Emergency Reserve. Dedication Of Certain Taxes To Transportation. Appropriation Limit Change.

Publication Year:
1988
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EMERGENCY RESERVE. DEDICATION OF CERTAIN TAXES TO TRANSPORTATION. APPROPRIATION LIMIT CHANGE. INITIATIVE CONSTITUTIONAL AMENDMENT. Requires three percent of total state General Fund budget be included in reserve for emergencies and economic uncertainties. Provides net revenues derived from state sales and use taxes on motor vehicle fuels be used only for public streets, highways, and mass transit guideways (Three-year phase-in.) Requires two-thirds vote of Legislature or majority vote of voters before taxes on motor vehicle fuels may be raised. Reserve and fuel tax revenues excluded from appropriation limit. Prohibits Legislature from lowering local sales tax rates in effect January 1, 1987. Summary of Legislative Analyst's estimate of net state and local government fiscal impact: Measure has two major fiscal effects. First, changes in state's appropriation limit will result in increased state appropriations authority of up to $1.6 billion in 1988-89, $1.5 billion in 1989-90, and slightly larger amounts in future years. As a result, the state may be able to spend or retain tax proceeds which otherwise would be returned to the taxpayers. State's ability to appropriate additional funds as a result of increased state limit is dependent on receipt of sufficient revenue. Based on estimates contained in Governor's Budget, state revenues will not be sufficient in 1988-89 to fund any additional appropriations allowed by this measure. In future years, economy's performance will determine whether and to what extent state revenues will be available to fund such additional appropriations. Second, the requirement that certain sales tax revenues be expended only for transportation purposes results in an increase in the amount of revenues available for transportation purposes while reducing the amount available for education, health, welfare and other General Fund expenditures. This shift in funding will amount to about $200 million in 1988-89, about $430 million in 1989-90, and about $725 million in 1990-91, and increasing amounts thereafter.