Proposition 1A

Title: Class-Size Reduction Kindergarten-University Public Education Facilities Bond Act of 1998. Legislative Bond Act.

Sponsor: Senator Leroy F. Greene, Assemblymembers Antonio Villaraigosa and Keith Olberg.

Legislative History: SB 50 (1998); Assembly Floor (69-9); Senate Floor (32-6).

Major Provisions:

• Provides for the sale of $9.2 billion in state general obligation bonds to fund school construction, reconstruction, and modernization.
• Provides K-12 schools with $6.7 billion to be used as follows:
  • At least $2.9 billion to buy land and construct new buildings.
  • At least $2.1 billion for reconstruction or modernization of existing buildings.
  • Up to $700 million for facilities needed for class-size reduction.
• Up to $1 billion for local schools that cannot provide local matching funds or will incur unusual costs.
• Provides higher education (UC, CSU, and community colleges) with $2.5 billion for new buildings, modification of existing buildings, and equipment for use in those buildings.
• Limits school construction-related developer fees by prohibiting cities and counties until 2006 from charging the fees as a condition of approving new development. After the primary election of 2006, cities and counties may charge the fees for up to half the cost of school construction if state funds are available. If state funds are not avail-able, 100 percent of the costs of school construction may be charged to developers.
• Allows school districts to levy developer fees with current caps of $1.93 per square foot on residential buildings and 31 cents per square foot on commercial projects (these amounts will adjust for inflation). Those caps may be exceeded under certain conditions involving school crowding, debt levels, and attempted bond elections. The higher fees could be collected to pay for the local 50 percent match required to receive state bond funds. If state funds are not available, districts could charge fees equal to 100 percent of the costs of a school project.
• Provides funds to local districts based on a fixed grant per projected unhoused pupil. Any savings a district can realize in constructing new buildings may be kept by the district to be used for additional facilities. Districts would be required to provide a 50 percent match of local funds for any new construction and a 20 percent match for modernization projects. The matching requirement is expected to cause greater attention to cost saving and lead to 12 percent to 15 percent lower costs, which could make $580 million available for additional projects - enough to pay for up to 145 additional new schools.
• Changes the school construction process to allow greater flexibility in choosing state, local, or private architects, eliminate state-funded change orders, and allow for one-policy "wrap-up" insurance for a project. It is thought that these changes could reduce costs 8 percent to 18 percent.
• Requires the State Allocation Board to compile a stock of standard, "off-the-shelf" plans appropriate for schools in various climates and geographical conditions. Schools may use the plans, which could save up to 15 percent in project costs.
• Requires school districts to set aside sufficient maintenance funds for new buildings so that future deferred maintenance costs would be avoided.
• Provides a separate state appropriation of $160 million over four years to offset some of the costs of developer fees to low-income home buyers and developers of low-income rental housing.

Background:
Various estimates show school facility needs of $20 billion to $40 billion over the next 10 years. The class-size reduction program, in which the state has provided funding to reduce class sizes in K-3 classes and some 9th grade classes, has increased the demand for additional or expanded school facilities.

California's universities and community colleges are also experiencing fast growth in enrollments. Although enrollments slowed significantly and even declined in the early 1990s, they have rebounded since the economy began recovery.

Fiscal Impact:
According to the Legislative Analyst's Office (LAO), debt service on this bond would average about $600 million per year. This estimate assumes that the bonds could be sold for an interest rate of 5 percent for a period of 25 years.

It has been generally accepted in recent years that a prudent level of debt service for the state would be 5 percent or less of the state general fund. Although California had reached the 5 percent level in recent years, the general fund has grown dramatically because of increased revenues brought in by the strong economy. Because of this growth and a slowing in issuance of new debt, current debt service loads are about 4.3 percent of the general fund. As currently authorized bonds are sold, this ratio will increase to 4.5 percent next year and decline thereafter. LAO estimates that if Proposition 1A were approved, debt service would rise to 4.7 percent of the general fund in 2000-01 and 2001-02 and decline thereafter.

Support Arguments:

• Proposition 1A is a necessary investment in our future to reduce classroom overcrowding, improve safety, and upgrade wiring so students can use needed computers.
• Cost-saving measures in this proposal will save hundreds of millions of dollars and allow for 145 new schools to be built with the savings alone.
• The bond will not raise taxes or hurt other public services.
• Failure of this measure would put local taxpayers at risk for greater property tax increases to fund school construction.

Signers of Support Arguments: Larry McCarthy, president, California Taxpayers' Association; Lois Tinson, president, California Teachers Association; Howard Owens, director, Congress of California Seniors; Daniel Terry, president, California Professional Firefighters; Assemblymember Deborah Ortiz; Allan Zaremberg, president, California Chamber of Commerce.

Opposition Arguments:

• An average family would have $2,000 of their taxes used to pay for these bonds over the life of the bonds.
• Bonds are the most expensive way to fund school construction. Pay-as-you-go is much cheaper, and California should have used its 1998-99 state budget surplus for school construction.
• This bond is almost as large as all the state K-12 bonds approved since 1982 added together. It is three times larger than the largest approved bond.
• A "no" vote will force politicians to behave responsibly and use surplus funds for school construction instead of on "pork barrel" projects.

Signers of Opposition Arguments: Assemblymember Tom McClintock; John Courtney, president, California Republican Assembly; Senator Ray Haynes; Lewis K. Uhler, president, National Tax Limitation Committee; Edward J. "Ted" Costa, CEO, People's Advocate, Inc.

Proposition 1

Title: Property Taxes: Contaminated Property. Legislative Constitutional Amendment.

Sponsor: Assemblyman Curt Pringle.

Legislative History: ACA 22 (1998); Assembly Floor (76-0); Senate Floor (30-3).

Major Provisions:

• Directs the Legislature to permit owners of "qualified contaminated property" to transfer the base-year value to property of equal or lesser value that is acquired or newly constructed as a replacement for the contaminated property. Under certain circumstances, the replacement property can be in a different county.
  Alternatively, the Legislature is directed to exclude from the definition of "new construction" the repair or replacement of a structure damaged or destroyed by environmental contamination. The replacement structure must be similar in size, utility and function to the original structure.
• To qualify, these conditions must be met:
• A residential property must be made uninhabitable or a nonresidential property must be made unusable by an environmental problem.
• The current owner must not have known of the environmental problem when the property was purchased or built.
• A state or federal government agency designates the property as a toxic hazard, environmental hazard, or environmental cleanup site.
• A property is substantially damaged or destroyed by environmental cleanup efforts.
• A lead government agency stipulates that the property was not made uninhabitable or unusable by an act or omission of the current owner.
• Replacement property must have been acquired, constructed, or repaired after January 1, 1995 and within five years after ownership of the contaminated property is sold or transferred.

Background:
Proposition 13 of 1978 provides that the assessed value of property for tax purposes is its value as of 1975-76, or, thereafter, the appraised value when purchased, newly constructed, or a change in ownership has occurred. Property owners, who through no fault or knowledge of their own found that their property had been contaminated prior to their acquisition of the property, faced the very real dilemma that the sale and replacement of that contaminated property or the remediation of that property necessarily resulted in an increase in their property taxes. This occurs because the replacement property would be 'newly purchased' or the remediation would constitute 'new construction' triggering the reassessment features of Proposition 13.

Fiscal Impact:
The Legislative Analyst's Office estimates the fiscal impact at "probably less than $1 million annually" to schools, counties, cities, and special districts. The Board of Equalization estimates the loss to be about $10,000 per year.

Support Argument:
Current law already protects innocent homeowners who lose their homes to natural disasters. If an earthquake, fire or flood destroys your home, you are allowed to rebuild or buy a new home without losing your existing Proposition 13 tax protection. This same degree of fairness should be extended to those whose property is destroyed by health-threatening toxic waste.

Signer of Support Arguments: State Assemblyman Curt Pringle.

Opposition Arguments: None filed.

Proposition 2

Title: Transportation: Funding. Legislative Constitutional Amendment.

Sponsor: Assemblyman Kevin Murray.

Legislative History: ACA 30 (1998); Assembly Floor (71-2); Senate Floor (32-1).

Major Provisions:

• Restricts the Legislature's ability to borrow from transportation funds.
• Allows loans to the state general fund from fuel taxes and other taxes and fees on motor vehicles (not including the vehicle license fee) if one of these conditions is met: The amount is paid back within the fiscal year or within 30 days after enactment of the budget bill for the following year, or the amount is paid back within three fiscal years if the governor has proclaimed a state of emergency that will result in a significant negative fiscal impact. Such loans also are allowed if general fund revenues, adjusted for population and inflation growth, are lower than the previous year.
• Funds in the Public Transportation Account in the State Transportation Fund (which are mostly derived from sales tax collections on motor vehicle fuels) may only be loaned to the general fund under similar circumstances as above, except that the comparison of general fund revenues to the previous year is an actual dollar comparison without adjusting for inflation and population growth.
• Transportation funds may be loaned to local government agencies for transportation purposes if paid back within four years with interest at the rate paid on money in the Pooled Money Investment Account.
• Local transportation funds would be designated trust funds and may not be abolished.

Background:
In November 1990, Cal-Tax supported, and voters approved, Proposition 111, which raised gas taxes by 9 cents per gallon to fund important transportation improvements. This increase doubled the gas tax rate. One argument used to convince voters to approve such a large increase was that the money was to be dedicated for transportation projects and was not be diverted to other uses. In fact, gas tax revenues have been dedicated for highway and transportation uses for many decades.

Dedicated transportation funds may not be appropriated for non-transportation uses, but the state Constitution does allow those funds to be loaned temporarily to the state general fund, although it does not define the term "temporarily." These funds are often borrowed, sometimes for very short terms, to aid in the management of state cash flow. However, throughout the 1990s, the Legislature and governor have approved seemingly permanent loans and transfers of transportation funds to the general fund. Some of the transfers have been used to pay debt service on transportation bonds and have been upheld in court. The loans have been used simply to provide cash to the general fund and are supposed to be temporary, but almost all have never been repaid. These loans and transfers total about $600 million.

In addition, the Legislature authorized Orange County to transfer $750 million from its local transportation funds during the height of the county's insolvency crisis. Los Angeles County was also allowed to transfer $50 million from its funds at that time.

All together, these state and local diversions of transportation funds amount to about $1.4 billion. To prohibit continuing diversions of these funds, a coalition of business, labor, highway contractors and engineers, and others sponsored ACA 30 in the Legislature, which placed this measure on the ballot.

Fiscal Impact:
According to the Legislative Analyst's Office, fiscal impact is unlikely because it would not result in additional borrowing costs or savings. This measure does not require repayment of past loans or transfers. However, it would have the impact of safeguarding funds for future transportation projects, and that could result in increased transportation spending in the future.

Support Arguments:

• The people voted to increase gas taxes and were told the funds would be earmarked for transportation projects, but elected officials and bureaucrats found ways to siphon more than $1 billion to other programs.
• Roads are getting worse and bad roads cost money for additional car repairs. The state is behind on plans to improve and maintain highways and bridges. Congestion is increasing, causing greater pollution, inconvenience and economic harm.
• Proposition 2 will restore fiscal responsibility to help solve these problems.

Signers of Support Arguments: State Assemblyman Kevin Murray; Allan Zaremberg, president, California Chamber of Commerce, and Donald Doser, business manager, AFL-CIO Operating Engineers.

Oppose Arguments: None filed.

Proposition 3

Title: Partisan Presidential Primary Elections. Legislative Initiative Amendment.

Sponsors: Senators John Lewis, John Burton and Ross Johnson.

Legislative History: SB 1505 (1998); Assembly Floor (52-12); Senate Floor (28-0).

Major Provisions:

• Limits, at a presidential primary, voting on delegates to a political party's presidential nominating convention to persons who are affiliated with that political party.
• Requires the printing of separate ballots for use at a party's presidential primary election by persons eligible to participate.
• Requires that the ballots prominently specify the name of the political party.

Background:
Proposition 198, adopted in March 1996, allows all voters in primary elections, including those not affiliated with a political party, to vote for any candidate for an office regardless of the candidate's or the voter's political party affiliation. This is the open primary system. Voters at a primary election are allowed to vote across party lines and voters not registered as a member of a political party are permitted to nonetheless vote for a candidate in the primary election. The candidates of each political party who receive the most votes become the nominees of the party at the next general election.

This proposal would prohibit voters from crossing party lines when voting for delegates to a political party's presidential nominating convention.

The concern raised by the proponents of this proposition is that California stands to be excluded from either or both of national Democratic and Republican presidential selection process because each party has rules permitting only party members to participate in the selection of delegates to their respective national conventions.

Fiscal Impact:
According to the Legislative Analyst, this measure would result in minor costs to state and local government.

Support Arguments:

• The national Democratic, Republican and other political parties have rules that prohibit them from accepting convention delegations elected in open primary states.
• The U.S. Supreme Court has ruled that national political parties may refuse, according to their own rules, to seat delegations from open-primary states at the parties' national presidential nominating conventions.
• Proposition 3 must be approved and enacted at this statewide election - otherwise California voters will NOT be allowed to participate in the year 2000 national presidential nominating process.

Signers of Support Arguments: State Senator John Lewis, Senate President Pro Tem John Burton, political commentator Bruce Herschensohn, Assembly Speaker Antonio Villaraigosa, Assembly Republican Leader Bill Leonard.

Opposition Arguments:

• The truth is that there are 24 states with some version of the open primary. And California voters passed the open primary in 1996 by 60 percent of the vote.
• National political party bosses are not going to frustrate the voters of California by refusing to honor their votes.
• To pass Proposition 3 means that independent voters (those not registered in any party) cannot vote in the presidential primary. Neither can voters registered in one party cross over and vote for a candidate from another party.
• Proposition 3 is yet another attempt by political power brokers to overturn the will of the voters.

Signer of Opposition Arguments: State Assemblyman Jack Scott.

Proposition 4

Title: Trapping Practices. Bans Use of Specific Traps and Animal Poisons. Initiative Statute.

Sponsors: Alan Hugh Berger and A. Aaron Medlock of "Protect Pets and Wildlife."

Major Provisions:

• Prohibits recreational and commercial trappers of fur-bearing and nongame mammals from using traps that grip the animal's body or body parts, including, steel-jawed legholds, padded-jaw legholds and snares. Cage and box traps, nets, suitcase-type live beaver traps, and common rat and mouse traps would not be considered body-gripping traps.
• Bans commerce of mammals' raw fur if the animals were captured in California by body-gripping traps.
• Forbids all persons, including government employees, from using and authorizing the use of steel-jawed and padded-jawed legholds to capture mammals. An exception would be made for government employees who, in extraordinary cases, have exhausted all other methods to protect human health or safety, by allowing the use of the padded-jaw leghold trap.
• Outlaws the use of sodium fluoracetate (otherwise known as Compound 1080) or sodium cyanide to poison any animal.
• Specifies that violations would be punishable by a $300 to $2,000 fine or county jail imprisonment for not more than a year.

Background:
The various types of mammals include: fur-bearing mammals, which are typically trapped for their commercial value; game mammals, which are commonly hunted for sport; fully protected mammals, which have legal protection; and nongame animals, which include all other mammals. In California, licenses must be obtained by the state Department of Fish and Game to use specified traps to capture or kill certain fur-bearing, game and nongame mammals.

Moreover, landowners and government employees can shoot, trap or poison mammals if they damage crops, livestock, and other property, kill endangered species, or pose a threat to public health and safety. Some government agencies, such as the U.S. Department of Agriculture Wildlife Services (WS), operate programs to capture or kill such mammals or contract for such services. Most government trappers use the padded jaw leg hold trap for animal control.

Fiscal Impact:
According to the Legislative Analyst, the Department of Fish and Game would experience negligible costs and losses. At the state and local level, the cost to implement alternative animal control methods could range up to $2 million annually.

Support Arguments:

• Commercial trappers use cruel traps to catch and kill tens of thousands of animals for the fur trade - 24,136 during the 1997-98 trapping season. Thousands of other animals including family pets, endangered species, birds, and small mammals also suffer and die in leghold traps, snares and Conibear traps.
• The steel-jawed leghold trap is condemned as "inhumane" and is banned in more than 80 countries and several states. The steel-jawed leghold trap and other body-gripping traps catch animals by slamming shut with bone-crushing force on an animal's leg or other body part causing injury and prolonged suffering until death.
• Poisoned animals suffer violently, sometimes for hours, before dying in agony, and secondary deaths result when other animals feed on poison victims.

Signers of Support Arguments: Doris Day, president, Doris Day Animal League; Retired state appellate Justice William Newsom, and Elden Hughes, vice president for communications, Sierra Club, 1996-1997.

Opposition arguments:

• Professional wildlife managers who protect the delicate balance of nature are worried that Proposition 4 would unnecessarily expose humans to animal transmitted diseases: Lyme, rabies and Bubonic plague.
• Farmers and ranchers would be helpless in their fight to protect crops and livestock. Animal protection collars (studied for 10 years and approved by both state and federal Environmental Protection Agencies) would be banned.
• The Department of Fish and Game would have to enforce the law at an estimated annual cost of $1 million. That means more bureaucrats and greater taxpayer costs.
• Nearly 80 percent of animals trapped are rodents. They are responsible for millions of dollars in damage to California's flood control and irrigation systems.

Signers of Opposition Arguments: Ben Norman, retired, Department of Veterinary Medicine, University of California at Davis; Dona Mast, immediate past chair, California Farm Bureau Federation Rural Health and Safety; Stephanie Larson, president-elect, Humane Society, Sonoma.

Proposition 5

Title: Tribal-State Gaming Compacts. Tribal Casinos. Initiative Statute.

Sponsor: Frank Lawrence, Los Angeles attorney.

Major Provisions:

• Requires the governor to sign a specified tribal-state gambling compact, the wording of which is explicitly written in the initiative, with any tribe upon request.
• Allows alternative compacts if a tribe and governor agree.
• Prevents the Legislature from approving or denying a compact unless the compact expands the scope of gaming, creates or confers additional powers on a state agency, or infringes upon the power of the Legislature to spend state funds.
• Permits lotteries, slot-machine-like devices and other gambling devices, banked card games, horse race wagering, any card game that was played in any California tribal gambling operation on or before January 1, 1998, and any form of gambling that may be allowed by the state in the future, in tribal gaming facilities.
• Establishes age 18 as a minimum age for gambling at tribal facilities, or age 21 if alcohol is served in the facility.
• Establishes trust funds that would receive amounts varying from 0.5 percent to 3 percent of the "net win" from electronic gambling devices and distribute the funds to non-gaming tribes, local governments where casinos are located, and statewide for emergency medical needs and compulsive gambling treatment programs. This provision is only in effect as long as tribes maintain a monopoly on this type of gambling in California.
• Provides for tribes to regulate their own gambling activities with minimal state involvement. The state would be limited to:
  • conducting background checks of non-tribal employees of a gambling operation,
  • reviewing specified information submitted by tribes, and
  • advising a tribe that the state objects to certain actions taken by the tribe.
• Provides for tribal reimbursement to the state for costs incurred in performing these limited regulatory duties.

Background:
The federal Indian Gaming Regulatory Act of 1988 governs gambling on Indian lands. This act defines three types of gambling that may be offered by tribes:

Class I, which includes social games and traditional and ceremonial games. These games may be played without restriction.

Class II, including bingo and some card games. These may currently be played only to the extent that the state allows their play throughout the state.

Class III, including all gambling not defined in Class I or Class II. This includes, but is not limited to, lotteries, slot machines, and horse race wagering. These games may currently be played only if a state agrees by signing a tribal-state compact.

As in many states, Indian tribes have been operating many gambling operations in California for several years. Some Indian casinos have been challenged in federal court. At the heart of the disputes are tribes' claims that they can operate gambling facilities because they are sovereign nations not subject to the state's authority.

The governor has signed gambling compacts with several tribes this year, and these have been approved by the Legislature.

Some Indian gambling activities have caused local and state government agencies to incur additional expenses, such as for law enforcement. One situation that received some attention was a feud between tribal factions in Lake County that resulted in gunfights and a standoff with the county sheriff. The state Attorney General's Office has been involved in attempting to shut down gambling operations and attempting to enforce criminal laws.

Earnings by Indian tribe members who live on a reservation are not taxable by the state, local, or federal governments. Some tax revenues are generated from Indian gambling operations, but only from tribal members who do not live on the reservation or from non-tribal members who work on the reservation. Corporations operated by tribes are not subject to corporate income or franchise taxes. In addition, horse race wagering conducted at an Indian gambling facility is not subject to state or local wagering taxes. A very large portion of tribal gambling profits are therefore exempt from taxation.

A recent study by former Legislative Analyst William Hamm shows that 75 percent of all money currently spent in California Indian casinos is money that would have been spent elsewhere in California. The remaining 25 percent is money that would have been spent in Nevada casinos or other out-of-state businesses. If this assessment is correct, growth in Indian gaming is causing a shift of consumption from taxable activities to non-taxable activities, which adversely impacts the state and local governments. Dr. Hamm estimates that the state and local governments are now losing $100 million in tax revenues because of these activities.

Fiscal Impact:
According the Legislative Analyst's Office, the fiscal impact of Proposition 5 is uncertain.

Support Arguments:

• Proposition 5 will allow Indians to keep the types of gaming they now have on reservations.
• Gambling helps Indians take care of themselves and get off welfare. Fifty-thousand jobs have already been created and $50 million a year has been saved in reduced welfare payments. Indian casinos generate $120 million a year in state and local tax revenues.
• Tribes use their earnings from gambling to provide health care, housing, education, cultural preservation, environmental protection, and elder care.
• Big Nevada casinos are trying to shut down Indian gaming. Reject their scare tactics.

Signers of Support Arguments: Daniel Tucker, chairman, Californians for Indian Self-Reliance; Mary Ann Andreas, tribal chairperson, Morongo Band of Mission Indians; David Edwards, tribal chairman, Tyme-Maidu Tribe; Jeff Sedivec, president, California State Firefighters Association; Les Sourisseau, past president, California Police Chiefs Association.

Opposition Arguments:

• Proposition 5 would result in a dramatic expansion of unregulated and untaxed casino gambling. Casinos would be exempt from regulations and laws regarding environmental protection, health, safety, business practices, and worker protection.
• The governor would be mandated to sign the gambling compact included in Proposition 5 - if he doesn't it would take effect anyway.
• Tribes could purchase land off their reservations and open casinos wherever they want with the approval of the governor and U.S. Secretary of the Interior. Local citizens would have no voice on the matter.
• Casinos will not be shut down if Proposition 5 fails. Tribes may still negotiate compacts with the state, as some already have.
• Less than 15 percent of California Indians would benefit from this initiative.

Signers of Opposition Arguments: Griselda Barajas, small business owner; Jack Gribbon, California political director, Hotel Employees and Restaurant Employees International Union, AFL-CIO; Sacramento County Sheriff Glen Craig, former president, California Police Officers' Association; John Van de Kamp, former attorney general of California; Juanita Haugen, Pacific region director, National School Boards Association; Bill Campbell, president emeritus, California Manufacturers Association.

Proposition 6

Title: Criminal Law. Prohibition of Horse Slaughter and Sale of Horsemeat for Human Consumption Act of 1998. Initiative Statute.

Sponsor: Cathleen Doyle and Sherry DeBoer of "Save the Horses."

Major Provisions:

• Prohibits the slaughter of horses for human consumption. Specifically, the measure declares unlawful the possession, transfer, receipt or holding of any horse, pony, burro or mule to those persons with knowledge (or those who should possess knowledge) of the intent to kill the animals for human consumption. Violation of this law would be a felony offense, punishable by imprisonment of 16 months to three years.
• Bans the sale of horsemeat for human consumption, and states that the first violation of this law is a misdemeanor offense. First time offenders would pay a fine no greater than $1,000 or serve jail time of 30 days to two years (or both, pay the fine and confinement). Subsequent violations would be felony offenses punishable by two to five years in a state prison.

Background:
Current law permits the slaughter of horses for human and pet consumption. However, horses that are to be used as human food can only be slaughtered in state or federally inspected facilities and must be slaughtered separately from other livestock. Although California has no facilities that are licensed to slaughter horses for human consumption, some facilities exist in other states.

All persons sending horses out of state for slaughter must document that the horse is being sent for that reason. Data by the Department of Food and Agriculture reveal that last year over 3,000 horses were sent to other states for slaughter.

California businesses are allowed to sell horsemeat for human consumption, but no data are available to determine participation rates, if any.

Fiscal Impact:
According to the Legislative Analyst, the fiscal impact is minor, resulting from increased law enforcement and incarceration costs.

Support Arguments:

• Proposition 6 puts California horses back in the stable ... and off the table! Horse slaughter is virtually a secret industry to Californians. Nationally, 2.5 million horses have been slaughtered for human consumption and exported to foreign countries as a "gourmet" meat since 1986.
• Horses slaughtered for human consumption are not humanely euthanized. They are killed by splitting open their skulls with a four-inch spike then hung, bled, and dismembered while still alive. Slaughter is not exclusive to the old, sick and crippled. Slaughter includes the young and healthy, our children's pets, frightened mares with helpless foals standing at their sides and our treasured wild mustangs.
• People's horses are stolen, obtained under false pretenses and purchased for slaughter, without the owner's knowledge, to quickly be shipped out of state to a "no-questions-asked" outlet.
• Proposition 6 protects California's horses from being purchased without the knowledge of the owner and shipped out of state to be cruelly slaughtered for gourmet human consumption overseas. Horses are pleasure animals, not raised for food. Horses are an integral part of California's heritage and deserve our protection.

Signers of Support Arguments: Gini Richardson, legislative chair, California State Horsemen's Association; Michael Bradbury, Ventura County district attorney; William Hemby, legislative chair, California Organization of Police and Sheriffs; Robert Redford, actor, The Horse Whisperer; John Van de Kamp, president, Thoroughbred Owners of California; Jill Henneberg, U.S. equestrian olympic silver medalist.

Opposition Arguments:

• This initiative shows how the ballot process can be abused by the idle rich. A wealthy heiress wants to foist her pet project - outlawing horsemeat for human consumption - on the rest of California. Get a life! Hardworking Californians don't need to waste their time voting on measures that are of little concern to the average citizen. Only 10,000 California horses are slaughtered for consumption each year.
• If the goal of Proposition 6 is to save horses, why would it only address killing them for human consumption? Horses are more often killed to make dog food or for industrial purposes.
• California's legislative counsel found Proposition 6 in violation of the U.S. Constitution. If passed, would it be legally challenged (to be paid by taxpayers)?
• People make many choices in life. What they eat is quite fundamental. Some people like to eat horsemeat. Because of this, a few businesses cater to the demand and sell the product. This is a private matter between a person and his local butcher - and between the butcher and his supplier. The government should not be involved.
• Felonies are serious offenses, most often involving violations of peoples' rights. Good examples are murder, rape and armed robbery. Selling horsemeat is certainly not in that league. Indeed, with the current interpretation of the "three strikes" law, a restaurant owner could sell four horse burgers; the first offense would be a misdemeanor and the other three would be felonies. Three felonies means "three strikes and you're out," with a mandatory sentence of 25 years to life in prison! Do we really want scarce prison space to be taken up for a non-offense like this?

Signers of Opposition Arguments: Ted Brown, past chair, Libertarian Party of California; Thomas Tryon, Calaveras County supervisor; Joseph Farina, attorney; Jeanne Bowers-Lepore, DVM, horse doctor.

Proposition 7

Title: Air Quality Improvement. Tax Credits. Initiative Statute.

Sponsor: Gerald Meral, executive director, Planning and Conservation League.

Major Provisions:

• Authorizes $218 million in state tax credits annually, until January 2011, to encourage air-emission reductions through the acquisition, conversion, and retrofitting of vehicles and equipment.
• Requires that funds recovered by the state from the private sector for fire suppression costs be deposited in a special account in the General Fund, to be used only for prescribed burning projects that reduce air pollution caused by wildfires.
• Designates Local Transportation Funds as trust funds and prohibits the funds from being abolished, and prohibits diversion of these funds from specified transportation purposes to other purposes.

The Tax Credit Program:
The tax credits available under Proposition 7 would be divided into 10 unique categories with specified dollar limitations for the amount of credits annually available for each category as follows:

Tax credits under Proposition 7 would be awarded at the discretion of the California Air Resources Board (CARB), or, if delegated, by local air quality districts. Taxpayers would apply to the CARB for tax credits that would be awarded based on each project's cost-effectiveness at reducing air pollution. CARB is required to give priority in ranking to projects with greater reductions in emission of toxic air contaminants. CARB may establish priorities and criteria for the reduction of emissions based on the specific air quality attainment needs of each air district.

Nature of the Credit:
Generally, the amount of the credit would be less than the full cost of the project. It would generally be the difference between the project's costs, including purchase and maintenance costs, and the costs of a dirtier alternative, although CARB may award greater amounts if deemed necessary to encourage reduced pollution. A project is not eligible for a tax credit if it is required by a federal, state or local law or regulation, or if the project is already the recipient of a government grant, loan or other tax credit for the same costs.

For most categories, eligible applicants for the tax credit include manufacturers, suppliers, installers, purchasers and end users. While only a single applicant can be awarded a tax credit certificate for a project, the tax credit is available to any member of the taxpayer's unitary group.

All tax credit awards shall be pursuant to contract of up to 10 years between the taxpayer and CARB. The credit cannot be revoked based on the fact that the change in equipment is subsequently mandated by law nor altered based on changes to the standards of cost-effectiveness.

If Proposition 7 passes, 10 provisions benefitting taxpayers, with total value of $100 million, would be eliminated. This linkage was approved by the Legislature and signed by the governor (AB 2798, Machado).

Fiscal Impact:
State Government: Losses of $218 million annually would occur, potentially more or less in any given year with the effects of carry-forwards of unused credits. There may be increased sales tax revenue to the extent this measure encourages purchase of tangible personal property. Proposition 7 also allocates $4.35 million for administration. Because 10 tax reductions would be eliminated if this is passed, the net effect is a revenue loss of $118 million.

Taxpayers would benefit from the reduced costs of purchasing, retrofitting or repowering equipment to reduce air emissions as well as benefit from the marginal reduction in pollutants in the air resulting from placing these more environmentally friendly machinery into service.

Local Government: At the local level, there could be increased property tax and sales tax revenues resulting from increased sales of tangible personal property.

Support Arguments:

• Proposition 7 uses private sector tax incentives to reduce toxic emissions from buses and trucks.
• Cleaner air benefits the health of children and the elderly.
• The measure creates no new bureaucracy and cuts no existing programs.

Signers of Support Arguments: John Blames, M.D., co-chair, Clean Air Advisory Group, American Lung Association of California; R. Michael Kussow, president, California Air Pollution Control Officers Association; Kit Costello, R.N., president, California Nurses Association; Senator Mike Thompson, chair, California Joint Legislative Budget Committee; Howard Ris, executive director, Union of Concerned Scientists; John Van de Kamp, former California attorney general.

Opposition Arguments:

• Proposition 7 is corporate welfare, pure and simple. It gives tax breaks to the corporations that paid to put it on the ballot.
• It guarantees billions in taxpayers' money to polluters, with no accountability or regulation in return.
• It takes money from universities, the environment and law enforcement.

Signers of Opposition Arguments: Dan Terry, president, California Professional Firefighters; State Senator Quentin Kopp; Roland Boucher, chair, United Californians for Tax Reform; Dan Aguirre, president, California Association of Professional Scientists; Lenny Goldberg, executive director, California Tax Reform Association.

Proposition 8

Title: Public Schools. Permanent Class Size Reduction. Parent-Teacher Council. Teacher Credentialing. Pupil Suspension for Drug Possession. Initiative Statute.

Sponsors: Governor Pete Wilson, Marian Bergeson, governor's secretary of child development and education, and Yvonne Larsen, president, State Board of Education.

Major Provisions:

• Guarantees continuous funding of the Class Size Reduction Program by placing revenues in a newly created Class Size Reduction Fund. The amount appropriated to the fund would be calculated by multiplying the K-3 enrollment rate by the full-time funding amount, which is currently $800 per pupil. The per-pupil amount would be annually increased for inflation. In addition, the Department of Finance would conduct biennial reviews, and excess revenues would be transferred to the Proposition 98 Reversion Account.
• Creates the Office of the Chief Inspector of Public Schools. The Chief Inspector would be appointed by the governor, without Senate confirmation, for one term of 10 years. The Inspector could be removed from office with a two-thirds vote of all Senate and Assembly members. Funding for the Chief Inspector of Public Schools would be appropriated from the annual budget, and the State Department of Education's (SDE's) budget would be reduced by an equal amount.
• As an independent state agent, the Chief Inspector would be granted authority to appoint, discharge, set salaries, and prescribe tasks of personnel in a manner applicable to Civil Service laws. The primary responsibility of the Chief Inspector would be to inspect each of the 8,000 public elementary and secondary schools at least once every two years, and submit an annual report of findings to the governor, the Legislature, the State Board of Education and the State Superintendent of Public Instruction. The report would rank by grade level the quality of education offered by schools, identify each school's strengths and weaknesses, and compile various student measurements, such as standardized test scores, attendance rates, dropout, college entrance rates, etc.
• Requires teacher candidates prove subject matter competency before receiving credentials. As a result, applicants must pass a subject-matter examination certified by the Commission on Teacher Credentialing and submit a commission-approved lesson plan in the subject area(s) to be taught.
• Requires school district governing boards, as a condition to receive class-size reduction funding, to ensure that school site governing councils are established in each school. The membership of each school site council would be comprised of teachers and at least two-thirds must consist of parents.
• The principal and school site council would be responsible for developing all curricula and making all financial decisions of funds allocated by the governing boards. The principal would have exclusive authority over all employment of personnel, including hiring, evaluating (including the evaluation of certificated employees based on student performance), and discharging employees. School districts would be responsible for reassigning discharged personnel.
• Grants school principals or superintendents the authority to suspend and recommend expulsion of students possessing illegal drugs while on school campuses or at off-site school events. There is an exception for first-time offenders caught with small amounts of marijuana.

Background:
Class-Size Reduction. In 1996, Governor Wilson signed the first legislative measure to reduce the class sizes of public school children in kindergarten through the third grade (K-3). During 1997, 95 percent of California school districts participated in class-size reduction. Today, class-size reduction is implemented by approximately 98 percent of the state's school districts. This equates to nearly 1.6 million K-3 pupils being taught in classrooms with 20 of fewer students.

In the 1997-98 state budget, the governor increased per-pupil spending for class-size reduction by $800. This brought the total per-pupil spending to approximately $1.5 billion. Currently, there are two options available for class-size reduction participants. Option One guarantees an allotment of $800 per pupil for full-time enrollment in classes of 20 or fewer students, while Option Two provides a per-pupil funding of $400 for students who are enrolled part-time in classes of 20 or fewer students.

School Inspections. The SDE provides guidance and support to the state's 8,000 public schools. The department also maintains data on school and student performance. As part of its duties, every four to five years, SDE staff (in conjunction with staff of the county offices of education) visits school sites that implement categorical programs. The objectives of these visits is to conduct compliance reviews and examine program successes.

Subject Matter Proficiency and Teacher Credentialing. To become credentialed teachers, applicants must demonstrate subject proficiency in one of two ways: (1) pass commission-approved courses, or (2) pass a commission-approved subject matter test. Under certain circumstances, teachers who are credentialed in one subject area may teach in another subject area where they are not credentialed.

School Site Councils: Currently, California schools that participate in certain school programs have school site councils, which are comprised of a majority of parents. School site councils assist school administrators with financial decisions and help improve schools' educational programs by conducting annual needs' assessments and preparing school site plans detailing how categorical resources will be used to improve instruction. These plans are ratified by local governing boards. Local school boards establish school curricula, make employment and financial decisions of schools, and determine how school districts and school sites operate. Principals are responsible for the day-to day operations of schools.

According to the Legislative Analyst, relative to the school site councils proposed in Proposition 8, the existing councils are fewer in number, have different compositions (principals are included in memberships), and have less mandated responsibilities.

Student Expulsion. While current law allows principals or superintendents to immediately suspend and recommend expulsion for selling of illegal drugs on school campuses or at school campus events, the punishment for possession of drugs is less severe as officials can only recommend expulsion.

According to the 1997 California Safe Schools Assessment report, drug and alcohol offenses represent 26 percent of all reported crimes at schools. Possession of drugs remains the most commonly reported offense, totaling 11 percent of all reported incidents in the 1995-96 school year. Consequently, the governor's 1998-99 budget provides a $6.2 million augmentation to enforce zero tolerance. The funds will be used to create alternative education programs for expelled students.

Fiscal Impact:
The Legislative Analyst indicates that this measure creates up to $60 million in new state programs that are partly offset by existing funds and fees. Annual costs to local school districts would be in the high tens of millions of dollars.

Support Arguments:

• Proposition 8 doesn't increase administrative spending. Money is redirected from existing bureaucracy to create the Chief Inspector of Public Schools - independent of partisan politics - responsible for quality control and providing accountability to taxpayers. Less than 1/10th of 1 percent of California's education budget is a small price to pay for direct accountability.
• Despite a booming economy and a whopping 17 percent increase in school spending in just the last two years - that guaranteed education more than $30 billion last year - our schools still aren't making the grade. As 1998 test scores (the first to compare California schools to the national norm since the 1960s) make painfully clear, California students fell below the national average in 28 of 43 categories.
• Proposition 8 authorizes principals to remove teachers for poor performance. Highlighting exceptional schools while targeting areas where improvement is needed, a Chief Inspector of Schools will evaluate public schools, rank them and publish the results so that parents, employers and taxpayers can judge for themselves the performance of their schools. Direct and immediate accountability to parents will best guarantee students a quality education. Parents deserve a timely and unbiased report card on their child's school.
• Proposition 8 establishes real educational accountability for the first time. Teachers must pass a subject matter competency exam in subjects they teach to get a teaching credential, and prepare lesson plans based on rigorous academic standards.
• Zero-Tolerance for Drugs and Violence. Before learning is possible, schools must be cleansed of weapons, drugs, and violence. Proposition 8 frees California schools from the suffocating grip of drugs, and establishes the same "zero-tolerance" for the possession of dangerous drugs as for the possessions of guns or knives. Guilty students will be immediately suspended and expelled.

Signers of Support Arguments: Governor Pete Wilson; Yvonne Larsen, president, California State Board of Education; Kim Jacobsma, 1996 teacher of the year, Mayfair High School; Jim Barnes, immediate past chair, California Taxpayers' Association; Wadie Deddeh, retired Democratic State Senator; Susan Henry, president, 1995-97 Parent-Teacher Association, Masuda Elementary School.

Oppose Arguments:

• Class size and drug policies already exist. Schools already have a class-size reduction program and zero tolerance policy for drugs.
• Inconsistent and conflicting academic standards. Proposition 8 creates a new school governing system that flies in the face of existing parent councils and statewide efforts to improve student achievement. It authorizes 8,000 new committees (not elected by taxpayers) to spend tax-dollars and set 8,000 different local academic standards at odds with new uniform state standards (the most rigorous in the nation).
• Proposition 8 gives principals new, unchecked power to remove teachers from their school without a hearing or any form of due process. It puts good teachers at risk of being the victim of petty politics and personality conflicts while doing nothing to improve teachers who need help.
• Proposition 8 triples the state's education bureaucracy - 300 percent the size of the existing bureaucracy. We already have a Superintendent of Public Instruction, a State Board of Education, a Secretary of Education and Child Development, 1,000 elected school boards and thousands of committees. Incredibly, Proposition 8 adds another arm of government and 8,000 new councils.
• Proposition 8 creates a new czar's office, which they cleverly gave the voter-friendly title "Office of the Chief Inspector." Unfortunately, the office is no friend to voters. Proposition 8 gives the new "Chief Inspector" the powers of a czar - a 10-year appointment with no legislative confirmation and no education experience required.
• Proposition 8 lets this new czar set his own salary and the salaries of all the political cronies he wants to hire. "Inspectors" not subject to taxpayer inspection!
• 8,000 separate councils setting 8,000 separate curriculums would guarantee many academic standards would be different from one school to the next and in conflict with the new state standards and college entrance requirements. Educators, parents, and the business community have worked hard to put in place rigorous new uniform standards for teachers and students and a thorough testing and measurement system to hold administrators, teachers and students accountable.

Signers of Opposition Arguments: Lois Tinson, president, California Teachers Association; Lenny Goldberg, executive director, California Tax Reform Association; Bob Wells, secretary/treasurer, Parents, Teachers' and Educators for Local Control; Steve Bock, California teacher of the year, 1997; Al Angele, executive director, California Organization of Police & Sheriffs; Mike Spence, chair, California Taxpayer Protection Committee.

Proposition 9

Title: Electric Utilities. Assessments. Bonds. Initiative Statute.

Sponsors: Harvey Rosenfeld, Coalition Against Utility Taxes; Nettie Hoge, Utility Reform Network; Elisabeth Robinson Gunther, Public Media Center.

Major Provisions:

• Prohibits issuance of rate reduction bonds and assessments on customers for payment of bond principal, interest and related costs.
• Prohibits assessment of utility tax, bond payments or surcharges for payment of transition costs of nuclear power plants and related assets. (Transition costs associated with above-market costs of power purchased from independent generators, known as "qualifying facilities," are exempt from this initiative and account for approximately 50 pecent of total transition costs.)
• Prohibits electric companies from collecting higher-than-market prices on non-nuclear generating assets and obligations, but would allow utilities to petition the California Public Utilities Commission (CPUC) for recovery of above-market costs of those assets and obligations if they show failure to recover such costs would yield less than a fair rate of return on those assets.
• Provides for an electricity rate reduction of at least 20 percent for residential and small commercial customers by January 1, 1999, to be financed by the prohibitions on utilities from collecting transition costs associated with nuclear and other uneconomic generating facilities.
• Provides judicial review of CPUC decisions relating to electric restructuring and financing costs by writ of mandate.
• Restricts customer information dissemination.

Background:
Legislation approved in 1996, AB 1890, created mechanisms for California's electricity market to transition from a monopoly structure to a fully competitive structure. In addition to opening up the market to competition and giving consumers a choice in their electricity provider, California's deregulation plan also froze electric rates at their June 10, 1996 levels beginning January 1, 1998, mandated a 10 percent rate reduction for residential and small commercial customers, and allowed investor owned utilities to recover certain stranded costs, called transition costs. These transition costs include the costs of construction of nuclear facilities and above market energy contracts that were encouraged by the PUC in an era of guaranteed service areas and customers.

Consumers were first able to choose their electric provider in April 1998. Transition costs are being recovered by allowing investor-owned utilities to retain the difference in the market price of energy generation and the frozen rates until the earlier of March 2002 or when fully recovered. This is called the Competitive Transition Charge.

The 10 percent rate reduction took effect on January 1, 1998. It is being financed by savings resulting from refinancing a portion of utilities' stranded costs at interest rates much lower than the utilities' carrying costs. This refinancing involves $6.021 billion in "rate-reduction bonds" issued during the first six months of this year through special purpose trusts established by the California Infrastructure and Economic Development Bank. The bonds will be paid off over the next 10 years. A non-bypassable charge which began appearing on customer bills in January serves as collateral for the bonds. This is called the Trust Transfer Amount.

The proposed initiative seeks to increase the mandated rate reduction to 20 percent, prevent utilities from recovering transition costs for nuclear plants, and prevent utilities from collecting the surcharge to finance the rate-reduction bonds. Recent reports indicate investors in California's rate-reduction bonds are offloading the bonds from their portfolios and that buyers were absent, despite widening spreads. The selling pressure is credited to concerns about this ballot initiative.

A lawsuit was filed in the Third District Court of Appeal to invalidate the initiative by a "No on Proposition 9" statewide coalition of business, taxpayer, consumer, and labor groups, including Cal-Tax. The lawsuit challenged the legality of the initiative on two grounds: (1) It is an unconstitutional impairment of contractual rights because it impairs previously sold bonds and exposes state taxpayers to more than $6 billion in liability to bondholders, and (2) it is defective because it attempts to statutorily override provisions in the California Constitution that control public utilities. The court denied the petition.

Fiscal Impacts:
State Government: According to the Legislative Analyst, the net impact on state government revenues would be annual reductions potentially in the range of $100 million per year through 2002. There is also potential state liability for debt service on $6 billion in previously issued rate-reduction bonds should judicial interpretation apply this initiative to those bonds. Potential savings would derive from lower electricity costs paid by state government.

Local Government: The net impact on local governments would be revenue reductions potentially in the tens of millions of dollars annually through 2002. Potential savings would derive from lower electricity costs paid by local government.

Assuming the above state revenue impact, there would be a decline in the minimum funding guarantee under Proposition 98 for K-14 education of about $50 million after 2002. The state would also be required to backfill for losses in local property tax revenue resulting from lower assessments on nuclear facilities. Potential savings would derive from lower electricity costs paid by schools.

Support Arguments:

• Consumers are paying a high price for "deregulation" but get none of the benefits.
• Utilities received a $28 billion bailout for their money-losing investments in nuclear power.
• Utility companies were allowed to borrow billions to finance a 10 percent phony rate cut that consumers will have to pay back with interest.
• Proposition 9 will protect consumers and small business from being saddled with the utilities' debt by holding utility companies and their investors responsible for their debts.

Signers of Support Arguments: In addition to sponsors Rosenfield and Hoge identified above, signers are Harry M. Snyder, Consumers Union; Ralph Nader, Consumer Advocate; David Brower, Friends of the Earth; Eugene P. Coyle, Ph.D., utility economist.

Oppose Arguments:

• Proposition 9 could hit taxpayers with liability for over $6 billion in bond payments.
• It would undermine California's stable, affordable competitive electric system.
• Proposition 9 would ultimately force higher electric rates on consumers and businesses.
• It is so poorly written that it would cost taxpayers millions of dollars in useless bureaucratic red tape, attorney fees and lawsuits.
• Proposition 9's promise of a rate cut is bogus.

Signers of Opposition Arguments: Larry McCarthy, California Taxpayers' Association; Jerry Meral, Planning & Conservation League; Allan Zaremberg, California Chamber of Commerce; David Horowitz, consumer advocate; Don Brown, California Organization of Police and Sheriffs; Rusty Herod, California School Employees Association.

Proposition 10

Title: State and County Early Childhood Development Programs. Additional Tobacco Surtax. Initiative Constitutional Amendment and Statute.

Sponsors: Rob Reiner, actor/director.

Major Provisions:

• Imposes an additional excise tax on cigarettes of 50 cents per pack (bringing total excise taxes to 87 cents per pack) beginning January 1, 1999.
• Increases the excise tax on other tobacco products (i.e., cigars, chewing tobacco, pipe tobacco, snuff) by an equivalent amount beginning July 1, 1999.
• Due to an existing law, any increase in the cigarette tax automatically increases the tax on tobacco products by an equivalent amount, so this initiative would cause a total additional excise tax on tobacco products equivalent to $1 per pack.
• The revenue generated by the additional excise taxes would be earmarked for a new special fund, the California Children and Families First Trust Fund. These revenues would: (1) fund early childhood development programs, and (2) offset any revenue losses to certain Proposition 99 programs as a result of decreased sales of cigarette and tobacco products. (The revenue generated by the inadvertent increase in the existing excise tax on tobacco products would continue to flow to Proposition 99 programs.)
• Twenty percent of available revenues would be allocated to a new California Children and Families First Commission with seven voting members appointed by the governor, the Senate Rules Committee and the speaker of the Assembly, and two ex-officio, non-voting members. The commission would develop statewide program guidelines, distribute education materials, provide technical assistance to county commissions, and conduct research and evaluations of early childhood development programs. This funding would be spent as follows: mass media communications 6 percent, education 5 percent, child care 3 percent, research 3 percent, administration 2 percent, and general purposes 1 percent.
• Eighty percent of revenues would be allocated to counties that create commissions based on the number of births in the county. The commissions would consist of five to nine members appointed by county boards of supervisors. Two or more counties could form joint commissions, joint strategic plans or joint programs.
• The funds must be used to supplement and not replace existing service levels. The initiative amends the State Constitution to provide that the new tax revenues are not General Fund revenues for Proposition 98 education funding purposes, and that the appropriation of these funds is not subject to state or local appropriations limits.

Background:
Called the California Children and Families First Initiative, it proposes to increase tobacco taxes on California smokers by $750 million annually to fund early childhood development programs. The current excise tax on cigarettes is 37 cents per pack. Ten cents is allocated to the state General Fund, 2 cents for breast cancer research, and 25 cents to the Proposition 99-created Cigarette and Tobacco Products Surtax Fund. State and local governments currently administer a variety of early childhood development programs.

Tax Policy Considerations:

• Earmarking puts public spending policy on auto pilot. It is inconsistent with sound budgeting practices.
• Cigarette taxes are inelastic, meaning they do not keep pace with economic growth. Increasing cigarette taxes produces revenue flows that decline in the future and will be unable to support the inflationary costs of the programs it funds when first enacted. This sets up a future decision to raise taxes even more or cut programs.
• Cigarette taxes are regressive, meaning they are not based on ability to pay. Though it is popular to burden tobacco companies, the cigarette tax is not paid by tobacco companies, but rather by Californians who choose to smoke, with a much greater tax burden placed on middle- and lower-income classes.
• High tobacco taxes could lead to increased out-of-state purchases of cigarettes (butt-legging) and tobacco products being brought across the state border, thus avoiding all taxes.
• This would further exacerbate the double-taxation of cigarettes and tobacco products since the sales tax is on the entire purchase price, which includes the excise taxes.
• Is it appropriate to target one industry or one group of consumers to fund government programs with a policy purpose benefitting the general public?
• Should $750 million per year in state resources be insulated from any state agency or legislative control?
• Many of the anticipated programs sound redundant with existing state and local programs. Could current resources and existing programs be redirected or made more efficient to provide the services this initiative would create?

Fiscal Impact:
State Government: According to the Legislative Analyst, the initiative would produce new revenue of approximately $400 million in 1998-99 and $750 million in its first full year of operation for the California Children and Families First Trust Fund. There would be an initial loss of $18 million to Proposition 99's health care and resources programs in 1998-99 and an ongoing loss of $7 million (the double increase in the excise tax on tobacco products begins in the second year, and thus, half of that increase offsets a portion of the initial loss). The state's General Fund would increase by a net $4 million annually due to increased sales tax revenues caused by higher prices for cigarettes and tobacco products (total sales tax revenue increases are larger but are offset by decreases in the current 10-cent excise tax allocated to the General Fund caused by decreased sales).

Taxpayers would experience a $750 million annual tax increase on smokers and consumers of tobacco products.

Local Government: A similar increase in sales tax revenue would occur for local governments of about $6 million per year. (Local governments do not receive any excise tax, thus there is no offset as for the state.)

Schools would experience potential savings in the long run if early childhood education programs lessen the need for programs such as special education.

Support Arguments:

• Scientific evidence shows that care received from prenatal through first years of life is critical to a child's brain growth and development and has a profound effect on whether a child will become a productive, well-adjusted adult.
• Billions of dollars are spent on remedial education and social services for children after they enter school, when it may be too late.
• Proposition 10 will more than double the funding available for anti-smoking campaigns with a special emphasis on stopping smoking by pregnant women and parents of young children.
• Proposition 10 is for local control, not big government.
• Accountability is assured through annual public audits of the state and county commissions.
• Every dollar spent on early childhood programs can save taxpayers up to seven dollars in remedial education, welfare and juvenile crime.
• A yes vote on Proposition 10 is a vote for our children and against the tobacco industry.

Signers of Support Arguments: Rob Reiner, I Am Your Child Campaign; Alan Henderson, American Cancer Society; John D'Amelio, California School Boards Association; C. Everett Koop, former surgeon general of the United States; Delaine Eastin, state superintendent of public instruction.

Opposition Arguments:

• Proposition 10 raises hundreds of millions of dollars in new taxes, creates a massive new state bureaucracy, but spends almost all of the money on programs that have nothing to do with smoking or tobacco-related issues.
• Thousands of new bureaucrats, controlled by over 500 new political appointees, would spend millions of new tax dollars on new programs that have nothing to do with anti-smoking or breast cancer research programs.
• California schools get nothing from this new tax because the proposition explicitly exempts any of the new money from going to schools.
• Proposition 10 shields its massive bureaucracies from constitutional limits on spending, resulting in uncontrolled spending and leaving taxpayers to pay the bill.
• Proposition 10 is a regressive tax that singles out the poor and minorities to pay the greatest share of the costs of this new government bureaucracy.

Signers of Opposition Arguments: Jane Armstrong, Alliance of California Taxpayers & Involved Voters; Helena Rutowski, Westminster School Board; Dr. Ken Williams, family physician; William Campbell, California Manufacturers Association; Francesca Felizzatto, school teacher; Ramon Rodriguez, small business owner.

Proposition 11

Title: Local Sales and Use Taxes - Revenue Sharing. Legislative Constitutional Amendment.

Sponsor: Assemblymember George Runner. Legislative History: ACA 10 (1998); Assembly Floor (64-4); Senate Floor (30-2).

Major Provision:

• Would allow cities and counties to enter into agreements to share some revenues from their Bradley-Burns sales tax rate. The agreement could be approved by a two-thirds vote of the governing body of each local government involved.

Background:
Current law allows cities and counties to create a sales tax revenue-sharing agreement if it is approved by a majority of voters of each local government agency. No local governments currently use the authority.

The Bradley-Burns sales tax law provides for a uniform 1 percent sales tax rate in all cities and counties in California. The tax revenues generated from the Bradley-Burns rate are collected by the State Board of Equalization and given to the city or county where the sales occur.

Local governments have welcomed sales tax-generating development, including large auto malls and regional shopping centers. Cities will often rush to be the first to construct a regional mall, which makes it infeasible for nearby cities to undertake a similar development, since the pool of available shoppers is limited and too much retail space would cause projects to fail. Often, these projects generate traffic and other public service impacts that affect nearby local governments that receive no revenue from these retail outlets.

This measure would allow a city, for example, to agree with a neighboring city or the county to share a portion of sales tax generated by the Bradley-Burns local rate. It is hoped by proponents that local government cooperation on sharing revenues from large retail projects may result in better land-use planning.

Fiscal Impact:

This proposal would not change overall sales tax collections, but could cause some voluntary shifting of sales tax revenues among communities.

Support Arguments:

• Proposition 11 would stop corporations and local governments from wasting tax dollars.
• It would allow local officials to work together instead of creating bidding wars to see which localities can get the retail businesses.
• It would not raise taxes.

Signers of Support Arguments: Assemblymembers George C. Runner and Tom Torlakson, and California Business Properties Association President Rex S. Hime.

Opposition Argument: None submitted.