This may end up being the biggest story of the state election – the passage of propositions 22, 25 and 26. It’s a bad news, good news, bad news story for state finances.

Prop. 22 is the measure that would prevent the state from borrowing or otherwise taking funds used for transportation, redevelopment or other local government projects. The problem is this will further limit the state Legislature’s ability to balance the budget. The end result is it could leave local governments whole at the expense of school districts.

The California Teachers Association had predicted that schools could stand to lose over $1 billion immediately and an additional $400 million each year after that. The campaign was centered on the emotion of “stopping state raids on local funds.” But this could be an example of sparing one local agency at the expense of another.

On the positive side, voters approved Proposition 25 which ends the senseless requirement that a budget needs to be approved by a two-thirds majority in the Legislature. It’s the single biggest cause of Sacramento gridlock.

But it appears that voters also have approved Proposition 26, which would require a two-thirds vote of legislators in order to approve fee increases. In other words, voters approved one measure that untied the hands of legislators – and then adopted two more that handcuffed them.
And it will be months before we figure out what the net impact will be.

– Paul Gullixson