director, Voter Revolt to Cut Insurance Rates.

Opposition Arguments:

Opposition arguments signed by: Candace Lightner, founder, Mothers Against Drunk Driving; Harvey Rosenfield, director, Foundation for Taxpayer and Consumer Rights; Michael Shames, executive director, Utility Consumer Action Network, and Lois Wellington, president, Congress of California Seniors.


Proposition 203

Public Education Facilities Bond Act of 1996

Legislative Statute (AB 1168, Campbell)

Sponsor: Assemblyman Robert Campbell

Major Provisions:

Background:

Since 1982, voters have approved $7.75 billion in state G.O. bond measures for new construction and modernization of K-12 schools. The most recent statewide school bonds failed on the June 1994 ballot. Those measures were:

According to the Governor's budget summary, K-12 school enrollment will increase between 100,000 and 150,000 pupils a year through the rest of this decade. This places pressure for expanded school capacity. The Department of Finance estimates total capital outlay need of $30 billion over the next 10 years for K-12 and higher education. The State Allocation Board has approved (with no funding) priority one and priority two K-12 school projects totaling $960 million. Applications for state funding of new K-12 school facilities total $7.2 billion.

Higher education enrollments fell after large student fee increases in the early 1990s. From 1991-92 to 1994-95, enrollment in the UC, CSU, and CCC systems fell by almost 34,000 students. However, enrollments are expanding again and are expected to grow by almost 28,000 students in 1996-97. The current year brought enrollment increases of about 6,000 full-time equivalent students.

Prior to 1986, tidelands oil revenues financed the construction of higher education facilities. Since then, lower tidelands oil revenues have led to partial reliance on G.O. bonds. Previously approved ballot measures total almost $2.4 billion. Higher education construction financing has also been achieved by the use of lease payment bonds authorized by the Legislature. (Lease payment bonds, because less secure, are more costly to the state.)

Prior to 1990, California was considered a low-debt state. State payments for all kinds of debt service (including revenue bonds and lease-purchase bonds, as well as G.O. bonds) were 2.5% of the general fund in 1990-91. That ratio rose to an expected peak of 5.1% during this fiscal year. The current ratio is considered a moderate debt level compared to other states.

According to the Legislative Analyst's Office, if no additional bonds are approved, general fund debt service will begin declining next fiscal year and will be 4.6% of the general fund in 1998-99. If this measure and the transportation bond on the March ballot are approved, debt service would peak in 1998-99 at 5.3% of the general fund, an increase of 0.7% from the current trend.

California's bond rating has declined in recent years, mostly as a result of short-term budget deficits. It is possible that a larger debt service burden could cause a reduction in the credit rating of the state.

Fiscal Impact:

If $3 billion in new bond authorizations are sold at 7% interest over 20 years, the total cost to the General Fund would be about $5.2 billion with annual average payments for principal and interest of about $260 million. (The official fiscal impact statement is a static analysis. It does not consider that investment in public facilities creates an economic stimulus which creates private sector jobs. Higher levels of employment resulting from public facilities investment will partially offset debt service costs associated with borrowing during development and construction stages.)

Support Arguments:

Support arguments signed by: Fran Packard, president, League of Women Voters of California; Lois Tinson, president, California Teachers Association; Kirk West, president, California Chamber of Commerce; Carol Ruley, president, California State Parent-Teacher Association; Howard Owens, legislative director, Congress of California Seniors; Dan Terry, president, California Professional Firefighters.

Opposition arguments:

Opposition arguments signed by: Gail Lightfoot, chair, Libertarian Party of California; Ted Brown, member, Libertarian Party Executive Committee; Pam Probst, teacher.


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