CALIFORNIA
PASSED: Proposition 30
Governor Jerry Brown proposed and promoted Proposition 30 as a tax hike to benefit the state’s schools. Weighed down by nearly $617 billion of debt, it was fairly easy for Governor Brown to make a strong case that California’s schools would need additional revenue. Proposition 30 passed within a comfortable margin—7.8% or approximately 700,000 votes.

The tax hike is anchored in sales tax revenues, raising the state’s sales tax by a quarter of a cent for four years, beginning January 1, 2013. Additionally, individuals making at least $250,000 will see a 3% increase in income taxes for seven years, retroactive to the start of 2012. It is projected to raise $6 billion in annual revenue over the next four years. That revenue will drop if the sales tax is not extended to parallel the supplemental income tax hike.

Although touted to benefit education, some revenue from Prop 30 will go towards balancing the budget. For more on Prop 30 taxes and budgeting gimmicks, click here.

FAILED: Proposition 31
Touted by transparency and accountability proponents, Proposition 31 required a three-day review period for new legislation before a vote. Prop. 31 purported to reign in spending by changing the budget cycle from an annual cycle to a biennial cycle and to offset expenditures of more than $25 million. Voters easily defeated the Proposition 60% to 40%.

ILLINOIS

FAILED: HJRCA 49
HJRCA0049, sponsored by Illinois Representatives Michael Madigan (D), Andre Thapedi (D), and Fred Crespo (D) and Senate Members John Cullerton (D), Iris Martinez (D), and Jeffery Schoenberg (D), proposed an amendment to the Illinois Constitution requiring that no bill, except a bill for appropriations, that provides a benefit increase under any pension or retirement system of the State can become law without the concurrence of 3/5 of the members elected to each house of the General Assembly.

Both Houses adopted the bill, which the legislators voted to put before Illinois voters on November 6, 2012 as a legislatively-referred constitutional amendment.

Illinois voters narrowly rejected the constitutional amendment, which needed a 3/5 majority to pass. It is unclear whether the measure would have improved the pension crisis in Illinois, which is mounting.

Illinois Constitution

The Illinois Constitutional provision regarding pensions is short, but its purpose is abundantly clear. Article XIII, Sec. 5, Pension and Retirement Rights, states, “Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” [Emphasis added].

As the title of the provision demonstrates, the drafters of the Illinois Constitution intended this provision to convey a right, rather than simply a benefit. One interpretation is that the drafters intended to liken the receipt of pension benefits to those rights guaranteed in the Illinois Bill of Rights, which includes well-known rights such as religious freedom and due process and equal protection.

Of additional importance is the language stating that receiving pension and retirement rights is an enforceable contractual right. This language indicates that the right to sue alleging a violation of this right is on the table. The extent of that ability is somewhat arguable, but including that type of language again demonstrates the importance of the provision, that the drafters truly intended to make access to pension funding a reliable promise. Illinois is currently approximately $271 billion in debt.

COLORADO

PASSED: Amendment 64
Amendment 64 will allow adults over 21 to possess up to an ounce of marijuana, although using the drug in public is still illegal. The amendment also allows the growth of up to six marijuana plants in a private residence. Colorado plans to put an excise tax on marijuana products, expected to generate approximately $46 million in new revenue and reduce law enforcement spending by $16 million. Revenues from the tax will benefit local school districts.

But don’t start smoking just yet. Before Colorado can implement the law, the federal government must take steps to amend Department of Justice and Drug Enforcement Agency regulations, which could take months. Despite its passage, it is still possible for the Obama 2012 Administration to interfere with the law, enough to prevent implementation.

The $46 million influx and $16 million savings projections would certainly be welcome, considering Colorado is roughly $78 billion in the hole.

WASHINGTON

PASSED: Advisory Vote 1
Advisory 1 asks voters their opinion passed this year that eliminates a Business and Occupation tax credit large banks receive for home mortgages. The credit is worth an estimated $170 million to the banks over ten years, although the same bill provided similar tax breaks for data centers, public docks, farm product manufacturers and newspapers, so the net gain to the state is $24 million over 10 years. Legislators voted to put before Washington voters on November 6, 2012 as a legislatively-referred constitutional amendment.

The Advisory Vote passed with a 57.93% majority. The yes vote rejects the maintaining of the removal of tax deductions and the consequent tax increase.

Washington is facing $81 billion of debt.

SOUTH DAKOTA

PASSED: Constitutional Amendment P
The South Dakota Budget Balance Amendment explicitly requires the state to have a balanced budget, including proposals. The Amendment also prohibits legislative appropriations from exceeding anticipated revenues and existing available funds. The measure easily passed with a 64.6% to 35.4% vote.

In February 2012, the South Dakota House of Representatives voted 66-3 to approve the measure, followed closely by Senate approval. Legislators voted to put before South Dakota voters on November 6, 2012 as a legislatively-referred constitutional amendment.

The South Dakota Constitution states, “Amendments to this Constitution may be proposed by initiative or by a majority vote of all members of each house of the Legislature. An amendment proposed by initiative shall require a petition signed by qualified voters equal in number to at least ten percent of the total votes cast for Governor in the last gubernatorial election. The petition containing the text of the proposed amendment and the names and addresses of its sponsors shall be filed at least one year before the next general election at which the proposed amendment is submitted to the voters.”

A balanced budget requirement is present in 49 states. Even so, nearly every state is facing massive debt, made possible by utilizing budget gimmicks that allow for the appearance of a balanced budget, but are substantively unbalanced. Without more specific requirements, a balanced budget amendment is a very small step towards fiscally responsible budgeting.