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Props 1D, 1E and 1F

by Sheila Kuehl
May 5, 2009

This is the second of two essays presenting the contents of, and analyses on, the six propositions on the May 19 ballot.  Props 1D and 1E have absolutely nothing to recommend them.  Prop 1F was a throwaway so that the last Republican to vote for the budget could say he extracted some cosmetic punishment for the legislature.  I recommend a no on all of them.  Details below.

What I Think (a recap from the last essay)
It seems pretty obvious that, whether the propositions pass or fail, they create a significant, but different, problem for the state.  The total monies brought into the current budget by all the propositions together is about 6 billion dollars.  However, over $5 billion of that revenue comes from the sale of the lottery.  This makes Props 1D and 1E virtually unnecessary.  Prop 1A brings significant monies in three and four years out from the current budget, but creates a badly-thought-out spending cap.  The problems created by the passage of the propositions simply to gain a small amount of one-time money and a bigger theoretical rainy day fund in the future are, in my opinion, too much of a price to pay.  Therefore, I intend to vote no on all of them, except maybe the lottery proposal contained in Prop 1C.  Unfortunately, there is no right answer, so long as we must garner a few Republican votes to pass a budget and raise a tax.  I apologize for the fact that the descriptions of the propositions are a bit simplified, but I hope you might find them helpful.

Proposition 1D
In 1998, voters adopted Prop 10, which increased the tax on tobacco products and set up the California Children and Families Trust Fund in the California Constitution.  20% of the monies (generally called First Five funds) were targeted for specific programs related to school readiness, child care, research on school readiness, and related administrative expenses.  80% of the new money went to newly established county commissions to spend on early childhood development programs.

Prop 1D would redefine and expand the purposes for which these tobacco tax monies may be used to include direct health care services, human services, services by county welfare agencies to families at risk and early education services.  This is a big change and allows the state to simply scoop the designated funds into the gaping maw of the state budget deficit.

In addition, Prop 1D would redirect up to $340,000,000 and no less than $275,000,000 of "unencumbered" funds in the First Five Accounts to health and human services programs for children up to five years of age, including adoption assistance, child welfare services, foster care, kinship guardianship assistance payments and direct healthcare services.  This transfer would continue at a rate of $268 million for the next five budget years.  The State Controller is also authorized to use any of the monies in the Fund for "loans" to the general fund.

My Opinion on Prop 1D
Former Los Angeles Mayor Richard Riordan wrote in the LA Times, "Then there's Proposition 1D, with its clunky and dishonest title: 'Protects Children's Services Funding.  Helps Balance State Budget.'  How does it 'protect' children's services funding? By taking $1.6 billion currently committed to children's health services and preschool and throwing it into the budget mess."

When the voters approved Prop 10, they correctly identified a gaping hole in programs for children from 0-5 in terms of health, readiness, education, child care, etc. Taking this money and adding it to the General Fund makes no sense, except to fill a budget hole with anything you can put your hands on.  And, since there are many, many good, ongoing programs already set up under the First Five Commissions, it turns those programs into one-time programs, when we really need continuity in this area.  In addition, the amount is so small, compared to the budget gap, and so large, in terms of the good it can do county by county, I believe this proposition deserves a resounding No.

Prop 1E
This is another fund grab that takes a 1% income tax increase the voters imposed on those with earnings over one million dollars, moves it from its original purpose of augmenting mental health services in the state, and dumps it into the general fund, in order to help balance the budget.

In 2004, voters adopted Prop 63, the Mental Health Services Act, to augment mental health monies being spent by the state, which were woefully inadequate.  The proposition was quite specific that the funds could not be used to supplant existing state or county funds for mental health and that the state was required to continue to provide the same level of funding in the general fund for these purposes and not use Prop 63 funds for existing programs.

Prop 1E removes those proscriptions and requires the diversion of $226,700,000 of these funds into the Early and Periodic Screening, Diagnosis and Treatment Program in the State Department of Mental Health, until 2011.  Although this is a good program, it will simply gobble up these targeted monies into routine work and leave nothing for the augmented programs begun under Prop 63.

My Opinion on Prop 1E
There is hardly a more needy set of programs than those devoted to improving the mental health of Californians.  At least we could be certain that Prop 63 monies were going toward alleviating this crisis.  We voted for an extra 1% tax on millionaires specifically to fund increased programming in our mental health fields.  Prop 1E would simply ignore that intention and drop the money down the state budget hole.  Again, I'm a No on this one.

Prop 1F
Well, of all the ideas proposed by Republicans dangling their votes in front of the President pro Temps in February, this was the least objectionable and, so, it got on the ballot.  The original idea was: if the legislature doesn't get the budget out on time (since only the democrats are ready to vote on it), they (even those who are fully prepared to vote for a balanced budget) deserve to lose some pay.

When that idea didn't fly, Prop 1F was born, directing the independent commission that sets not just legislative, but all, statewide salaries, to freeze all those salaries when there is a "negative balance in the Special Fund for Economic Uncertainties in an amount equal to, or greater than, 1 percent of estimated General Fund revenues."  Frankly, had the Governor filled the empty slots on the Commission in a timely fashion, this would not even be a discussion since the Board will not vote to raise the salaries of legislators or statewide officers under these circumstances, anyway.

My Opinion
No need for this one.

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