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In the ongoing tussle over budget rules, a state appellate court has dismissed a challenge from school groups who said California leaders had illegally manipulated the state constitution when they wrote the 2011-12 budget.

The San Francisco-based First District Court of Appeal said Tuesday that even if it ruled in favor of the school groups, "there unquestionably is no effective relief that can be granted" because voters overrode potential legal problems by passing Gov. Jerry Brown's Proposition 30 last fall.

Besides increasing income taxes on top earners and the statewide sales tax, the initiative retroactively changed the state constitution so the state could divert just over 1 percentage point of sales tax to local governments without giving a share to schools.

The state's complicated school funding formulas remain an ongoing battleground in the Capitol, with rules still being defined 25 years after voters approved the underlying initiative, Proposition 98. As part of the 2011 budget deal, Brown and lawmakers sent about $6 billion to local governments so they could assume former state responsibilities, most notably housing inmates and watching parolees.

That had the secondary effect of reducing how much the state had to send to K-12 schools and community colleges - without which state leaders would have had to find $2 billion more in cuts or revenue that year. The California Teachers Association, whose substantial power has made it the de facto enforcer of Proposition 98, embraced the maneuver after negotiating teacher protections in the budget.

But school boards and administrators filed suit against the state, saying that if allowed, the move would give lawmakers an easy way to manipulate the constitutional guarantee for education. Because overall state general fund revenues are one factor that determines what schools must receive, plaintiffs argued that lawmakers could simply slice off a share of revenue for some special purpose in order to reduce what they owed schools.

Brown and lawmakers knew the maneuver was legally vulnerable, which is one reason they added provisions in Proposition 30 immunizing the 2011 shift through a constitutional amendment. The First District Court of Appeal found that Proposition 30's passage precluded the 2011 case from going any further.

The court's opinion is unpublished, which means that it cannot be relied upon in future cases. Should the Legislature attempt the same maneuver again in future budgets, litigation remains possible, and the court noted Tuesday that "future challenges may be likely."


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