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Vote In California

Next Statewide Election:
March 3, 2020,
Presidential Primary Election


November 6, 2018, General Election Voter Guide

Introduction to Propositions

Proposition 1

1
Authorizes Bonds to Fund Specified Housing Assistance Programs. Legislative Statute. Authorizes $4 billion in general obligation bonds for existing affordable housing programs for low-income residents, veterans, farmworkers, manufactured and mobile homes, infill, and transit-oriented housing. Fiscal Impact: Increased state costs to repay bonds averaging about $170 million annually over the next 35 years.

Proposition 1 was put on the ballot by the state’s lawmakers, your representatives in the Legislature.

If passed by voters in this election, it would allow the state to borrow $4 billion by selling general obligation bonds. These funds would go toward existing affordable housing programs for low-income residents, veterans, farmworkers, manufactured and mobile homes, infill, and transit-oriented housing.

Housing is Expensive in California

Housing in California has long been more expensive than most of the rest of the country. While many factors have a role in driving California’s high housing costs, the most important is the significant shortage of housing, particularly within coastal communities. A shortage of housing means households wishing to live in the state compete for limited housing. This competition increases home prices and rents. Today, an average California home costs 2.5 times the national average. California’s average monthly rent is about 50 percent higher than the rest of the country.

State Housing Programs Fund Some Home Building.

In most years, about 100,000 houses and apartments are built in California. Most of these housing units are built entirely with private dollars. Some, however, receive financial help from federal, state, or local governments. In these cases, the state provides local governments, nonprofits, and private developers with grants or low-cost loans to fund a portion of the housing units’ construction costs. Typically, housing built with these funds must be sold or rented to Californians with low incomes. A portion of housing units built with state funds is set aside for homeless Californians. While the state historically has not provided ongoing funding for these housing programs, California receives approximately $2 billion annually from the federal government to support these projects.

Home Loan Program for Veterans.

The state’s veteran home loan program provides home loans to eligible veterans, including veterans who may not otherwise qualify for a home loan. Under the program, the state sells general obligation bonds to investors and uses the funds to provide loans to eligible veterans to purchase homes. Participating veterans repay the state for these home loans. These funds are then used to repay the bonds.

This Proposal

The $4 billion from this proposition, if passed, includes $1.5 billion for Multifamily Housing Program for low-income residents, $1 billion for loans to help veterans purchase farms and homes, $450 million for infill and transit-oriented housing projects, $300 million for farmworker housing program, and $300 million for manufactured and mobile homes. The funds would provide housing assistance for buyers, infrastructure financing, and matching grants to expand the number of affordable homes available in the market.

The bond funds would be available as follows:

  • Affordable Multifamily Housing Programs. $1.8 billion.
    • The measure provides funds to build or renovate rental housing projects, such as apartment buildings. These programs generally provide local governments, nonprofit organizations, and private developers with low-interest loans to fund part of the construction cost. In exchange, projects must reserve units for low-income households for a period of 55 years.
  • Infrastructure Programs. $450 million.
    • The measure provides funds to programs that build housing in existing urban areas and near public transportation. The funds also would provide loans and grants for a wide variety of projects that support this housing—such as parks and water, sewage, and transportation infrastructure.
  • Homeownership Programs. $450 million.
    • The measure provides funds to encourage homeownership for low- and moderate-income homebuyers. Most of the funds would be used to provide down payment assistance to first-time homebuyers through low-interest loans or grants. Additionally, the measure provides funds to assist low- and moderate-income families to build their own homes.
  • Farmworker Housing Program. $300 million.
    • This measure provides funds in loans and grants to build housing for farmworkers. Program funds would be used for both rental and owner-occupied housing.
  • Veterans Housing Program. $1 billion.
    • This measure also provides funds for home loan assistance to veterans. Veterans generally use these loans to purchase single-family residences, condominiums, farms, and mobile homes.

State Bond Cost Estimate

Authorized new borrowing: $4 billion
Average annual cost to pay off bond: $170 million
Likely repayment period: 35 years
Source of repayment: General tax revenue




 

Proposition 2

2
Authorizes Bonds to Fund Existing Housing Program for Individuals with Mental Illness. Legislative Statute. Amends Mental Health Services Act to fund No Place Like Home Program, which finances housing for individuals with mental illness. Ratifies existing law establishing the No Place Like Home Program. Fiscal Impact: Allows the state to use up to $140 million per year of county mental health funds to repay up to $2 billion in bonds. These bonds would fund housing for those with mental illness who are homeless.

Proposition 2 was put on the ballot by the state’s lawmakers, your representatives in the Legislature.

If passed by voters in this election, it would allow the state to borrow $2 billion by selling general obligation bonds. The funds would allow the state to carry out the No Place Like Home program, which was created in 2016 in order to build and rehabilitate housing for those with mental illness who are homeless or at-risk of becoming homeless.

The bonds would be repaid with interest over a 30-year period, with payments coming out of an existing tax provided for under the Mental Health Services Act.

Counties Provide Mental Health Services

Counties are primarily responsible for providing mental health care for persons who lack private coverage. Counties provide psychiatric treatment, counseling, hospitalization, and other mental health services. Some counties also arrange other types of help for those with mental illness—such as housing, substance abuse treatment, and employment services.

Mental Health Services Act

In 2004, California voters approved Proposition 63, also known as the Mental Health Services Act. The act provides funding for various county mental health services by increasing the income tax paid by those with income above $1 million. This income tax increase raises $1.5 billion to $2.5 billion per year.

No Place Like Home Program

In 2016, the Legislature created the No Place Like Home Program to build and rehabilitate housing for those with mental illness who are homeless or at-risk of becoming homeless. The state plans to pay for this housing by borrowing up to $2 billion. However, to borrow the funds, the state must first ask the courts for approval of the state’s plan.

This Proposal

The measure allows the state to carry out No Place Like Home, and makes it so that court approval on the funding issue is no longer required. In particular, the measure:

  • Approves the Use of Mental Health Services Act Funds for No Place Like Home.
    • The measure says that Mental Health Services Act funds can be used for No Place Like Home. No more than $140 million of Mental Health Services Act funds could be used for No Place Like Home in any year.
  • Authorizes $2 Billion in Borrowing.
    • The measure allows the state to sell up to $2 billion in bonds to pay for No Place Like Home. The bonds would be repaid over many years with Mental Health Services Act funds.

Fiscal Effect Depends on the Court Decision

The fiscal effect of the measure depends on whether or not the courts would have approved the state’s plan to pay for No Place Like Home without this measure.

If the courts would have approved the state’s plan anyway, the measure would have little effect. This is because the state would have gone forward with No Place Like Home in any case.

If the courts would have rejected the state’s plan, the state would not have been able to move forward with No Place Like Home. This measure would allow the state to do so.





 

Proposition 3

3
Authorizes Bonds to Fund Projects for Water Supply and Quality, Watershed, Fish, Wildlife, Water Conveyance, and Groundwater Sustainability and Storage. Initiative Statute. Authorizes $8.877 billion in state general obligation bonds for various infrastructure projects. Fiscal Impact: Increased state costs to repay bonds averaging $430 million per year over 40 years. Local government savings for water-related projects, likely averaging a couple hundred million dollars annually over the next few decades.

Proposition 3 was put on the ballot by petition signatures.

If passed by voters in this election, it would allow the state to borrow $8.877 billion by selling general obligation bonds. These funds would go toward various water and environmental projects.

Californians Get Water from Several Sources

Watersheds

Most of the water used for drinking and farming in California comes from rain and melted snow. Rain and snow flow into streams and rivers, many of which start in the mountains. The areas where these streams and rivers begin are referred to as "watersheds."

Water Transportation

California has built dams, reservoirs, and canals to store water and deliver it around the state. Water is also pumped from underground (referred to as "groundwater"), especially during dry years when not as much rain and snow falls.

Water Recycling

A small share of the state’s water comes from other sources, such as cleaning and reusing the wastewater that households and businesses send into sewers (referred to as "water recycling").

Most Spending on Water Is by Local Governments

Local government agencies—usually water districts, cities, and counties—fund most of the projects that provide clean water for people to drink, supply water for farming, and protect communities from floods. These agencies spend about $25 billion each year on these types of water-related activities. Residents pay for the majority of this spending when they pay their water and sewer bills.

The State Also Spends Money on Water, as Well as Environmental Projects

The state gives grants and loans to local government agencies to help pay part of the costs of some of their water projects. The state also spends money on projects to improve the natural environment, including protecting habitats that are home to fish, birds, and other wildlife. In many cases, the state—rather than local governments—provides most of the funding for these environmental projects. Sometimes state departments carry out environmental projects themselves, and sometimes they give grants to local governments, nonprofit organizations, and other organizations for these projects. In recent years, the state has spent about $4 billion per year to support water and environmental projects.

This Proposal

This proposition would allow the state to sell about $8.9 billion in new general obligation bonds for various water and environmental projects. The proposed funds would be used in carrying out six categories of programs, which include about 100 subcategories and specific projects. These six broad categories include the following:

  • Watershed Lands ($2.5 Billion).
    • This category funds projects to improve the conditions of watershed lands, which include forests, meadows, wetlands, and areas near rivers. Funded projects must protect or improve the supply and quality of the water that comes from these lands. Many of these projects would also have environmental benefits, such as improving habitat for fish and wildlife or reducing the risk of forest fires. This funding category includes about 50 subcategories with special requirements, including that certain amounts be spent in specific areas of the state. For example, the proposition provides $250 million for the forests in the Sierra Nevada Mountains and $200 million for the Salton Sea in Southern California.
  • Water Supply ($2.1 Billion).
    • This funding is for projects that will increase the amount of water available for people to use. This includes money for collecting and cleaning up rainwater ($550 million), cleaning up drinking water ($500 million), and recycling wastewater ($400 million). The proposition also provides funding for water conservation activities that decrease how much water people use ($300 million). This could include paying some of the costs for people to install low-flow toilets or replace their lawns with plants that use less water.
  • Fish and Wildlife Habitat ($1.4 Billion).
    • This category funds projects to improve fish and wildlife habitat. The types of projects could include increasing the amount of water that flows to a wetland or river, as well as buying undeveloped land to keep it in a natural state. The proposition targets some of the funding for projects to help certain species, including native fish in the Central Valley ($400 million), salmon and steelhead trout ($300 million), and migratory birds ($280 million).
  • Water Facility Upgrades ($1.2 Billion).
    • This funding is for four specific projects to improve the availability of water in certain areas of the state. These projects include: (1) repairing the federally owned Madera and Friant-Kern canals in the Central Valley ($750 million), (2) building canals and other types of projects that connect local reservoirs and communities in the San Francisco Bay region ($250 million), (3) repairing the state-owned Oroville Dam in Butte County ($200 million), and (4) planning changes for the North Bay Aqueduct that serves Solano and Napa Counties ($5 million).
  • Groundwater ($1.1 Billion).
    • This category funds projects related to groundwater storage to make sure groundwater will be available in future years. This includes activities to clean up groundwater by removing salts to make it more usable ($400 million). Funding will also be used for projects that help water to soak back into the ground so that it can be used in the future (known as "groundwater recharge").
  • Flood Protection ($500 Million).
    • This funding is for projects that reduce the risk from floods. These projects could include expanding floodplains (which provide areas where floodwaters can spread without causing much harm) and repairing reservoirs. Some of these projects would provide other benefits, such as improving fish and wildlife habitat, increasing water supplies, and improving recreation opportunities. Some of this funding is for projects in specific areas of the state, including the Central Valley ($200 million) and the San Francisco Bay Area ($200 million).
Distributes Most Funding Through Grants.

The proposition provides funding to more than a dozen different state departments. The proposition continuously appropriates the bond funds to these departments, which is different from most water and environmental bonds. This means that the Legislature would not spend the funds in the annual state budget. Instead, departments would automatically receive funding when they are ready to spend it. Departments would spend some of the funds to carry out projects themselves. However, almost all of the funds would be given as grants to local government agencies, Indian tribes, nonprofit organizations, and private water companies for specific projects. For some funding subcategories—particularly those related to increasing or protecting water supply—grant recipients would have to provide at least $1 in local funds for each $1 of grant funding they receive.

Provides Funding for "Disadvantaged Communities."

The proposition has several requirements to help disadvantaged communities (those with lower average incomes). For a few spending subcategories, the proposition requires that funding be spent on projects that benefit these communities. Also, in many cases disadvantaged communities that receive grants would not have to pay the local share of costs discussed above.

Provides Greenhouse Gas (GHG) Funds for Water Projects.

Separate from the $8.9 billion bond, this proposition also changes how the state must spend some existing funding related to GHGs. The state has passed laws to reduce global warming by limiting the amount of GHGs that are released in California. These efforts include the "cap-and-trade" program, which requires some companies and government agencies to buy permits from the state to release GHGs. The program causes some water agencies to have higher electricity costs to operate parts of their water delivery systems, such as pumps and water treatment plants. This proposition requires that a portion of the funding the state receives from the sale of permits be provided to four water agencies—the state Department of Water Resources, the Metropolitan Water District of Southern California, the Contra Costa Water District, and the San Luis and Delta Mendota Water Authority. The amount of funding would be equal to each agency’s additional electricity costs associated with state programs to reduce GHGs. We estimate these costs could total tens of millions of dollars annually. (In the most recent year, the state has received $3 billion from the sale of permits.) The agencies would be required to spend the funds they receive on such activities as water conservation programs. As such, these funds would no longer be available for the state to spend on other activities.

Fiscal Effects

State Bond Costs

This proposition would allow the state to borrow $8.9 billion by selling additional General Obligation bonds to investors. These investors would be repaid with interest using the state’s General Fund tax revenues. The cost of these bonds would depend on various factors—such as the interest rates in effect at the time they are sold, the timing of bond sales, and the time period over which they are repaid. We estimate that the cost to state taxpayers to repay this bond would total $17.3 billion to pay off both principal ($8.9 billion) and interest ($8.4 billion). This would result in average costs of about $430 million annually over the next 40 years. This amount is about one-third of 1 percent of the state's current General Fund budget.

Local Costs and Savings to Complete Projects

Much of the bond funding would be used for local government projects. Providing state funds for local projects would affect how much of their own funds these local governments spend on these projects. In many cases, state bonds would reduce local spending. For example, this would occur in cases where the state bond funds replaced monies that local governments would have spent on projects anyway.

In some cases, however, state funds could increase total spending on projects by local governments. For example, some local governments might choose to build additional or substantially larger projects than they would if state funds were not available. For some of these projects—such as when the bond requires a local cost share—local governments would bear some of the additional costs.

On balance, we estimate that this proposition would result in savings to local governments to complete the projects funded by this bond. These savings could average a couple hundred million dollars annually over the next few decades. The exact amount would depend on which specific projects local governments choose and their share of the total project costs.





 

Proposition 4

4
Authorizes Bonds Funding Construction at Hospitals Providing Children’s Health Care. Initiative Statute. Authorizes $1.5 billion in bonds, to be repaid from state’s General Fund, to fund grants for construction, expansion, renovation, and equipping of qualifying children’s hospitals. Fiscal Impact: Increased state costs to repay bonds averaging about $80 million annually over the next 35 years.

Proposition 4 was put on the ballot by petition signatures.

If passed by voters in this election, it would allow the state to borrow $1.5 billion by selling general obligation bonds. These funds would go toward grants for construction, expansion, renovation, and equipping of qualifying children's hospitals.

Children’s Hospitals

State law identifies eight private nonprofit hospitals and the children's programs at the five University of California (UC) academic medical center campuses as "children's hospitals." Children's hospitals focus on treating infants and children with severe illness or injuries, or complex chronic health conditions that require specialized care. Many children receiving services in these hospitals are from low-income families.

Children’s hospitals receive funding from several sources. A majority of children's hospitals' funding comes from the federal-state Medicaid program (known as Medi-Cal in California), which provides health care coverage to low-income children in the state. Children's hospitals also receive funding from commercial health insurance coverage, other government health care coverage programs, and private donations.

California Children's Services (CCS) Program

The CCS program is a state-local health care coverage program that pays for specialized treatment and other services for children with complex chronic health conditions, including many children treated at children's hospitals. (Most children in the CCS program are also enrolled in Medi-Cal.) The state approves hospitals and other medical providers to receive payment for treating children in the CCS program.

Other Hospitals Also Treat Children

Other hospitals in California that are not specifically identified as children's hospitals in state law also focus to varying degrees on children's health care. For example, some hospitals have wings or centers that specialize in treating children. These hospitals are often approved to treat children in the CCS program.

This Proposal

This measure authorizes the state to sell an additional $1.5 billion in general obligation bonds for capital improvement projects at (1) the 13 children's hospitals and (2) other public or private nonprofit hospitals that treat children eligible for the CCS program.

The measure provides 72 percent of the bond funds—roughly $1.1 billion— to the eight private nonprofit children's hospitals. Each of these eight hospitals may apply for an equal share of this funding. The measure provides 18 percent of the bond funds—$270 million—to the five UC children's hospitals. Each UC children's hospital may apply for an equal share of this funding.

  • Private Nonprofit Children’s Hospitals -- 72 Percent of Funds ($1.08 billion).
    • ($135 million each)
    • Children’s Hospital and Research Center, Oakland
    • Children’s Hospital of Los Angeles
    • Children’s Hospital of Orange County
    • Earl and Loraine Miller Children’s Hospital (Long Beach)
    • Loma Linda University Children’s Hospital
    • Lucile Packard Children’s Hospital
    • Rady Children’s Hospital, San Diego
    • Valley Children’s Hospital (Madera)
  • University of California Children’s Hospitals -- 18 Percent of Funds ($270 million).
    • ($54 million each)
    • Mattel Children’s Hospital at University of California, Los Angeles
    • University Children’s Hospital at University of California, Irvine
    • University of California, Davis Children’s Hospital
    • University of California, San Diego Children’s Hospital
    • University of California, San Francisco Children’s Hospital
  • Other Hospitals -- 10 Percent of Funds ($150 million).
    • Roughly 150 public or private nonprofit hospitals that provide services to children eligible for the California Children’s Services program.
Use of Funds

The measure allows for the money raised from bond sales to be used for various purposes, including "construction, expansion, remodeling, renovation, furnishing, equipping, financing, or refinancing of eligible hospitals in the state." The measure requires that the funds provided not exceed the total cost of a project and funded projects be completed within a "reasonable period of time."

State Bond Repayment Costs

This measure would allow the state to borrow $1.5 billion by selling additional general obligation bonds to investors, who would be repaid, with interest, using the state's general tax revenues.

We estimate that the cost to taxpayers to repay the bonds would total $2.9 billion to pay off both the principal ($1.5 billion) and interest ($1.4 billion). This would result in average repayment costs of about $80 million annually over the next 35 years.

This amount is less than one-tenth of 1 percent of the state's current General Fund budget. Administrative costs, paid from the bond funds, would be limited to actual costs or 1 percent of the bond funds, whichever is less.





 

Proposition 5

5
Changes Requirements for Certain Property Owners to Transfer Their Property Tax Base to Replacement Property. Initiative Constitutional Amendment and Statute. Removes certain transfer requirements for homeowners over 55, severely disabled homeowners, and contaminated or disaster-destroyed property. Fiscal Impact: Schools and local governments each would lose over $100 million in annual property taxes early on, growing to about $1 billion per year. Similar increase in state costs to backfill school property tax losses.

Proposition 5 was put on the ballot by petition signatures.

If passed by voters in this election, it would change the way some property taxes would be calculated for some property owners over the age of 55 -- reducing taxes for those individuals.

Schools and other local governments each probably would lose over $100 million in annual property tax revenue in the first few years, growing over time to about $1 billion per year (in today's dollars). There would be a similar increase in state costs to backfill school property tax losses.

Local Governments Levy Taxes on Property Owners.

California local governments— cities, counties, schools, and special districts—levy property taxes on property owners based on the value of their property. Property taxes are a major revenue source for local governments, raising over $60 billion per year.

Calculating a Property Owner's Tax Bill.

Each property owner's annual property tax bill is equal to the taxable value of his or her property multiplied by the property tax rate. The typical property owner's property tax rate is 1.1 percent. In the year a property is purchased, its taxable value is its purchase price. Each year after that the property's taxable value is adjusted for inflation by up to 2 percent. This continues until the property is sold and again is taxed at its purchase price.

Movers Often Face Increased Property Tax Bills.

The market value of most homes (what they could be sold for) grows faster than 2 percent annually. This means the taxable value of most homes is less than their market value. Because of this, when a homeowner buys a different home, the purchase price of the new home often exceeds the taxable value of the buyer’s prior home (even when the homes have similar market values). This leads to a higher property tax bill for the home buyer.

Special Rules for Some Homeowners.

In some cases, special rules allow existing homeowners to move to a different home without paying higher property taxes. These special rules apply to homeowners who are over 55 or severely disabled or whose property has been impacted by a natural disaster or contamination. (We refer to these homeowners as "eligible homeowners.")

When moving within the same county, an eligible homeowner can transfer the taxable value of his or her existing home to a different home if the market value of the new home is the same or less than the existing home. Also, a county government may allow eligible homeowners to transfer their taxable values to homes in the county from homes in different counties. Ten counties allow these transfers. Except in limited cases, homeowners who are over 55 or severely disabled can transfer their taxable value once in their lifetime.

This Proposal

Expands Special Rules for Eligible Homeowners.

The measure amends the State Constitution to expand the special rules that give property tax savings to eligible homeowners when they buy a different home. Beginning January 1, 2019, the measure:

  • Allows Moves Anywhere in the State.
    • Eligible homeowners could transfer the taxable value of their existing home to another home anywhere in the state.
  • Allows the Purchase of a More Expensive Home.
    • Eligible homeowners could transfer the taxable value of their existing home (with some adjustment) to a more expensive home. The taxable value transferred from the existing home to the new home is adjusted upward. The new home’s taxable value is greater than the prior home's taxable value but less than the new home's market value.
  • Reduces Taxes for Newly-Purchased Homes That Are Less Expensive.
    • When an eligible homeowner moves to a less expensive home, the taxable value transferred from the existing home to the new home is adjusted downward.
  • Removes Limits on How Many Times a Homeowner Can Use the Special Rules.
    • There is no limit on the number of times an eligible homeowner can transfer their taxable value.

Fiscal Effect

Reduced Property Tax Revenues to Local Governments.

The measure could have multiple effects on property tax revenue:

  • Reduced Taxes From People Who Would Have Moved Anyway.
    • Right now, about 85,000 homeowners who are over 55 move to different houses each year without receiving a property tax break. Most of these movers end up paying higher property taxes. Under the measure, their property taxes would be much lower. This would reduce property tax revenue.
  • Potentially Higher Taxes From Higher Home Prices and More Home Building.
    • The measure would cause more people to sell their homes and buy different homes because it gives them a tax break to do so. The number of movers could increase by a few tens of thousands. More people being interested in buying and selling homes would have some effect on home prices and home building. Increases in home prices and home building would lead to more property tax revenue.
  • The revenue losses from people who would have moved anyway would be bigger than the gains from higher home prices and home building.
    • This means the measure would reduce property taxes for local governments. In the first few years, schools and other local governments each probably would lose over $100 million per year. Over time, these losses would grow, resulting in schools and other local governments each losing about $1 billion per year (in today's dollars).
More State Spending for Schools.

Current law requires the state to provide more funding to most schools to cover their property tax losses. As a result, state costs for schools would increase by over $100 million per year in the first few years. Over time, these increased state costs for schools would grow to about $1 billion per year in today's dollars. (This is less than 1 percent of the state budget.)

Increase in Property Transfer Tax Revenues.

As the measure would increase home sales, it also would increase property transfer taxes collected by cities and counties. This revenue increase likely would be in the tens of millions of dollars per year.

Increase in Income Tax Revenues.

Because the measure would increase the number of homes sold each year, it likely would increase the number of taxpayers required to pay income taxes on the profits from the sale of their homes. This probably would increase state income tax revenues by tens of millions of dollars per year.

Higher Administrative Costs for Counties.

County assessors would need to create a process to calculate the taxable value of homes covered by this measure. This would result in one-time costs for county assessors in the tens of millions of dollars or more, with somewhat smaller ongoing cost increases.





 

Proposition 6

6
Eliminates Certain Road Repair and Transportation Funding. Requires Certain Fuel Taxes and Vehicle Fees Be Approved by the Electorate. Initiative Constitutional Amendment. Repeals a 2017 transportation law’s taxes and fees designated for road repairs and public transportation. Fiscal Impact: Reduced ongoing revenues of $5.1 billion from state fuel and vehicle taxes that mainly would have paid for highway and road maintenance and repairs, as well as transit programs.

Proposition 6 was put on the ballot by petition signatures.

If passed by voters in this election, it would repeal the gasoline and fuel tax increases passed by the Legislature in 2017. It would also make it so the Legislature couldn’t raise such taxes in the future without first submitting those tax increases to voters via a ballot proposition such as this one, requiring a majority vote.

Approval of State Taxes

Currently, the Legislature can only pass a new tax or increase an existing tax with a two-thirds vote. (The Legislature can pass most other types of laws with a simple majority.) The Legislature does not need to get voter-approval for such tax changes.

Voters, by putting an initiative on the ballot, can also pass new taxes or increase existing taxes without the Legislature’s involvement.

State Fuel and Vehicle Taxes

The state charges various on gasoline and diesel fuel. The amounts of the taxes are set on a flat per-gallon basis (excise tax) and also on a percentage basis of the sales price (sales tax). The State Constitution generally requires that the money from these fuel taxes be spent on highways, roads, and transit.

State law requires vehicle owners to pay two specific taxes for the privilege of operating a vehicle on public highways. These are (1) vehicle license fees and (2) recently enacted transportation improvement fees, both of which are based on a vehicle's value. The State Constitution requires that the transportation improvement fee revenues also be spent on highways, roads, and transit.

Senate Bill 1 (2017) - “The Gas Tax”

In 2017, the Legislature enacted Senate Bill (SB) 1 to increase annual state funding for transportation through various fuel and vehicle taxes. Specifically, SB 1 increased the base gasoline excise tax (by 12 cents per gallon) and the diesel sales tax (by 4 percent). It also set fixed rates on a second (add-on) gasoline excise tax and the diesel excise tax, both of which previously could change each year based on fuel prices.

Further, SB 1 created the transportation improvement fee (which ranges from $25 to $175 per year) and a fee specifically for zero-emission vehicles (set at $100 per year for model years 2020 and later). It also provides for inflation adjustments in the future.

This fiscal year, the state expects the taxes to raise $4.4 billion. Two years from now, when all the taxes are in effect and the inflation adjustments have started, the state expects the taxes to raise $5.1 billion.

The State Constitution requires that nearly all of these new revenues be spent on transportation purposes. Senate Bill 1 dedicates about two-thirds of the revenues to highway and road repairs, with the remainder going to other programs (such as for mass transit).

This Proposal

Requires Legislature to Get Voter Approval for Fuel and Vehicle Taxes.

Proposition 6 amends the State Constitution to require the Legislature to get voter approval for new or increased taxes on the sale, storage, use, or consumption of gasoline or diesel fuel, as well as for taxes paid for the privilege of operating a vehicle on public highways. Thus, the Legislature would need voter approval for such taxes as gasoline and diesel excise and sales taxes, vehicle license fees, and transportation improvement fees.

Eliminates Recently Enacted Fuel and Vehicle Taxes.

Proposition 6 also eliminates any such fuel and vehicle taxes passed by the Legislature after January 1, 2017 and up to the date that Proposition 6 takes effect in December. This would eliminate the increased fuel taxes and the transportation improvement fees enacted by SB 1.

Fiscal Effects

Eliminates Tax Revenues From SB 1.

In the current fiscal year, Proposition 6 would reduce SB 1 tax revenues from $4.4 billion to $2 billion—a $2.4 billion decrease. (The $2 billion in remaining revenues would be from taxes collected prior to Proposition 6 taking effect in December.) Two years from now, the revenue reduction would total $5.1 billion annually. The funding reductions would mainly affect highway and road maintenance and repair programs, as well as transit programs.

Makes Passage of Specified Fuel and Vehicle Taxes More Difficult.

Proposition 6 would make it more difficult to enact specified fuel and vehicle taxes because voters also would have to approve them. As a result, there could be less revenue than otherwise would be the case. Any reduction in revenues is unknown, as it would depend on future actions by the Legislature and voters.





 

Proposition 7

7
Conforms California Daylight Saving Time to Federal Law. Allows Legislature to Change Daylight Saving Time Period. Legislative Statute. Gives Legislature ability to change daylight saving time period by two-thirds vote, if changes are consistent with federal law. Fiscal Impact: This measure has no direct fiscal effect because changes to daylight saving time would depend on future actions by the Legislature and potentially the federal government.

Proposition 7 was put on the ballot by the state’s lawmakers, your representatives in the Legislature.

If passed by voters in this election, it would allow for our state representatives, the Legislature, to change our Daylight Saving Time policy by a two-thirds vote.

Federal Law Establishes Daylight Saving Time for Part of the Year.

Federal law establishes a standard time zone for each area of the U.S. For example, California and other western states are in the Pacific standard time zone. Federal law requires the standard time of each zone to advance by one hour from early March to early November—a period known as Daylight Saving Time (DST).

During DST, sunrises and sunsets occur one hour later than they otherwise would. We move our clocks forward in the spring, and set our clocks back in the fall.

Currently, federal law does not allow states to adopt year-round DST. However, federal law allows states to opt out of DST and remain on standard time all year, as is currently the case in Arizona and Hawaii.

California Voted on DST About 70 Years Ago.

In 1949, California voters approved an initiative measure which established DST in California. The Legislature can only make changes to that initiative measure by submitting those changes to the voters for their approval.

This Proposal

Proposition 7 allows the Legislature with a two-thirds vote to change DST (such as by remaining on DST year-round), as long as the change is allowed under federal law. Daylight Saving Time would still be observed as it is now, until the Legislature acts to change it.

No Direct Fiscal Effects on State and Local Governments

The measure would have no direct effect on state and local government costs or revenues. This is because any impacts would depend on future actions by the Legislature—and potentially the federal government—to change DST.



 

Proposition 8

8
Regulates Amounts Outpatient Kidney Dialysis Clinics Charge for Dialysis Treatment. Initiative Statute. Requires rebates and penalties if charges exceed limit. Requires annual reporting to the state. Prohibits clinics from refusing to treat patients based on payment source. Fiscal Impact: Overall annual effect on state and local governments ranging from net positive impact in the low tens of millions of dollars to net negative impact in the tens of millions of dollars.

Proposition 8 was put on the ballot by petition signatures.

If passed by voters in this election, it would create limits on fees that licensed Dialysis Clinics in California can charge, with higher limits tied to higher spending on patient care.

Dialysis Treatment

Healthy kidneys filter a person's blood to remove waste and extra fluid. Kidney disease refers to when a person's kidneys do not function properly.

”Dialysis” artificially mimics what healthy kidneys do. Most people on dialysis undergo hemodialysis, a form of dialysis in which blood is removed from the body, filtered through a machine to remove waste and extra fluid, and then returned to the body. A hemodialysis treatment lasts about four hours and typically occurs three times per week.

Individuals with kidney failure may receive dialysis treatment at hospitals or in their own homes, but most receive treatment at chronic dialysis clinics (CDCs).

Chronic Dialysis Clinics (CDCs)

As of May 2018, 588 licensed CDCs in California provided treatment to roughly 80,000 patients each month. Each CDC operates an average of 22 dialysis stations, with each station providing treatment to one patient at a time.

The California Department of Public Health (CDPH) is responsible for licensing and inspecting CDCs.

While various entities own and operate CDCs, just two private, for-profit entities, DaVita, Inc. and Fresenius Medical Care, operate and have at least partial ownership in 421 of the state’s 588 clinics. That means that they alone operate over 72% of the state’s total clinics.

Paying for Dialysis Treatment

We estimate that CDCs have total revenues of roughly $3 billion annually from their operations in California. These revenues consist of payments for dialysis treatment from a few main sources, or "payers":
  • Medicare
    • This federally funded program provides health coverage to most people age 65 and older and certain younger people who have disabilities. Federal law generally makes people with kidney failure eligible for Medicare coverage regardless of age or disability status. Medicare pays for dialysis treatment for the majority of people on dialysis in California.
  • Medi-Cal
    • The federal-state Medicaid program, known as Medi-Cal in California, provides health coverage to low-income people. The state and the federal government share the costs of Medi-Cal. Some people qualify for both Medicare and Medi-Cal. For these people, Medicare covers most of the payment for dialysis treatment as the primary payer and Medi-Cal covers the rest. For people enrolled only in Medi-Cal, the Medi-Cal program is solely responsible to pay for dialysis treatment.
  • Group and Individual Health Insurance
    • Many people in the state have group health insurance coverage through an employer or another organization (such as a union). The California state government, the state’s two public university systems, and many local governments in California provide group health insurance coverage for their current workers, eligible retired workers, and their families. Some people without group health insurance purchase health insurance individually. Group and individual health insurance coverage is often provided by a private insurer that receives a premium payment in exchange for covering the costs of an agreed-upon set of health care services. When an insured person develops kidney failure, that person can usually transition to Medicare coverage. Federal law requires that a group insurer remain the primary payer for dialysis treatment for a "coordination period" that lasts 30 months.
Group and Individual Health Insurers Typically Pay Higher Rates for Dialysis Than Government Programs.

The rates that Medicare and Medi-Cal pay for dialysis treatment are relatively close to the average cost for CDCs to provide a dialysis treatment and are largely determined by regulation. In contrast, group and individual health insurers establish their rates by negotiating with CDCs. The rates paid by these insurers depend on the relative bargaining power of insurers and the CDCs. On average, group and individual health insurers pay multiple times what government programs pay for dialysis treatment.

This Proposal

Requires Clinics to Pay Rebates When Total Revenues Exceed a Specified Cap.

Beginning in 2019, the measure requires CDCs each year to calculate the amount by which their revenues exceed a specified cap. The measure then requires CDCs to pay rebates (that is, give money back) to payers, excluding Medicare and other government payers, in the amount that revenues exceed the cap. The more a payer paid for treatment, the larger the rebate the payer would receive.

Revenue Cap Based on Specified CDC Costs.

The revenue cap established by the measure is equal to 115 percent of specified “direct patient care services costs” and “health care quality improvement costs.” These include the cost of such things as staff wages and benefits, staff training and development, drugs and medical supplies, facilities, and electronic health information systems. Hereafter, we refer to these costs as “allowable,” meaning they can be counted toward determining the revenue cap. Other costs, such as administrative overhead, would not be counted toward determining the revenue cap.

Interest and Penalties on Rebated Amounts.

In addition to paying any rebates, CDCs would be required to pay interest on the rebate amounts, calculated from the date of payment for treatment. CDCs would also be required to pay a penalty to CDPH of 5 percent of the amount of any required rebates, up to a maximum penalty of $100,000.

Rebates Calculated at Owner/Operator Level.

The measure specifies that rebates would be calculated at the level of a CDC's "governing entity," which refers to the entity that owns or operates the CDC (hereafter "owner/operator"). Some owner/operators have many CDCs in California, while others may own or operate a single CDC. For owner/operators with many CDCs, the measure requires them to add up their revenues and allowable costs across all of their CDCs in California. If the total revenues exceed 115 percent of total allowable costs across all of an owner/operator's clinics, they would be required to pay rebates equal to the difference.

Legal Process to Raise Revenue Cap in Certain Situations.

Both the California Constitution and the United States Constitution prohibit the government from taking private property (which includes the value of a business) without fair legal proceedings or fair compensation. A CDC owner/operator might try to prove in court that, in their particular situation, the required rebates would amount to taking the value of the business and therefore violate the state or federal constitution. If a CDC owner/operator is able to prove this, the measure outlines a process where the court would reduce the required rebates by just enough to no longer violate the constitution. The measure places on the CDC owner/operator the burden of identifying the largest amount of rebates that would be legal. The measure specifies that any adjustment in the rebate amount would apply for only one year.

Other Requirements.

The measure requires that CDC owner/operators submit annual reports to CDPH. These reports would list the number of dialysis treatments provided, the amount of allowable costs, the amount of the owner/ operator's revenue cap, the amount by which revenues exceed the cap, and the amount of rebates paid. The measure also prohibits CDCs from refusing to provide treatment to a person based on who is paying for the treatment.

CDPH Required to Issue Regulations.

The measure requires CDPH to develop and issue regulations to implement the measure's provisions within 180 days of the measure's effective date. In particular, the measure allows CDPH to identify through regulation additional CDC costs that would count as allowable costs, which could serve to reduce the amount of any rebates otherwise owed by CDCs.

Uncertain Fiscal effects

Because a majority of Chronic Dialysis Centers in the state are operated for profit, and this proposal would reduce their profitability, it’s unclear what effects this measure would have on their business models.

As an example, if CDCs respond to the measure by scaling back operations in the state, some dialysis patients' access to dialysis treatment could be disrupted in the short run. This could lead to health complications that result in admission to a hospital. To the extent that dialysis patients are hospitalized more frequently because of the measure, state costs—particularly in Medi-Cal—could increase significantly in the short run.

Our best estimate of the range of the measure's likely fiscal impacts on state and local governments range from a net positive effect in the low 10s of millions of dollars to a net negative effect in the low 10s of millions of dollars.

It is also unclear how CDPH (as the state regulator involved in implementing and enforcing the measure) and courts would interpret the measure's provisions defining allowable costs. Including more costs as allowable would make revenue caps higher and allow CDCs to keep more of their revenues (by requiring smaller rebates). Including fewer costs as allowable would make revenue caps lower and allow clinics to keep less of their revenues (by requiring larger rebates).

Uncertain How CDCs Would Respond to the Measure. CDC owner/operators would likely respond to the measure by adjusting their operations in ways that limit, to the extent possible, the effect of the rebate requirement. They could do any of the following:

  • Increase Allowable Costs.
    • CDC owner/ operators might increase allowable costs, such as wages and benefits for non-managerial staff providing direct patient care. Increasing allowable costs would raise the revenue cap, reduce the amount of rebates owed, and potentially leave CDC owner/operators better off than if they were to leave allowable costs at current levels. This is because the amount of revenues that CDC owner/operators could retain would grow by more than the additional costs (the revenue cap would increase by 115 percent of additional allowable costs).
  • Reduce Other Costs.
    • CDC owner/operators might also reduce, where possible, other costs that do not count toward determining the revenue cap (such as administrative overhead). This would not change the amount of rebates owed, but it would improve the CDCs' profitability.
  • Seek Adjustments to Revenue Cap.
    • If CDC owner/operators believe they cannot achieve a reasonable return on their operations even after making adjustments as described above, they might try to challenge the rebate provision in court to get a higher revenue cap as outlined in the measure. If such a challenge were successful, some CDC owner/operators might have a higher revenue cap and owe less in rebates in some years.
  • Scale Back Operations.
    • In some cases, owner/operators might decide to open fewer new CDCs or close some CDCs if the amount of required rebates is large and reduced revenues do not provide sufficient return on investment to expand or remain in the market. If this takes place, other providers would eventually need to step in to meet the demand for dialysis. These other providers might operate less efficiently (have higher costs). Some other providers could potentially be exempt from the provisions of the measure if they do not operate under a CDC license (for example, hospitals). Such broader changes in the dialysis industry are difficult to predict.




 

Proposition 9

On July 18, 2018, Proposition 9 was removed from the ballot by order of the California Supreme Court.

Proposition 10

10
Expands Local Governments’ Authority to Enact Rent Control on Residential Property. Initiative Statute. Repeals state law that currently restricts the scope of rent-control policies that cities and other local jurisdictions may impose on residential property. Fiscal Impact: Potential net reduction in state and local revenues of tens of millions of dollars per year in the long term. Depending on actions by local communities, revenue losses could be less or considerably more.

Proposition 10 was put on the ballot by petition signatures.

If passed by voters in this election, it would repeal a state law that currently restricts the scope of rent control policies that cities and other jurisdictions may impose on residential property. The measure would allow local governments to enact rent control.

Rental Housing Is Expensive in California.

Renters in California typically pay 50 percent more for housing than renters in other states. In some parts of the state, rent costs are more than double the national average. Rent is high in California because the state does not have enough housing for everyone who wants to live here. People who want to live here must compete for housing, which increases rents.

Several Cities Have Rent Control Laws.

Several California cities—including Los Angeles, San Francisco, and San Jose—have laws that limit how much landlords can increase rents for housing from one year to the next. These laws often are called rent control. About one-fifth of Californians live in cities with rent control. Local rent boards administer rent control. These boards are funded through fees on landlords.

Court Rulings Limit Local Rent Control.

Courts have ruled that rent control laws must allow landlords to receive a "fair rate of return." This means that landlords must be allowed to increase rents enough to receive some profit each year.

State Law Limits Local Rent Control.

A state law, known as the Costa-Hawkins Rental Housing Act (Costa-Hawkins), limits local rent control laws. Costa-Hawkins creates three main limitations. First, rent control cannot apply to any single-family homes. Second, rent control can never apply to any newly built housing completed on or after February 1, 1995. Third, rent control laws cannot tell landlords what they can charge a new renter when first moving in.

State and Local Government Tax Revenues.

Three taxes are the largest sources of tax revenue for the state and local governments in California. The state collects a personal income tax on income—including rent received by landlords— earned within the state. Local governments levy property taxes on property owners based on the value of their property. The state and local governments collect sales taxes on the retail sale of goods.

This Proposal

Repeals Costa-Hawkins.

The measure repeals the limits on local rent control laws in Costa-Hawkins. Under the measure, cities and counties can regulate rents for any housing. They also can limit how much a landlord may increase rents when a new renter moves in. The measure itself does not make any changes to local rent control laws. With a few exceptions, cities and counties would have to take separate actions to change their local laws.

Requires Fair Rate of Return.

The measure requires that rent control laws allow landlords a fair rate of return. This puts the results of past court rulings into state law.

Fiscal Effects

Economic Effects

If communities respond to this measure by expanding their rent control laws, it could lead to several economic effects. The most likely effects are:

  • To avoid rent regulation, some landlords would sell their rental housing to new owners who would live there.
  • The value of rental housing would decline because potential landlords would not want to pay as much for these properties.
  • Some renters would spend less on rent and some landlords would receive less rental income.
  • Some renters would move less often.

These effects would depend on how many communities pass new laws, how many properties are covered, and how much rents are limited. Voters in some communities have proposed expanding rent control if this measure passes. If many localities enacted strong rent regulation, other economic effects (such as impacts on housing construction) could occur.

Changes in State and Local Revenues.

The measure’s economic effects would affect property tax, sales tax, and income tax revenues. The largest and most likely impacts are:

  • Less Property Taxes Paid by Landlords.
    • A decline in the value of rental properties would, over several years, lead to a decrease in property tax payments made by owners of those properties.
  • More Sales Taxes Paid by Renters.
    • Renters who pay less in rent would use some of their savings to buy taxable goods.
  • Change in Income Taxes Paid by Landlords.
    • Landlords' income tax payments would change in several ways. Some landlords would receive less rental income. This would reduce their income tax payments. On the other hand, over time landlords would pay less to buy rental properties. This would reduce expenses they can claim to lower their income tax payments (such as mortgage interest, property taxes, and depreciation). This would increase their income tax payments. The measure's net effect on income taxes paid by landlords in the long term is not clear.

Overall, the measure likely would reduce state and local revenues in the long term, with the largest effect on property taxes. The amount of revenue loss would depend on many factors, most importantly how communities respond to this measure. If several communities expand moderate rent control to cover most of their rental housing, revenue losses could be in the tens of millions of dollars per year. If few communities make changes, revenue losses would be minor. If many communities pass strong rent control, revenue losses could be in the hundreds of millions of dollars per year.

Increased Local Government Costs.

If cities or counties create new rent control laws or expand existing ones, local rent boards would face increased administrative and regulatory costs. Depending on local government choices, these costs could range from very little to tens of millions of dollars per year. These costs likely would be paid by fees on owners of rental housing.





 

Proposition 11

11
Requires Private-Sector Emergency Ambulance Employees to Remain On-Call During Work Breaks. Eliminates Certain Employer Liability. Initiative Statute. Law entitling hourly employees to breaks without being on-call would not apply to private-sector ambulance employees. Fiscal Impact: Likely fiscal benefit to local governments (in the form of lower costs and higher revenues), potentially in the tens of millions of dollars each year.

Proposition 11 was put on the ballot by petition signatures.

If passed by voters in this election, this would make it so an existing law that entitles hourly employees to breaks without being on-call would not apply to private-sector ambulance employees. Private ambulance companies could continue their current practice of having emergency medical technicians (EMTs) and paramedics stay on-duty during their meal and rest breaks in order to respond to 911 calls.

The measure would also put an end to any active lawsuits filed by several groups of EMTs and paramedics for back-pay penalties that ambulance companies likely will owe if the measure doesn’t pass.

Additionally, going forward, the measure would require the ambulance companies to offer employer-paid training and mental health services.

California's Ambulance EMTs and Paramedics.

There are 17,000 emergency medical technicians (EMTs) and paramedics in California and about 3,600 ambulances. EMTs provide first aid and basic medical care. Paramedics provide advanced medical care. Ambulances have two crew members—two EMTs, an EMT and a paramedic, or two paramedics. Ambulance crews normally work 12-hour shifts.

Employers Must Follow State Labor Laws About Meal and Rest Breaks.

California employers must follow various labor laws, including rules about the state minimum wage, how many hours can be worked, health and safety in the workplace, and meal and rest breaks. Most employers must provide an unpaid 30-minute meal break during each work shift and a paid 10-minute rest break every four hours.

Meal and Rest Breaks Taken by EMTs and Paramedics.

In practice, EMTs and paramedics are "on call" for their entire work shift in case they receive an emergency call. This means that their breaks are sometimes interrupted by 911 calls. They can also be interrupted by a request to reposition to a new posting location. As a result, EMTs and paramedics are often unable to plan their meal and rest breaks. At the same time, most ambulance shifts include down time between emergency calls. (Urban areas tend to have less down time than rural areas do.) As a result, crews often have enough down time in their shift to take uninterrupted meal and rest breaks even though they are technically on call.

Recent Court Decision Likely Requires "Off-Duty" Breaks for EMTs and Paramedics.

In 2016, the California Supreme Court ruled that on-call breaks violate state labor law. Instead, employers must provide breaks that are off-duty and not interruptible, even if an emergency occurs. If ambulance companies are required to comply with this decision, ambulance crews would have to go off-duty during their meal and rest breaks.

As a result, in order to meet the terms of their existing contracts, ambulance companies would likely have to operate significantly more ambulances in each area than they do now. This would increase costs to ambulance companies—potentially by more than $100 million each year statewide.

Ambulance Industry Response

To address higher costs and still remain profitable, companies would need to raise revenue and/or reduce costs. In response to the court decision, ambulance companies could:

  • Negotiate Legal Agreements That Allow Partial Compliance.
    • In some cases, ambulance companies and EMTs and paramedics could agree to a meal and rest break compromise that is less costly for ambulance companies than providing off-duty breaks.
  • Increase Insurance Charges.
    • Ambulance companies could charge commercial insurance companies more for their patients’ trips. If commercial insurers agreed to pay these higher rates, this would likely increase health insurance premiums for people with commercial health insurance. As noted earlier, ambulance companies already charge insurers much more than the average cost for an ambulance trip. Ambulance companies might be able to generate some additional revenue from insurance companies, but it appears unlikely that the full cost of compliance with the court decision could be covered in this way.
  • Reduce Business Costs.
    • Ambulance companies could change the way they do business to reduce costs. They could, for instance, lengthen their response times for emergency calls or replace higher paid paramedics with EMTs (who are generally paid lower wages). Ambulance companies would need to negotiate these changes with counties. These types of changes would likely be minor and therefore not provide major cost savings.
  • Make Smaller Contract Payments to Local Governments.
    • Ambulance companies could pay counties less for the right to provide ambulance services in each area. In areas that are least profitable, ambulance companies might no longer be able to pay for the right to provide ambulance services in that area. In these cases, counties might need to pay ambulance companies to ensure ambulance services remain available in that area.

Much of These New Costs Would Be Paid by Counties.

Although increased costs associated with compliance with Augustus would be offset by ambulance companies in a variety of ways, as discussed above, it appears likely that much of these higher costs would be borne by counties.

This Proposal

This measure makes changes to state laws that affect private-sector EMTs and paramedics, but would not apply to public agencies, such as fire departments.

Requires On-Call Meal and Rest Breaks for EMTs and Paramedics.

The measure requires EMTs and paramedics to stay on call during their whole shift. In effect, the measure continues the industry practice of requiring EMTs and paramedics to remain on call during breaks. At the same time, however, the measure requires that meal breaks (1) not be during the first or last hour of a shift, and (2) be spaced at least two hours apart. The measure requires ambulance companies to operate enough ambulances to meet these meal break schedules.

Seeks to Limit Costs for Past Practice of On-Call Meal and Rest Breaks.

Private ambulance companies may now owe penalties for these past violations. Several groups of EMTs and paramedics have sued ambulance companies alleging these violations. These lawsuits are still active. In addition to requiring on-call meal and rest breaks going forward, this measure states that the past industry practice of on-call meal and rest breaks was allowable. This could eliminate costs that ambulance companies may face related to these lawsuits.

Requires Employer-Paid Training and Mental Health Services.

The measure requires ambulance companies to offer EMTs and paramedics (1) annual natural disaster, active shooter, and violence prevention training; (2) mental health and wellness education; (3) mental health counseling sessions; and (4) access to long-term mental health services.

Fiscal Effects

As described above, the legal status of labor law requirements on industries such as ambulance services is currently in flux. It appears likely, however, that ambulance companies will be required in the near future to provide off-duty meal and rest breaks. If so, this will have the effect of significantly raising costs of providing ambulance services. These higher costs would affect counties, by reducing ambulance company payments to them and/or by requiring county payments to ambulance companies to ensure adequate service.

Under Proposition 11, however, ambulance companies would avoid most of these new costs, as the measure generally would allow them to continue operating as they have in the past. That is, they could continue to use on-call meal and rest breaks.

Fiscal Benefit to Local Governments due to Lower Net Ambulance Costs

Due to lower net ambulance company costs, this measure would result in fiscal benefits to local governments (in the form of lower costs and higher revenues), potentially in the tens of millions of dollars each year. This is because ambulance companies would avoid increased costs associated with providing off-duty meal and rest breaks. A portion of these benefits would go to insurance companies, but most would go to local governments.





 

Proposition 12

12
Establishes New Standards for Confinement of Specified Farm Animals; Bans Sale of Noncomplying Products. Initiative Statute. Establishes minimum requirements for confining certain farm animals. Prohibits sales of meat and egg products from animals confined in noncomplying manner. Fiscal Impact: Potential decrease in state income tax revenues from farm businesses, likely not more than several million dollars annually. State costs up to $10 million annually to enforce the measure.

Proposition 12 was put on the ballot by petition signatures.

If passed by voters in this election, there would be new minimum requirements on farmers to provide more space for egg-laying hens, breeding pigs, and calves raised for veal. California businesses would be banned from selling eggs or uncooked pork or veal that came from animals housed in ways that did not meet these requirements.

Agriculture Is a Major Industry in California.

California farms produce more food—such as fruit, vegetables, nuts, meat, and eggs—than in any other state. Californians also buy food produced in other states, including most of the eggs and pork they eat. The California Department of Food and Agriculture (CDFA) is responsible for promoting California agriculture and overseeing animal health and food safety.

State Law Bans Cruelty to Animals.

For over a century, the state has had laws banning the mistreatment of animals, including farm animals. For example, anyone who keeps an animal in an enclosed area is required to provide it with an exercise area and give it access to shelter, food, and water. Depending on the specific violation of these requirements, a person could be found guilty of a misdemeanor or felony, either of which is punishable by a fine, imprisonment, or both.

Farm Animal Practices Are Changing.

There has been growing public interest in the treatment of farm animals. In particular, concerns have been expressed about keeping farm animals in cages and crates. Partly in response to these concerns, various animal farming associations have developed guidelines and best practices to improve the care and handling of farm animals. Also in response to these concerns, many major grocery stores, restaurants, and other companies have announced that they are moving towards requiring that their food suppliers give farm animals more space to move around (for example, by only purchasing eggs from farmers who use “cage-free” housing for hens).

Proposition 2 (2008) Created Standards for Housing Certain Farm Animals.

Proposition 2 generally prohibits California farmers from housing pregnant pigs, calves raised for veal, and egg-laying hens in cages or crates that do not allow them to turn around freely, lie down, stand up, and fully extend their limbs. Under Proposition 2, anyone who violates this law is guilty of a misdemeanor.

State Law Banned the Sale of Eggs That Do Not Meet Housing Standards.

A state law passed after Proposition 2 made it illegal for businesses in California to sell eggs that they knew came from hens housed in ways that do not meet Proposition 2’s standards for egg-laying hens. This law applies to eggs from California or other states. Any person who violates this law is guilty of a misdemeanor. (The law does not cover liquid eggs, which are egg yolks and whites that have been removed from their shells and processed for sale.)

This Proposal

This measure (Proposition 12) creates new minimum requirements on farmers to provide more space for egg-laying hens, breeding pigs, and calves raised for veal. These requirements, which apply to farm animals raised in California, would be phased in over the next several years

Bans the Sale of Products That Do Not Meet New Housing Standards.

The measure also makes it illegal for businesses in California to knowingly sell eggs (including liquid eggs) or uncooked pork or veal that came from animals housed in ways that do not meet the measure’s requirements. This sales ban applies to products from animals raised in California or out-of-state. The sales ban generally does not apply to foods that have eggs, pork, or veal as an ingredient or topping (such as cookie dough and pizza). Violation of the housing requirements or sales ban would be a misdemeanor, and a violation of the sales ban could also be subject to a fine in civil court. This measure also requires CDFA and the California Department of Public Health to write regulations to implement its requirements.

Fiscal Effects

This measure would likely result in an increase in prices for eggs, pork, and veal for two reasons:

  1. This measure would result in many farmers having to remodel or build new housing for animals—such as by installing cage-free housing for hens. In some cases, this housing also could be more expensive to run on an ongoing basis. Much of these increased costs are likely to be passed through to consumers who purchase the products.
  2. It could take several years for enough farmers in California and other states to change their housing systems to meet the measure’s requirements. If in the future farmers cannot produce enough eggs, pork, and veal to meet the demand in California, these shortfalls would lead to an increase in prices until farmers can meet demand.

As discussed above, many companies have announced that they are moving towards requiring that their food suppliers give farm animals more space to move around (such as by buying only cage-free eggs). To the extent that this happens, some of the price increases described above would have occurred anyway in future years.

Small Reduction in State Government Revenues.

Because this measure would increase costs for some California farmers who produce eggs, pork, and veal, some of them could choose to stop or reduce their production. To the extent this happens, there could be less state income tax revenues from these farm businesses in the future. The reduction statewide likely would not be more than several million dollars each year.

State Oversight Costs

CDFA would have increased workload to enforce this measure. For example, the department would have to check that farmers in California and other states that sell to California use animal housing that meets the measure’s requirements. CDFA would also make sure that products sold in California comply with the measure’s requirements. The cost of this additional workload could be up to $10 million annually.





 

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