Summaries of March 26, 1996 Ballot Propositions

Proposition 192

Legislative Statute (SB 146, Maddy)

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

Major Provisions:

• Would authorize the sale of $2 billion in general obligation bonds for the seismic retrofit of state-owned highways and bridges, including $650 million for toll bridges.
• Should this measure fail on the March 1996 ballot, this statute requires the same $2 billion authorization to automatically be placed on the November 1996 ballot.

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:

• Without raising taxes, Proposition 192 will protect Californians from potential damages from future quakes.
• California residents and commerce benefit from the measure by removing risks and transportation problems presented by unsafe bridge and overpass structures.
• Proposition 192 will create jobs and boost our economy.
• Needed transportation projects are being delayed in order to complete seismic retrofit projects. Bond funding would allow both programs to remain on track.

Opposition Arguments:

• Proposition 192 is a $2 billion bond that will cost taxpayers billions to repay.
• Seismic repairs can be financed by freezing the growth of run-away bureaucracies, using previously authorized bonds, or other proposals put forward by taxpayer groups and newspapers.

Proposition 193

Legislative Constitutional Amendment (ACA 17 of 1994, Knowles)

Sponsor: Assemblyman David Knowles

Major Provisions:

• Would amend the Constitution to exempt real property transferred between grandparents and grandchildren, if both parents of the grandchildren are deceased as of the date of the purchase or transfer, from reassessment by excluding such transfers from the term "change of ownership."
• Would apply to purchase or transfers of ownership occurring on or after the date upon which this amendment is approved by voters (after March 26, 1996).
• Would apply to the purchase or transfer of the principal residence of the grandparent and the first $1 million of the full cash value of other property.
• The exemption for the principal residence of the grandparent would not apply if a grandchild had previously received a principal residence, or interest therein, that was exempt from reassessment through a purchase or transfer from a parent. Rather, the full cash value of the grandparent's principal residence could apply to the $1 million exemption of all other real property transferred from parents and/or grandparents.

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:

• Under current law, grandparents can transfer property to their immediate children and then to the grandchildren without reassessment, but only if the intervening generation is alive at the time of the transfers. This proposition would correct the unfair situation where such a transfer is impossible because the parents are deceased.
• Under current law, the transfer of property from parent to child is a proper way of providing and safeguarding a child's welfare and future. Allowing grandparents to provide for grandchildren where parents have died is just as proper.
• This measure will have minimal revenue consequence on state or local governments because it would have infrequent application, but for those families to whom this would apply, this is a fair and compassionate measure.

Opposition Arguments:

• The automatic reassessment provision of Proposition 13 has caused a gradual but massive shift of the overall property tax burden from owners of commercial and industrial property to owners of residential property. Instead of correcting this inequity, this measure would increase the unfairness of the property tax system and benefit some privileged persons.
• To eliminate the unfairness of Proposition 13, property should be periodically reassessed while automatically lowering the tax rate so that government would not get more money just because property values increase.

Proposition 194

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:

• Businesses and taxpayers are being fleeced out of more of their hard-earned money due to a loophole in state law. Released prisoners are perpetrating yet another crime on Californians by collecting unemployment checks upon release from prison.
• The more unemployment checks cashed by paroled inmates, the higher the unemployment insurance premiums Joint Venture businesses must pay for all their employees. This cost is an impediment for businesses involved in the program and for those wishing to participate, and an affront to taxpayers.

Opposition Arguments:

• Public safety suffers when inmates leaving prison cannot plan on a stable source of minimal income until they find a job. Victims' rights suffer when inmates are not sufficiently reintegrated into society to pay full restitution.
• Unemployment is a special problem for inmates released during an economic downturn. Without financial resources, ex-prisoners are more likely to return to crime to support themselves.
• JVP companies already get substantial advantages over other employers and don't need to be exempt from paying unemployment benefits.

Proposition 195

Legislative Statute (SB 32, Peace)

Sponsor: Senator Steve Peace

Major Provisions:

• Would add first-degree murder during commission of a carjacking or kidnap-carjacking to the list of special circumstances that require the death penalty or life imprisonment without parole.
• Would add first-degree murder of a juror in retaliation for, or to prevent the performance of, the victim's official duty to the list of special circumstances that require the death penalty or life imprisonment without parole.

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:

• Proposition 195 updates California's death penalty law to include all currently defined first- degree murders as special circumstances that allow the death penalty to be imposed. It also expands the law to allow the death penalty for the retaliatory murder of a juror. These are heinous crimes that should carry the maximum punishment.

Opposition Arguments:

• The death penalty is a failure. It does not prevent crime.
• The death penalty takes too much valuable time of police and courts, and it diverts resources away from other government functions that could help prevent crime.
• The death penalty erodes our vision of the dignity of human life. Government policies should promote awareness of the value of human life.

Proposition 196

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:

• Murder by drive-by shooting has reached epidemic levels. An average of one young person per week is shot in Los Angeles, but the problem is not just an inner-city phenomenon. Victims are often innocent bystanders. Proposition 196 would deter gang members and others by imposing the highest penalty for this crime.

Opposition Arguments:

• The death penalty has failed to reduce murders and other kinds of violence. Violence decreases after death penalties have been repealed.
• This measure would place too much emphasis on the location of the shooter - a killer on foot may not face the same punishment.
• The U.S. Supreme Court requires that there be a meaningful distinction between death penalty special circumstances and other murders. This measure does not make that distinction.

Proposition 197

Legislative Statute (SB 28, Leslie)

Sponsor: Senator Tim Leslie

Major Provisions:

• Would change the vote requirement (to majority from four-fifths) for the Legislature to amend or repeal laws passed in Proposition 117 (1990) concerning mountain lions and removes the provision that those changes be consistent with the purposes of Proposition 117.
• Would eliminate the designation of the mountain lion as a specially protected mammal, reclassifying it as a game species.
• Would require the Department of Fish and Game to prepare and implement a mountain lion management plan.
• Would authorize the Department of Fish and Game to designate persons to remove or kill mountain lions considered safety threats.
• Would reallocate funds that have been earmarked for mountain lion preservation efforts and habitat acquisition, specifying that some funds be spent on mountain lion management and planning activities.

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:

• Wildlife management has been made difficult because the experts have been precluded from managing a key predator species. The mountain lion population has doubled, causing excessive predation on other animal populations, including endangered bighorn sheep. People are being attacked, public safety is in danger, and livestock are being killed, causing increased costs to consumers. Special interests caused these problems with Proposition 117, and voters should restore common sense to wildlife management.

Opposition Arguments:

• This measure is not about proper wildlife management - it is an attempt to allow trophy hunting, which is cruel. It could be supported if it only included one line maintaining the ban on trophy hunting. The gun and trophy hunting lobbies are behind this proposal and only want trophy hunting for mountain lions legalized. The Department of Fish and Game is "playing chicken" with the public by not killing dangerous lions under current law provisions.

Proposition 198

Initiative Statute

Sponsor: Richard B. Ferrari and Trish Hooper

Major Provisions:

• Would provide that all persons entitled to vote, including those not affiliated with any political party, shall have the right to vote during any election for any candidate.
• Would provide for a primary ballot on which names and party affiliations of all candidates are placed randomly and not grouped by political party. Voters would choose a candidate for each office, regardless of party affiliation. The top vote getters in each party would then face each other in the general election.

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:

• California's closed primary election system limits voters' choices for candidates within their own party and excludes 1.5 million independent voters from voting in primary elections at all.
• An open primary will permit voters to select the best candidate, regardless of party.
• An open primary will increase voter participation by providing voters a real choice and forcing candidates to focus on policy issues instead of partisanship.
• An open primary will force all candidates to listen to all voters, not just those registered in their own party.
• A 1986 U.S. Supreme Court decision acknowledged that dire consequences predicted by open primary opponents did not materialize in 29 states that have moved to more open primaries.

Opposition Arguments:

• Party members should be allowed to choose their nominee, free from outside influence.
• Political parties engage in a healthy debate about which candidates will lead them. This gives voters a real choice between different candidates, from different parties, offering different voices.
• Thomas Jefferson advised against the amalgamation of parties and applauded distinct political parties with clear philosophical differences as "useful watchmen for the public."
• The U.S. Supreme Court has ruled that political parties have the right to determine who votes in their primaries.
• Open primary is an effort by ambitious politicians to change the rules to serve their own interests.

Proposition 199

Initiative Statute

Sponsor: Californians for Mobilehome Fairness

Major Provisions:

• Would phase out existing state and local mobilehome rent control laws and prohibit new mobilehome rent control laws. As mobilehome owner sells, transfers or sublets the mobilehome, rent restrictions would be eliminated.
• Would require mobilehome park management to administer and provide a rent subsidy equal to a 10% discount on monthly rent to low-income tenants meeting residency requirements. This requirement would operate when 10% or less of occupied spaces are covered by rent control or rent subsidy.
• Would establish priority for and conditions for losing rent subsidy.
• Would prohibit state and local requirements for reductions in rent and limits on increases in rent to less than specified cost-of-living indices.
• Requires future state rent control to be approved by voters.

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:

• Proposition 199 would help stop the decline of affordable housing in California. Over 600 mobilehome parks have closed since 1981. This dramatic decline in park rental spaces drives up the cost of mobilehome housing and is the result of local rent regulations.
• Mobilehome housing experts indicate that local rent regulations artificially increase the resale price of mobilehomes by thousands of dollars, making units less affordable. This primarily affects seniors and younger families who are low-income or fixed-income families.
• California taxpayers have paid over $450 million in attorneys' fees and administrative costs for 102 different mobilehome rent regulations in California. On an ongoing basis, $45 million would be necessary each year to continue these regulations. Proposition 199 will end this waste. Economists, housing experts and taxpayers recognize it is time for change.

Opposition Arguments:

• Proposition 199 would enable mobilehome park landlords to raise mobilehome rents without limit whenever they choose.
• 400,000 Californians, mostly senior citizens, own mobilehomes and rent space in a mobilehome park. Rents can be higher than social security and retirement income. Increases in mobilehome rental space traps mobilehome owners since it can cost $10,000 to move a mobilehome and available space is scarce. Mobilehome owners must pay the rent or lose their homes. Mobilehome owners who cannot pay escalating rents lose the equity in their homes.
• Since the expiration of Los Angeles County's rent control ordinance, an 83-year-old Los Angeles widow faces loss of her home of 20 years. Rent has risen to $845 per month, while her social security check totals $783. She faces eviction, repossession of her home and total disruption of her final years.
• Proposition 199 is phony. It is seeking to protect $330 million in resale value that was gained when local regulations were adopted. It would wipe out 80 local initiatives and laws passed by voters and local officials. It would prevent local voters from ever passing another mobilehome rent protection law. It would give the Legislature all power over mobilehome rents.
• The initiative would not enable administrative funds to be diverted to public safety and other essential services since rent protection administration is funded by fees paid by mobilehome and park owners.

Proposition 200

Initiative Statute

Sponsor: Alliance to Revitalize California

Major Provisions:

• Would eliminate liability for auto accident injuries (not property damage) for personal and commercial vehicles, except for drunken drivers or those committing a felony.
• Drivers' own no-fault Personal Injury Protection (PIP) policies would cover their own costs (and their passengers' costs) of injuries from auto accidents. This would include medical costs, lost wages, and other injury-related costs. Standard policies would cover $1 million in damages, but owners of non-business vehicles could sign a waiver of full benefits and purchase a minimum policy covering $50,000 per person.
• Motorists could also purchase pain and suffering coverage for themselves and their passengers. Pain and suffering awards would be determined by a schedule developed by the state insurance commissioner.
• Property damage liability would not be affected - except that uninsured drivers would be prohibited from suing for recovery of property damage to their vehicles.
• Uninsured drivers would have no coverage.
• Insurance companies would be required to settle claims in 30 days, with 24% interest on late payments. Disputes would go to arbitration.
• Businesses and government agencies could self-insure, provided they meet financial requirements.

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:

• Health care savings: State and local governments would have reduced basic and emergency health care costs for low-income persons who have no medical insurance. When these persons are injured in auto accidents, many of their costs would be borne by PIP insurance, saving potentially over $100 million annually.
• Loss in vehicle registration revenues: Because the measure requires proof of insurance when registering a vehicle, some owners may decide to drive unregistered rather than get insurance, causing registration revenue losses in the tens of millions of dollars, potentially over $100 million annually.
• Savings from reduced government liability: Drivers who are injured by government employees driving on government business would be compensated by their own PIP insurance, producing savings to state and local government in the tens of millions of dollars.
• Loss in gross premiums tax revenue: Total insurance premiums may decrease because of lower legal costs, causing a reduction in state gross premiums tax revenue. However, premium revenue may increase if significant numbers of currently uninsured drivers purchase insurance. The net effect is probably a revenue loss, potentially greater than $10 million annually.
• Decreased health insurance costs for employees: Medical benefits for auto accident injuries would be paid first from PIP insurance before medical insurance, leading to a potential reduction in employee medical insurance premiums for state and local governments.
• State administrative costs: Costs to develop regulations and ensure compliance would be about $15 million initially, and about $10 million annually.

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:

• Proposition 200 removes lawyers and lawsuits from most auto accident cases, saving millions of dollars. RAND Corporation says that this proposal could reduce insurance premiums by 25%.
• In California, injury claims are filed in 67% of accidents, compared to 29% nationally - California is swamped with phony claims.
• This proposal ensures that you get compensated more quickly and fairly.
• Children, pedestrians, and bicyclists are covered automatically. Drunken drivers can still be sued.
• Uninsured drivers will not be a problem; they won't be able to sue.

Opposition Arguments:

• This measure makes every accident your fault. Good drivers will pay for bad drivers. You will have no recourse against reckless drivers, even if they kill your child.
• It puts decisions about how much you pay back in the hands of insurance companies.
• In other states with some form of no-fault, insurance rates went up faster than in California. Other states are repealing their no-fault laws.
• The measure has too much fine print, would restrict your medical options, and would be partially administered by the Department of Motor Vehicles. It has no guarantee of lower cost.

Proposition 201

Initiative Statute

Sponsor: Alliance to Revitalize California

Major Provisions:

• In any shareholder derivative or securities class-action lawsuit, the losing party would pay the winner's legal expenses. This would not apply to individual, non-class-action lawsuits.
• Named plaintiffs or their attorney would be required to post a bond to secure their potential liability for legal costs, unless the named plaintiffs represent at least 5% of the class.
• The court would have the option of charging the losing party's attorney rather than the losing party.
• The court could waive the liability of an individual member of the losing party if the lawsuit was substantially justified and if requiring that member to pay would be unjust.

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:

• Proposition 201 stops unscrupulous lawyers from filing frivolous suits against companies generating the most new jobs for California, the high-tech companies. Lawyers use professional plaintiffs to sue multiple companies. One such plaintiff was in 38 different lawsuits.
• In one year, one lawyer took almost $250 million out of the California economy. Lawyers get big fees, but shareholders only get a few cents per share from these settlements, providing a big incentive for lawyers to instigate these suits.

Opposition Arguments:

• Proposition 201 would weaken protections for pension investments and would hurt seniors. People would have to pay a deposit to sue erring companies.
• Companies which have settled suits for investor fraud put up money for this measure. This measure would make it difficult for small investors to sue big corporations for misconduct.

Proposition 202

Initiative Statute

Sponsor: Alliance to Revitalize California

Major Provisions:

• If a defendant in a tort action offers an early settlement (within 60 days of receiving a plaintiff's demand), and the plaintiff accepts, plaintiffs' attorneys would be limited to contingent fees of 15% of the settlement.
• If an early settlement were offered, but not accepted, and the plaintiff wins a subsequent judgment or settlement, plaintiffs' attorneys' fees would be limited to 15% of the early settlement offer, plus an unlimited percentage of any amount in excess of the early settlement offer.
• If a defendant did not make an early settlement offer, the fee limitations would not apply.

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:

• Proposition 202 would stop unfair legal practices and runaway lawsuits from costing more California jobs and money. Seven lawsuits are filed every minute of each day in California - far too many phony claims.
• One of every five lawyers in the United States lives in California. This measure would encourage quicker settlement of legitimate cases and let victims keep a greater share of settlements.
• The courts would be less clogged and frivolous lawsuits would be reduced. This measure only applies to cases with early settlements, so the lawyers deserve less, because they did less work.

Opposition Arguments:

• Proposition 202 limits consumers' attorneys' fees but doesn't do a thing to limit the lawyers for the big companies, drunken drivers, Charles Keating types, insurance companies, and manufacturers of dangerous products.
• Contingent fee attorneys are on the consumers' side and shouldn't be restrained while the business lawyers can keep charging high rates. Rich corporate interests put this on the ballot to keep consumers from suing them.

Proposition 203

Legislative Statute (AB 1168, Campbell)

Sponsor: Assemblyman Robert Campbell

Major Provisions:

• Would allow the sale of $3 billion in general obligation bonds for local schools and state higher education facilities. Local school districts would receive $2.025 billion and $975 million would be used for higher education facilities.
• Within the $2 billion proposed for K-12 schools, the measure would provide the following criteria:
• No more than $900 million for portable classrooms; reconstruction or modernization projects including wiring for educational technology; air conditioning for year-round schools; acquisition of relocatable child care and development facilities for extended day care services; high priority roof replacement; school security upgrades; abatement of hazardous asbestos and lead in school facilities; classrooms for severely handicapped pupils; special projects for districts impacted by the locating or expanding of state and federal prisons, and project funding for small school districts.
• No more than $100 million for seismic retrofit.
• No more than $25 million for projects that involve joint use of school facilities.
• Would require the Board of Governors of the California Community Colleges to consider historic significance of buildings that are to be renovated.
• Would require higher education authorities to submit a five-year capital outlay plan and seismic retrofit priority schedule before receiving any bond proceeds.
• Would require that any funds remaining from previous school construction bond measures (about $45 million) be transferred to the State School Building Lease-Purchase Fund to be apportioned by the State Allocation Board according to the Leroy F. Greene State School Building Lease-Purchase Law.

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:

• Proposition 1B: $1 billion for K-12 schools, which barely failed with 49.5 percent yes votes.
• Proposition 1C: $900 million for higher education, which failed with 47.3 percent support.

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:

• To be competitive in a world economy, California must provide first-rate learning environments for all of its students. Many of California's public education buildings are in desperate need of repair, and more than half of the schools are over 30 years old. Classrooms are overcrowded. Schools must be made earthquake safe. Plus, students cannot be expected to succeed in the information age unless classrooms are equipped with computers and modern technology.
• California's school population is growing, with class sizes nearly one-third larger than the national average. Also, funds from previous school construction bond acts have been committed or spent.
• California ranks 50th out of 50 states in computers per student, and this bond issue will help prepare students for the 21st Century workplace.
• Proposition 203 does not increase taxes. Passage of Proposition 203 conforms to both the letter and spirit of Proposition 13 and provides desperately needed revenue - without raising taxes.

Opposition arguments:

• Voters rejected a $1 billion school bond and a $900 million college bond in June 1994. Now politicians want to try again - but now they want $3 billion! They forget the economy is a mess. Californians are fighting just to pay their bills. We can't afford Proposition 203, which will raise taxes and government spending. Bonds are not free money, like politicians want you to think. Proposition 203 calls for taxpayers to pay $3 billion, plus another $2.4 billion in interest over 20 years. That's right, using bonds almost doubles the cost of any government project. Instead of biting the bullet now, politicians want our kids and grandkids to pay the bills.
• There are millions of square feet of vacant commercial property in California. Why can't school districts lease existing buildings instead of undertaking this massive boondoggle?
• Half the state's budget goes to education already. Sixty-four percent of the education budget never makes it past the bureaucracy into the classrooms. Public schools employ 127 non-teachers for every teacher, while private schools only employ 16 non-teachers per 100 teachers. Proposition 203 means more money to bureaucrats, not students.
• The school establishment pleads poverty - but in fact it wastes huge amounts of money on administrators and other bureaucrats. There should be plenty of money in each school district's regular budget to pay for needed projects and maintenance.

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