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California Proposition 58 (2004)

From Academic Kids

Proposition 58 was a proposition in the state of California on the March 2, 2004 ballot. It passed with 4,535,084 (71.2%) votes in favor and 1,841,138 (28.8%) against. It was officially called The California Balanced Budget Act. It forces state legislators to pass a balanced budget every year. In addition, it also created a reserve fund called the Budget Stabilization Account in case of future financial trouble. It also prevented the creation of any future bonds to pay off deficits like that in Proposition 57 (the California Economic Recovery Bond Act). Proposition 58 would not have taken effect unless Proposition 57 also passed, which it ultimately did.

Propositions 57 and 58 were the centerpiece of Gov. Arnold Schwarzenegger's plan to resolve California's budget problems. Schwarzenegger campaigned heavily for the propositions' passage.

See also: List of California ballot propositions 2000-present

Official summary

  • Requires enactment of a balanced budget where General Fund expenditures do not exceed estimated General Fund revenues.
  • Allows the Governor to proclaim a fiscal emergency in specified circumstances, and submit proposed legislation to address the fiscal emergency.
  • Requires the Legislature to stop other action and act on legislation proposed to address the emergency.
  • Establishes a budget reserve.
  • Provides that the California Economic Recovery Bond Act is for a single object or work.
  • Prohibits any future deficit bonds.

Summary of Legislative Analyst's Estimate of Net State and Local Government Fiscal Impact:

  • Unknown net state fiscal effects, which will vary year by year and depend in part on actions of future Legislatures.
  • Reserve provisions may smooth state spending, with reductions during economic expansions and increases during downturns.
  • Balanced budget and debt limitation provisions could result in more immediate actions to correct budgetary shortfalls.

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