December 09, 2003

The Golden State, From Red to Black

Some very interesting proposals for fiscal responsability in this article by Donna Arduin, namely this Constitutional spending limit:

Constitutional spending limit. This will require that expenditures in fiscal year 2004-05 cannot exceed revenues. It will truly require the state to live within its means. For the 2005-06 fiscal year, spending growth over the preceding year will match inflation and population growth. This spending limit will also establish a Revenue Stabilization Fund, which will receive any general fund revenue that comes in above the spending limit. This "rainy day" fund could be used--with a two-thirds vote of the Legislature--for the following four purposes: repaying deficit bonds, tax rebates, emergencies declared by the governor, and transfers to the general fund when revenues fall below the spending limit in the future.

This spending limit will allow the governor to declare a fiscal emergency in the event that the director of finance determines that general fund expenditures are projected to either exceed available general fund revenues, or exceed the spending limit. Once a fiscal emergency is declared, the governor is then required to call a special session and submit legislation to reduce expenditures. The Legislature would then have 30 days to enact, by a two-thirds vote in each house, any different package of legislation. But in doing so, the Legislature must make a finding that its package also solves the spending problem identified in the declaration.