The California Chamber of Commerce is joining Governor Edmund G. Brown Jr. in supporting Propositions 1 and 2 on the November ballot. These measures are crucial to California’s continued economic vitality and are the subject of this week’s CalChamber Capitol News Report video,
CalChamber President and CEO Allan Zaremberg (left) and Loren Kaye, president of the California Foundation for Commerce and Education, discuss reasons to support Propositions 1 and 2 in the latest CalChamber Capitol News Report video.
Proposition 1, a $7.5 billion water bond with significant funding for needed water storage projects, is the result of a historic bipartisan agreement.
In the video, CalChamber President and CEO Allan Zaremberg discusses the importance of Proposition 1 with Loren Kaye, president of the California Foundation for Commerce and Education.
Kaye explains why water is so important to California’s economy.
“We haven’t updated the state water project in more than 50 years. Our population has more than tripled in that time and the infrastructure is just not up to snuff.”
California is an arid state and without water we won’t have a vibrant economy, Zaremberg emphasizes.
“It’s agriculture, it’s our hospitality industry and it’s also our manufacturing and development industry that depend on a reliable supply of water.”
Placed on the ballot with bipartisan support, Proposition 2 places in the State Constitution the requirement to create a rainy day fund, saving money and paying down state debts when times are good.
California is known for boom-and-bust revenues, and spending one-time money on ongoing programs, which creates problems in the long run. Zaremberg asks Kaye to explain how Proposition 2 deals with these issues and solves the problem.
“The last 10 years has shown that the California Legislature really needs some controls when it comes to spending tax revenues. Proposition 2 sets aside—every year— a certain amount of money to put into a prudent reserve and to pay down budget-related debt,” Kaye explains.
Preventing politicians from spending temporary revenue spikes for ongoing programs will keep the state from spending more than it can afford.
Passage of Proposition 2 means “schools and taxpayers both win because we have reserves created, but just as significantly, there’s less chance for the state to get into these deficits because Proposition 2 prevents the state from spending one-time revenues on ongoing programs, creating future debt when we have an inevitable downturn,” Zaremberg says.
Proposition 2 will ensure that California does not repeat this cycle of boom-and-bust budgeting.
“Proposition 2 will smooth out the revenues, saving money in the good years so we can spend it during the bad years,” Kaye says.
Proposition 2 means that California can rely on the fact that the state will have a stable funding source, businesses won’t have to worry about targeted tax increases and neither will individual taxpayers.
The constitutionally protected reserve can be used to protect schools, as Kaye points out.
“Since schools are the biggest part of the state budget, they also take the biggest hits when we have downturns.”
Zaremberg sums up all the benefits of Proposition 2: “The taxpayers are winners, the schools are winners, and we have a stable budget for the future of California without ups and downs as we’ve experienced in the last 10 years.”