Proposition 58 was a
California ballot proposition
California () is a U.S. state, state in the Western United States that lies on the West Coast of the United States, Pacific Coast. It borders Oregon to the north, Nevada and Arizona to the east, and shares Mexico–United States border, an ...
on the March 2, 2004 ballot. It passed with 4,535,084 (71.2%) votes in favor and 1,841,138 (28.8%) against. It was officially called the California Balanced Budget Act. It requires the
state legislature
A state legislature is a Legislature, legislative branch or body of a State (country subdivision), political subdivision in a Federalism, federal system.
Two federations literally use the term "state legislature":
* The legislative branches of ...
to pass a
balanced budget
A balanced budget (particularly that of a government) is a budget in which revenues are equal to expenditures. Thus, neither a budget deficit nor a budget surplus exists (the accounts "balance"). More generally, it is a budget that has no budge ...
every year, which means that budgeted recurrent expenditure, including repayment of past
debt
Debt is an obligation that requires one party, the debtor, to pay money Loan, borrowed or otherwise withheld from another party, the creditor. Debt may be owed by a sovereign state or country, local government, company, or an individual. Co ...
, does not exceed estimated
revenue
In accounting, revenue is the total amount of income generated by the sale of product (business), goods and services related to the primary operations of a business.
Commercial revenue may also be referred to as sales or as turnover. Some compan ...
. The act does not require that capital works programs be funded out of current revenues. The
California Constitution
The Constitution of California () is the primary organizing law for the U.S. state of California, describing the duties, powers, structures and functions of the government of California. California's constitution was drafted in both English ...
has always allowed
bond issues (state debt) for specified capital works, above a certain value. Bond measures must be approved by a statewide ballot.
The Act created a reserve fund called the Budget Stabilization Account in case of future financial trouble. It also prevented the creation of any future bonds to pay off deficits like that in
Proposition 57 (the California Economic Recovery Bond Act). Proposition 58 took effect only because Proposition 57 also passed.
Propositions 57 and 58 were the centerpiece of
Governor
A governor is an politician, administrative leader and head of a polity or Region#Political regions, political region, in some cases, such as governor-general, governors-general, as the head of a state's official representative. Depending on the ...
Arnold Schwarzenegger's plan to resolve California's budget problems. Schwarzenegger campaigned heavily for both propositions' passage.
While Prop 58 was to provide balanced California budgets, the deficits continued in subsequent years, growing larger over time.
Official summary
* Requires enactment of a balanced budget where General Fund expenditures do not exceed estimated General Fund revenues.
* Allows the Governor to proclaim a fiscal emergency in specified circumstances, and submit proposed legislation to address the fiscal emergency.
* Requires the Legislature to stop other action and act on legislation proposed to address the emergency.
* Establishes a budget reserve.
* Provides that the California Economic Recovery Bond Act is for a single object or work.
* Prohibits any future deficit bonds.
Summary of Legislative Analyst's Estimate of Net State and Local Government Fiscal Impact:
* Unknown net state fiscal effects, which will vary year by year and depend in part on actions of future Legislatures.
* Reserve provisions may smooth state spending, with reductions during economic expansions and increases during downturns.
* Balanced budget and debt limitation provisions can result in more immediate actions to correct budgetary shortfalls.
References
External links
Voter Information Guide with text of Proposition 58
58
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