The November 2, 2010 California Ballot Measures: A Claremont Institute Analysis
We offer to our supporters and the public the following observations on seven ballot measures in the upcoming November 2 general election: Propositions 19, 20 and 27, 22, 23, 25, and 26.
The Claremont Institute is a nonpartisan organization, recognized as tax-exempt under Section 501(c)(3) of the Internal Revenue Code. We do not endorse any candidate for political office. None of the Claremont Institute's writings or events should be construed as an attempt to aid or hinder the passage of any proposition, or of any bill before the state legislature or the Congress, or as an attempt to aid the election of any public official.
David Frisk, Claremont Institute Fellow
Marijuana is currently illegal under both state and federal law. Although possessing less than an ounce is a misdemeanor bringing only a fine under state law, selling marijuana is a felony that can lead to prison. "Medical marijuana" has been legal under state law since Proposition 215 was passed in 1996, allowing cultivation and possession for such purposes. Although federal law still forbids even medical marijuana and Californians can therefore be prosecuted for it, the Department of Justice since 2009 has had a policy of not pursuing patients and providers who keep within the state's law. Prop. 19, in contrast, would apply to general marijuana use. If it passes, California will have the most libertarian marijuana law in the country. It conflicts with federal prohibitions on the drug, and the U. S. Attorney General has said those prohibitions will continue to be enforced if Prop. 19 is adopted. It's therefore unclear how much impact the measure would have.
Prop. 19 would legalize the possession and cultivation of small amounts of marijuana by persons at least 21 years old. It could not be smoked either in public or where minors are present. Both use and possession on school grounds would remain illegal. Most of the state's enormous illegal marijuana industry centered on the North Coast would continue to be illegal, but people could grow up to 25 square feet on private property. Prop. 19 would also let cities and counties authorize, regulate, and tax sales of the drug. "Licensed marijuana establishments" could be opened under such local ordinances. Some communities have already expressed interest in authorizing and taxing such pot dispensaries as a revenue source.
Additionally, Prop. 19 has a controversial workplace provision. Employers couldn't fire or discipline workers who legally smoked pot unless it actually impaired their job performance-and there would be no presumption of such impairment based solely on marijuana use. Although marijuana's long-term effect on physical and mental health is unclear, there is no question it can impair functioning and safety when used in sufficient quantities. Accommodating marijuana users would likely put an unneeded burden on California's businesses in these tough economic times. In addition, because employees could possess marijuana on the job, companies in California couldn't meet federal drug-free workplace standards and therefore might not get federal contracts. On a similar basis, Prop. 19 opponents also raise the prospect of lost federal school funding, perhaps as much as $9.4 billion, plus hundreds of millions that colleges and universities could lose.
As for public safety, opponents warn that drivers could smoke marijuana shortly before driving and get away with it, since Prop. 19 enacts no tests or objective standards, such as exist for alcohol, to tell whether a person is under the influence. Proponents cite FBI statistics to the effect that in 2008, for example, more than 61,000 Californians were arrested for misdemeanor marijuana possession-pointing to the situation as a significant waste of public resources. They also say the illegal status of marijuana results in large numbers of mostly counterproductive first-time incarcerations of black and Hispanic youths. The nonpartisan State Legislative Analyst's Office notes that reductions in the number of arrests and jailings, as well as fewer probation and parole cases, could save our state and local governments several tens of millions of dollars annually in law enforcement and court costs, which could be shifted toward weightier responsibilities. But it's also possible, according to the same analysis, that the higher marijuana consumption potentially resulting from Prop. 19 could mean more individuals would seek drug treatment, often at public expense.
There's also a more general revenue issue. The Legislative Analyst estimates that depending on how much legal marijuana cultivation occurred, state and local governments could eventually collect hundreds of millions of dollars a year in taxes. But how this would be balanced against the general costs of marijuana consumption on society and the effects on the productivity of California businesses is left unanswered.
Another major question raised by Prop. 19 is whether violence from the drug trade would decline. A recent study suggests there would be little impact on either drug violence or the often-murderous drug gangs' activities as whole. The reason, according to the study, is that damage to these gangs would plausibly occur only if small-scale cultivation in California resulted in substantial marijuana exportation to other states (illicitly, since Prop. 19 doesn't allow this). Under such circumstances, it says, the national marijuana trade now run by the smugglers could be reduced, but because so much marijuana is already grown in California and increasingly sent to other states, it's questionable whether the illegal trade can be devastated simply by legalizing the growth and possession of small amounts. In addition, law enforcement officers have expressed fears that the black market could actually expand as gangs find it easier to smuggle pot in a situation under which small amounts are legal.
Propositions 20 and 27
These ballot measures are closely connected. Proposition 20 would give a new nonpartisan commission the authority to draw the district lines for California's seats in the House of Representatives. The commission, which is in the final stages of being formed, currently has the authority to draw the districts for the state legislature starting in 2011 and continuing after each decennial census.
This measure would take effect only if it got more votes than Proposition 27, which was placed on the ballot by opponents of commission-style redistricting. The two measures are incompatible. A supporter of Proposition 20 would logically oppose Proposition 27, because the latter would completely invalidate the former. A Prop. 27 supporter would logically oppose Prop. 20, which gives more authority to the commission that 27 would abolish. If 27 passes and wins more votes than 20, thereby going into effect, it would return redistricting authority to the legislature (although the resulting map of the new districts would be subject, as previous legislatively-drawn maps have been, to the governor's approval). The result would be to permit gerrymanders, which occurred in the 1981 and 2001 redistricting processes under Democratic legislatures and governors.
The argument for nonpartisan redistricting, and thus against 27 and for 20, is that the citizenry should choose their representatives without those representatives having previously determined which towns and neighborhoods (meaning: which citizens) should be grouped in whose districts. The latter is "political" or "partisan" redistricting, and tends to result in the self-interestedly creative line-drawing known as gerrymandering. Gerrymanders insulate majority parties and/or incumbents effectively, in a large majority of cases, against the possibility of defeat in most or all election years. It is unlikely to occur when, rather than politicians, carefully chosen nonpartisan officials draw the districts-as they did in California in 1971 and 1991, after a redistricting deadlock between the legislature and the governor. Such districts were much more geographically natural, and less politically-engineered to ensure the reelection of incumbents.
The argument against redistricting by special commission is that the alternative to line-drawing by elected officials, who can be fired after adopting an unpopular set of lines if the voters really wish, is redistricting by unaccountable experts. In regard to Prop. 20, opponents also point out that it would add to the workload of the first-time, untested commission. The panel must complete its legislative map, and would have to finish any congressional map, by late 2011. Redistricting for the legislative seats is a fairly demanding task even without adding more than four dozen House seats to its purview.
Prop. 20 would do one other thing in addition to probably ending gerrymanders for congressional districts. It would provide a definition for "community of interest," a key concept the redistricting commission must follow in line-drawing under Prop. 11, the 2008 ballot measure that authorized it. Prop. 20 would define a community of interest as "a contiguous population which shares common social and economic interests that should be included within a single district for purposes of its effective and fair representation." This definition, which would apply to all redistricting done by the commission, not only that for congressional seats, would be one of a few different requirements under Prop. 11 that are designed to produce compact rather than oddly-shaped districts. In their ballot argument, opponents say this definition for communities of interest would mean "Jim Crow districts." But racially identifiable districts-rather than just socioeconomically identifiable ones, as in Prop. 20-are more or less required anyway, in many cases, by the federal Voting Rights Act. All in all, it is very difficult to take the politics out politics, much as propositions may try.
This proposed constitutional amendment ends the state government's current ability to reduce its chronic budget shortfalls by appropriating from local government the tax revenues it collects for local transportation, redevelopment, and other local projects and services-something the state has done repeatedly.
In order to help balance its 2009-2010 budget and protect levels of state services, Sacramento borrowed $1.9 billion from local property taxes, $1.7 billion from redevelopment projects, and $1 billion from local transit agencies. Such diversions of local dollars, common in California budgeting, now come in a recessionary time when communities have seen cuts in police, fire and emergency medical services, libraries, services for seniors, road repairs, and public transportation improvements. Backers of Prop. 22 also note that local tax dollars are not only local in origin but legally dedicated to local purposes.
Opponents warn that the public schools, state fire fighters (who respond mainly to natural disasters such as forest fires), and affordable health care for children are all at risk if Prop. 22 passes. Its beneficiaries, they argue, would be "local government bureaucrats, developers and redevelopment agencies." Opponents are also using the city of Bell salaries scandal as a talking point, arguing that local officials shouldn't have more money to misuse. Regardless of how Prop. 22 comes out, there needs to be a complete redesign of the state's tax and spending structure that aligns state taxes with purely state obligations and local taxes with purely local obligations.
This measure would set aside for probably a long period, without repealing, the controversial and ambitious new air pollution law enacted in 2006. That law, known as Assembly Bill 32 or the "California Global Warming Solutions Act," requires that our state's total greenhouse gas emission levels be slashed to 1990 levels by 2020-just ten years from now-and 80% below 1990 levels by 2050. This requires state agencies, led by the California Air Resources Board or CARB, to implement thousands of new regulations in order to achieve that goal. What this means in practice is that industries and consumers will need to dramatically cut such emissions. It's estimated this form of pollution would have to be almost one-third lower under AB 32 than it would be otherwise.
Under the plan subsequently prepared by CARB to achieve reductions in greenhouse gas emissions, a "cap and trade" system would go into effect. In such a regulatory framework, companies could buy, sell, and trade emissions allowances that in the aggregate are strictly limited. There are also to be energy efficiency standards for buildings and a "low-carbon" standard for transportation fuel. AB 32 additionally requires that one-third of California utilities' electricity supply come from renewable sources, such as solar and wind power, by 2020. The Global Warming law affects businesses ranging from oil refineries and energy companies to industries that emit large amounts of carbon dioxide, such as cement makers and dairies.
Proposition 23 would suspend AB 32 until unemployment in California is no higher than 5.5% and stays there for a year. During the intervening period, state agencies would be prevented from proposing or adopting new regulations, and enforcing already-adopted ones, that are intended to carry out AB 32. Since 1970, unemployment in California has been under 5.5% for only three rather short periods, most recently in 2006-2007. It is currently 12.4%. Forecasts now place our likely unemployment above 8% for at least the next five years. If that proves accurate, Prop. 23 would require a lengthy delay in implementing the Global Warming law-a period perhaps long enough for a new technological, scientific or environmental context to arise that could make AB 32 either more or less desirable. Several air pollution regulations, because they are based on laws other than AB 32, probably wouldn't be affected by Prop. 23. These include tighter emission standards for cars and small trucks, a program that encourages installation of home solar panels, land-use policies intended to reduce the need for commuting and thereby cut auto emissions, and energy-efficiency requirements affecting buildings and appliances.
In essence, the climate-change "scoping plan" approved by the Air Resources Board two years ago, the main document for carrying out AB 32, would be put in abeyance by Prop. 23. If the ballot measure fails and the scoping plan moves forward, the cost of implementing the changes required by the 2006 law will run into unknown hundreds of billions of dollars. Studies sponsored by state agencies have generally focused on long-term cost savings the law would seem to produce and ignored the implementation costs. But Sanjay Varshney and Dennis Tootelian of Cal State Sacramento conducted a study last year for the California Small Business Roundtable that examined AB 32's potential costs to businesses and consumers. It concluded that the law could impose $24.8 billion in direct costs, resulting in a total annual loss of $71.5 billion in economic output. Families could pay annual costs of more than $3,800, according to this study, potentially causing reductions of their discretionary spending by one-quarter. It also concluded that California might see 1.1 million jobs lost, reducing tax revenue by $5.8 billion.
Faced with such possibilities, or even ones that are lesser but still substantial, voters are in the position of trying to weigh them against potential benefits from the Global Warming law.
Opponents of Prop. 23 maintain that the law must be allowed to proceed as planned for two reasons: 1) the urgent need, for national and international politico-economic reasons, for a major entity like California to take the lead in cutting greenhouse emissions; and 2) the economic benefits of a "green energy" industry now starting to develop in our state. They also maintain that a robust environment-friendly energy sector can produce many solid jobs for Californians, lower consumers' energy bills, and generate more tax revenue for our state and local governments. Opponents note that lengthy suspension, at least, of AB 32 would delay many investments in green technology that would produce these desirable results, and worse, would be likely to abort most of this necessary new energy industry.
According to the nonpartisan State Legislative Analyst, "on balance, economic activity in the state would likely be modestly higher if this proposition were enacted than otherwise." In addition, Prop. 23 would "likely result in lower energy prices in California than would otherwise occur." A potential compromise would be short-term relief from AB 32-driven regulations in the current recession. The governor can already suspend the Global Warming law unilaterally for one year on the basis of extraordinary circumstances, catastrophic events, or threat of significant economic harm, according to AB 32 itself. The suspension is also renewable. As an alternative to complete suspension, the governor is allowed to delay individual regulations resulting from the law.
California is one of the very few states that requires a two-thirds vote of the legislature in order to pass its annual budget. This measure would allow budget adoption by a simple majority vote, a condition it applies both to the budget itself and to the "trailer bills" that appropriate the authorized funds. Prop. 25 does not alter the principle that a governor's veto can be overridden only by a two-thirds vote.
The measure also tries to put teeth into the mid-June deadline for passing a budget, which is based on the fact that the fiscal year begins July 1 and a budget is supposed to be enacted with the governor's signature by then. In many years Democrats and Republicans, strongly disagreeing on taxes and spending, engage in a standoff lasting well into the summer, to September, or even (this year) to early October. Since 1980, the legislature has met the June 15 date for passing a budget only five times. The more significant problem-failure to enact a budget by the beginning of July-has occurred in 20 of the last 30 and seven of the last ten years. Under Prop. 25, if the June 15 deadline isn't met, legislators would permanently lose their pay for the entire period in which a budget remains unpassed. Supporters point out that the late budget in 2009 resulted in the issuance of a whopping 450,000 IOUs to state workers and to people doing business with the state, plus more than $8 million in interest payments.
The more controversial part of Prop. 25 is the elimination of the two-thirds majority requirement now in place. "Under the current system," backers of the measure note, "a small group of legislators can hold the budget hostage, with the ‘ransom' being more perks for themselves, spending for their pet projects or billions in tax breaks for narrow corporate interests."
Opponents' main arguments are that 1) the existing two-thirds requirement to raise taxes, not only the same requirement for budget approval, would in practice be eliminated by Prop. 25, despite a disclaimer made in what opponents say is non-binding "intent" language; and 2) that requiring on-time budgets would cause more "gimmicks, borrowing and deficit spending" in them. On the question of the supermajority requirement for tax hikes, the Legislative Analyst sides with the Prop. 25 advocates, saying it will remain law. The proposition, however, doesn't allow a simple majority vote only for the budget. It also allows a simple majority for bills "related to the budget," a provision that opponents say would, in practice, let taxes be raised.
State revenues are raised through fees as well as taxes. Prop. 26 would require that certain new or increased state fees be approved by a two-thirds vote of the legislature (as taxes already must be) and that some such local fees be ratified by two-thirds of local voters. For example, "regulatory fees" that fund environmental programs would be affected. Under court rulings, the fees the state imposes to fund regulatory programs don't now qualify as taxes unless they 1) collectively exceed the reasonable cost of the program; or 2) are really imposed in order to raise general-fund rather than specially-designated money. The new approval requirements would not, however, be applied to user fees.
Proponents argue that Prop. 26 is necessary because current loopholes are abused, with many de facto taxes imposed by the legislature in the guise of "fees" on a simple majority vote, and because the same has happened at the local level. Opponents warn against "special protections" for oil, tobacco, and alcohol companies subject to the fees affected by Prop. 26 and that less money would be available for public services. They also say the measure, by complicating the process of raising fees, will lead to excessive litigation and too many local elections.
At issue in Prop. 26, as perhaps also in 25, is mainly the philosophical question of whether a supermajority or only a simple majority should be required in order to raise taxes or tax-like fees. Most governmental decisions are made by majority vote, but our constitutional system has always required two-thirds in more fundamental circumstances. The idea behind the state's two-thirds requirement in the case of taxes is that non-taxpayers should neither outvote taxpayers nor come close to doing so, or at any rate that more than one fiscal and economic perspective should be taken seriously into account when tax levels are set. On the other hand, simple-majority requirements do force voters to decide which of their elected representatives or parties best represent their philosophical point of view, and then force them to live under the consequences.