The race between education and catastrophe (1966/1972)

The Rodda Project: A graduation speech

In 1966, Senator Rodda was invited to give the commencement speech for the graduation ceremonies at Phineas Banning Adult School in Wilmington, a city in southern California. Sen. Rodda took the opportunity to speak on one of his favorite topics: the power of education to preserve and improve our lives. It was a cautionary speech, acknowledging both the increasing impact of technology on employment opportunities and the relative neglect of the important of vocational education. The dark tone may have derived from the Senator's concerns over the upheaval and pessimism of the 1960s.

Rodda kept a copy of his Banning Adult School remarks in his files. This text is from the 1972 revision of the original 1966 speech. He probably updated it slightly to keep it more current, as he would often send copies of his papers in response to inquiries from constituents and reporters. However, there is no indication that he ever used the text again in a spoken presentation.

—TB

Graduation Ceremonies
Phineas Banning Adult School
Wilmington, California

Senator Albert S. Rodda

June 16, 1966
(Revised on March 29, 1972)

Today, we live in an age in which H. G. Wells' dictum that human survival is “a race between education and catastrophe” is no longer quoted as pious rhetoric. It is regarded as a frightening possibility full of a terror which derives from the known potential for destruction of thermonuclear weapons. The destructive power of the H Bomb is so vast that it almost defies description; and clearly establishes the fact that resort to total war by Russia and the United States will destroy mankind and civilization.

The destructive capability of a thermonuclear way may be judged from the following description of the results of an imagined explosion of a 20 megaton bomb over Los Angeles:

“It will create a crater one-half mile long and 250 feet deep; it will produce complete destruction over an area three miles in diameter, severe blast damage over an area eight miles in diameter and moderate damage over an area twelve miles from the point of the explosion of a diameter of twenty-four miles.”

Incidentally, modern H Bombs are 100 megaton size—5 times as destructive.

His awareness of the horrible destructiveness of modern war prompted Bertram Russell, the English philosopher, to suggest, in a quiet commentary, that it is too late to educate the young people for a peaceful world; and that, if we are to have peace, we must concentrate on the education of adults. It was Russell's conviction that the critical decisions which will determine the fate of civilization were being made every day and that any “breakthrough” in organizing the world for peace must be achieved immediately by the generation in power.

The urgency of the world situation, therefore, in Russell's view, mandated the education of adults in the means of achieving a peaceful world.

Although Russell's statement was made over a decade ago, it is no less valid today, for the imminence of total war has not been removed by the passage of time; if anything, its proximity is even closer. There must, therefore, be a continuing education of adults in those areas of knowledge which impinge upon the issue of war and peace. And this must be a never ending activity—carried on through the public forum, formal classes in adult education, educational television, public discussion in the journals and newspapers of our time, and in the institutions of higher education and the chambers of our law-making bodies.

If education for a peaceful world is a major responsibility of education, it is not the only one. For there are other responsibilities worthy of our attention.

Education has acquired a new dimension in recent times. This is a result primarily of the changes which have taken place in our society and which continue to take place. The condition of change is summed up in the words “automation” and “cybernation.”

Automation is defined as “the automatically .controlled operation of production which takes the place of human effort.”

Cybernation is “the use of mechanical-electrical communication systems to supplement or replace brainpower in problem solving or analysis.” Everywhere in our society, in government, as well as industry, there is a high rate of substitution of machines and computers for human skills and human intelligence.

The result, of course, is a dynamic society characterized by a rapidly changing technology.

The general effect is satisfactory; the productivity of workers increases, costs of production are reduced, the prices of commodities are lowered, larger quantities of goods and services are made available, and new products are put on the market. All of this is progress and it must be entered on the positive or benefit side of the ledger.

To illustrate the benefits which flow from the computerization of society one can suggest quite seriously that in the absence of the computer, social security, Medicare, and industrial fringe benefit programs would involve so much unmanageable paper work that their cost would be prohibitive and that in the absence of automation many products could not be produced at marketable prices and that in the absence of the electronic brain, the problems involved in the mastery of outer space would be beyond solution; and finally, that, without “systems analysis,” the efficient planning and management of industry would be greatly impaired.

On the negative side of the ledger there are, however, the adverse effects of technological progress. Persistent technological innovation, for example, produces a continuous imbalance between the demand and supply for labor skills. The imbalance is characterized by a surplus of old skills, for which there is no longer a need and a simultaneous unfulfilled demand for new and highly specialized technical capabilities.

This fact of economic life impresses itself upon the worker in the form of the persistent threat of job obsolescence and unemployment and upon the industrialist in the form of labor shortage and unmet product demand.

The frustrations experienced by both management and labor have come into focus as educational problems of a serious and growing significance. The result has been immediately apparent in its impact on the schools.

First, many conventional programs in vocational and technical education have been made useless and obsolete.

Second, the schools have been placed in a position of having to build more flexibility into the vocational curriculum through the rapid introduction of new courses and the serious modification of old ones.

Third, in response to the changing occupational pattern, close cooperation between the schools and the local community has developed as a practical means of providing the schools with a vocational and technical curriculum better designed to meet the community's changing labor market.

Fourth, the schools have launched a vigorous attack against illiteracy as a vital part of the war on poverty and unemployment, and, finally, a tremendous effort is being made to reduce the school dropout rate and to continue teenagers in school long enough for them to acquire either a professional, vocational or technical education.

The educational response to change and innovation in the economy must be the education of our youth more practically and for a longer period of time and the training and retraining of increasing numbers of adults. It means that education no longer can terminate at the 12th Grade or even during the employment life of the adult worker.

If we are to meet this education challenge, the cost in tax dollars will be extraordinary and will steadily increase. And yet we must meet it, if we are to provide the economy with an adequate supply of employable labor—young and old.

The criticalness of the employment situation can be established by the following data:

For example, in 1968, of the young men and women in the United States under 22 years of age, who terminated their education before high school graduation, over one million were unemployed. In today's economy more than thirty percent of high school dropouts are unemployed and even high school graduates average more than fifteen percent in unemployment.

The impact of unemployment is, as these figures indicate, especially harsh upon the under-educated or the vocationally untrained. As time passes, the situation will become more serious. The role of such citizens in our economy will be drastically reduced. Robert Theobold, expert on cybernetics and automation, emphasized this problem with a percent of the population, with the aid of automatic, computer-controlled machines, “will produce all the goods and services necessary to clothe, feed and run our society.” If you believe this a ridiculous idea, reflect upon the fact that today fewer than 200 men produce 90% of the electric lights manufactured in the United States.

Another set of statistics, however, reveals a different trend—a growing demand for the technically and professionally educated person. For example, it is estimated that, from 1965 to 1975, the demand for trained workers in professional and technical areas will increase by sixty-five percent; in managerial skills, thirty-two percent; in clerical activities, forty-five percent; and in service work, fifty-one percent.

These data indicate a rising demand for talent which will not be met unless the educational attainment of our citizenry is upgraded. When the regular schools fail to prepare for employment, or shifts in technology make obsolete and unnecessary, certain types of labor it is the responsibility of special occupational and adult schools to provide opportunities for the continued education, training and retraining of our citizens. This role is very vital if the labor supply is to adjust to labor demand. It means the creation of a quality labor supply.

I am saying, in effect, that education, while continuing to educate for citizenship, recreation and leisure, for personal satisfaction and for the professions must expand in breadth and depth in technical and vocational education.

Its major role in the future may very well be education in (1) English and reading skills, (2) vocational and technological skills, with emphasis on the latter, and, (3) preparation for effective employment in the personal services, an area of employment certain to expand with the growth of automation, as well as, of course, (4) collegiate professional education—the importance of which there is no doubt in the public mind.

What I have been saying poses a problem for a highly technical society which stated simply is: Does the population possess the native intelligence and neuro-muscular skills in sufficient quantity to meet the economy's need or demand for highly educated, technically trained individuals? This, of course, is not a problem with which I wish to deal tonight. My concern is with the crucial. necessity of utilizing as fully and as efficiently as possible the human intelligence and capabilities which we possess.

Great progress is being made by many local school districts and County Offices of Education in Los Angeles, San Francisco, Sacramento, Alameda Counties and many others.

Under great handicaps, the school districts and County Offices are educating increasing numbers of youth and adults in meaningful vocational and technical skills. For example, nineteen percent of the high school graduates in the Sacramento City Unified School District are graduated from the evening adult high school. Certainly, this is a significant statistic, and I know that it is duplicated in other urban areas.

But a realistic evaluation of the total picture, however, is disquieting. It shows a hesitancy on the part of the public or of those in education to develop vocational and adult education on a scope necessary to meet the demands of the time. School facilities generally consist of day-school buildings given over to adult education at night, or old structures no longer adequate for day-time education; inadequate visual aids and equipment, and limited auxiliary educational services in guidance and library materials.

The development of a massive comprehensive type of adult and vocational and technical education, as I envision it, is not, in my opinion, imminent; it will inevitably come, since time and circumstances will mandate it. By this, I mean that the social and economic requirements of our rapidly changing society will inevitably demonstrate the need. However, the situation today actually is not encouraging; in fact, it is in some quite discouraging.

The theme of my remarks, however, is not the decline of vocational, technical and adult education, but rather its growing significance and the importance of a greater public appreciation and understanding of its role. With understanding will come public support and with public support will come the political pressure necessary to institute adequate programs.

I conclude by emphasizing that although high school vocational education and adult education are a significant aspect of the educational process, they now enjoy a stepchild status, but that the “contextual imperative”—or the demands of our dynamic-changing society—will bring these kinds of education the public understanding and support they need. When this occurs, those engaged in such educational programs will have the tools necessary to meet the challenge. The challenge is the continuing education of the citizenry—for more effective involvement in the community, more productive involvement in the economy, and more meaningful living and, therefore, greater personal fulfillment.

Collective Bargaining in California (1975)

The Rodda Project: The Story of SB 160

Albert Rodda's best-known legislation is Senate Bill 160—usually simply cited as “the Rodda Act”—which established collective bargaining for California's public school teachers.

This undated document from the Senator's files contains a record of his extemporaneous remarks on the significance of his legislation, so it is most likely from the latter part of 1975, when SB 160 was signed by Governor Jerry Brown. There is no indication of the venue in which the Senator delivered his speech.

—TB

Collective Bargaining in California

Breakthrough in California

(Extemporaneous Remarks)

Senator Albert S. Rodda

My purpose tonight is briefly to provide some historical background and perhaps make some comments about the critical issues which are affected by the collective bargaining legislation. I'll begin my presentation with reference to the original Winton Act. I was in the Legislature when the Winton Act was passed, and I voted against it although, as a freshman senator in 1958, I was committed to collective bargaining for teachers. I had been at one time president of Local #31 of the California Federation of Teachers in Sacramento. This involvement had influenced my thinking on this issue.

As a teacher, I was of the opinion—having had some experience in matters affecting the professional status of teachers—that they should have an opportunity to negotiate in a more meaningful way with administrators and school board members. So I was supportive of the Winton Act in concept and of collective bargaining in principle. But I voted against the Winton Act on the Floor because of the manner in which those who were on the so-called negotiating council were chosen. There was no exclusive negotiation and no exclusive representation, and in the Senate the word “confer”—not even confer in good faith—was substituted by amendment for the word “negotiate,” which was contained in the Assembly version of the bill. So we ended up with a law which provided for a “negotiating council” which merely conferred and which did not provide for exclusive representation; so I voted “no.”

We are familiar with the fact that the Winton Act was not implemented very well in some districts and, as a consequence, in about 1970, Senator Newton Russell, then Assemblyman, introduced a bill which would significantly have amended the Winton Act. The bill was sponsored, as I recall, by the California School Boards Association. I introduced a bill which was sponsored by the author. We finally reached a consensus and the Russell bill became law. My bill was dropped; although the bills were amended so that they were identical, and the Winton Act was, thus, amended by the Russell-Rodda Act. So, it is the Winton-Russell Act which was amended by SB 160.

The Russell Act was substantive in some respects. In the first place, it contained a definition of impasse. And it introduced language into the Winton Act requiring the parties to confer in a conscientious effort to reach an agreement, which is a little bit better and stronger than just the meet-and-confer provision. There was no written contract, but there was provision for mediation; there was provision for factfinding, but not for publication of the recommendation of the factfinder; so even that legislation fell short of collective bargaining. The Russell Act did contain the same provisions relating to the strike as did the original Winton Act—reference to the Labor Code which courts had interpreted to deny the right of concerted action or the strike—but there were no provisions for a written contract and, of course, no provision for exclusive representation. The absence of a contract provision became an issue in the Los Angeles teacher's strike, which occurred about the same time the Russell Act went into effect.

At that time, the California Teachers Association—and please don't interpret my remarks with reference to any organization as being polarized or biased—did not favor collective bargaining for teachers, while the CFT did. The following year, however, CTA changed its historic position of opposition to one of support. My recollection is that in the same year Senator Dymally authored a substantive collective bargaining bill which was sponsored by both the CTA and the CFT. It was legislation that would have covered employees in the public education system from Kindergarten through the university; the bill was considered in the Senate Education Committee and died there. I voted against it because I believed that we should try to make the newly enacted Russell amendments work.

There was a great deal of momentum being generated for legislation because of the CTA support of collective bargaining. The rivalry between the two organizations, the CTA and the CFT, for collective bargaining legislation for public employees in the public education sector became very intense. In addition, the economies imposed upon higher education by Governor Reagan had the effect of intensifying union activity within the two systems of higher education, especially in the State University and Colleges System, where the whole concept of collegiality had not developed to the extent it had on the University of California campuses. As a result, the California State University faculty moved toward an approach to the problem of employee-employer relations which was more oriented toward the union model—the collective bargaining model. Looking at the membership lists of teacher organizations during those critical years, you'll find that they showed rather dramatic increases, and that fact of life created more pressure. The CFT had long supported collective bargaining, which meant that the School Administrators and the School Board members were fighting a rather difficult and almost losing battle on this issue.

Following Senator Dymally's effort, Senator Moscone became involved as principal author of legislation in 1973. The bill was SB 400 and it included within its coverage employees in public education from Kindergarten through the university system. There were five critical issues: (1) the inclusion of the two segments of higher education; (2) definition of scope; (3) language with reference to strike; (4) the agency shop; and (5) management rights. When the Moscone bill was under consideration, supported by teachers in all segments of public education, the Administrators and the School Board members testified to the effect that it lacked certain language they thought was important and that the language contained in the bill was too far-reaching in some respects. Their concern was the absence of language with reference to strike, the wide-open definition of scope of bargaining, provision for the agency shop, and the lack of the provision with respect to management rights. And, of course, the bill was opposed by the Regents of the University of California and the Board of Trustees of the California State University and Colleges System. I told Senator Moscone, when the bill was presented to the Senate Education Committee, to sit down and try to work out a compromise.

The bill came back before the Senate Education Committee the following week, but there was no compromise. The Administrators and School Board members were not the only uncompromising individuals. The uncompromising people were also the teachers, because they had political muscle in the Legislature and they knew, in a sense, that this piece of legislation would not become law because Governor Reagan would not sign it under any circumstances. I voted for the bill. It went to the Governor and he vetoed it.

In 1972, I had chaired Senate Education Committee interim hearings on this subject, but when the Moscone bill was under consideration in 1973, I did not introduce legislation because I wanted a compromise or consensus piece of legislation to be considered seriously and I knew what was going to happen with respect to the Moscone legislation. I had been in politics long enough to know what the scene would be. I knew that no one would think about a compromise bill; so why waste my time? In that year, however, I assigned Mr. John Bukey to do the principal work in reference to collective bargaining. Mr. Jerry Hayward and Mr. John Bukey, consultants to the Senate Education Committee, and I met in my constituency with School Board members and School Administrators at their request, and they said that they wanted to cooperate in an effort to improve the existing law, because they recognized it had significant deficiencies. I said, “Well, there's no point in my undertaking that kind of task unless you are willing to make some compromises; I have to work with the teacher groups; you're going to have to work with the teacher groups; we're all going to have to work together.” They agreed to such an arrangement.

At that time, I told John Bukey to study the findings of the interim committee hearing, to look at the legislative proposal made by the local group and to consult with the teachers in the various segments of education, and to try to develop a legislative consensus. The idea was to obtain comments from all parties so that I could affirm that all groups had had an opportunity to examine the legislation, to know what the intent was and, therefore, an opportunity to respond in a constructive way.

I stated at the time in response to the proposal made by the local group that “I was willing to introduce legislation and that I would try to achieve a compromise.” Incidentally, a politician may not use the word compromise; so I observed that I would struggle to achieve what we will call a “consensus.” So we strove for consensus and I said, “If I ever obtain consensus in the Senate, I will fight off amendments in the other House introduced by any element involved in this legislative activity which would change substantively the provisions of the legislation,” because if such amendments were made, they would create a bias and there would be no consensus. The bill, which was developed, pursuant to that effort, was SB 1857, and the year was 1974.

Fortunately, we did develop a degree of consensus and John Bukey and I conferred with people throughout the state on the legislation. The United Teachers of Los Angeles and the Classified School Employees of Los Angeles supported the bill despite the fact that it continued the Winton Act language with reference to the strike; despite the fact that it had a restricted definition of scope; and despite the fact that it did not include provision for the agency shop. They also accepted the management rights language. But some teachers challenged me that year with the charge that the bill was “an outright betrayal of teachers.” I argued that “there were some substantive improvements in the bill over existing law.” The bill provided for a written contract; for exclusive negotiation; and there were provisions for impasse negotiations, including mediation and public factfinding with recommendations. These were substantive changes, in my view, I observed. And I also commented on the positive aspects of the creation of a state board and the possibility of binding arbitration of contract, or “rights” disputes.

Meanwhile the courts were interpreting the Winton Act as a consequence of litigation and various decisions were handed down. These various interpretations were helpful in stimulating among the School Administrators and School Board members a desire for a law which could be interpreted in a uniform manner and which would make sense and improve negotiations with teachers. But they did not reach that position overnight. The leadership representing the School Boards and the School Administrators had to travel about the state educating their people and urging them to take a more positive attitude toward the legislation. And I commend them for that effort; without that effort I never could have obtained the kind of support for the bill that emerged. The teachers, from their perspective, were not totally negative, but the two principal organizations, the CTA and the CFT, remained in opposition throughout 1974.

I included the community college system in the original version of the bill. That was my decision. But I excluded the two segments of higher education—the University of California and the State University and Colleges System because there are differences in their internal governance which I did not fully comprehend, but which were of such a nature that they justified in my mind a separate bill or their inclusion in a bill which would cover all state employees. The inclusion of the community colleges was justified because of the similarity of governmental organization and finance to the Kindergarten-12 schools. They were, therefore, included despite the fact that there were problems with respect to the community college academic senates or faculty councils and their involvement in decisions affecting educational policy. I thought we could, with appropriate language, however, resolve that issue. But during the 1974 session I could not bring the community colleges into any kind of an agreement; so I personally deleted them from the legislation, which, of course, was SB 1857.

That legislation, the first product of the consensus effort, in the year 1974, moved to the Assembly, having the approval of the Senate, as I have described it to you, and having the support of the elements I mentioned—School Boards, School Administrators, UTLA and the Classified School Employees of Los Angeles, and a few chapters of CTA and the CFT local in San Francisco. It was opposed by the faculty of the University of California and the State University and Colleges System because they wanted a comprehensive bill; they wanted to be included and they were afraid that if a bill became law which excluded them, they would be left out permanently. SB 1857 failed in the Assembly Ways and Means Committee by one vote, after having been approved by the Assembly Education Committee.

The following year, 1975, I introduced SB 160, which was virtually identical to SB 1857. I did so with grave reservations because Speaker Moretti had introduced in 1974 a comprehensive bill, AB 1243, to include all public employees, which died in the Senate policy committee. And, in the same year, 1974, Senator Dills had introduced—and I had voted for— legislation (SB 32) to provide collective bargaining for local government employees. The Dills' bill was approved by the Senate and moved to the Assembly, where it perished because the Speaker was determined to enact a comprehensive bill. The significance of this action is that total emphasis was to be the enactment of comprehensive, not piecemeal legislation. The Moretti bill was assigned to interim hearings and I was on the joint committee that conducted the interim hearings. The entire intent was to achieve enactment of the comprehensive legislation. The Assembly leadership, Senator Dills, and the new Governor were committed to such action, as were all teacher organizations throughout 1975.

As the 1975 session proceeded, I accepted amendments to SB 160 with reference to the definition of scope which was modestly broadened, and I also introduced compromise language with reference to agency shop. And it is important to understand that an agency shop agreement under the provisions of the bill is a matter which may be negotiated. If a school board wishes to allow it, it may introduce such a provision into the contract; the issue would then have to be submitted to all affected employees for a vote. If the affected employees vote yes, it will be necessary for every employee in that group to pay a services rendered cost fee. The legislation does not provide, however, for compulsory membership; it does not require a union shop. Furthermore, if there is an organization which is competing with another organization to be the exclusive representative, and it loses the election, only the winning organization may have the right of dues deduction. If an organization does not want to compete for the right of exclusive negotiation, if it desires to be only educational organization, it may state that to be a fact with reference to its intent and purpose, and it may then have the right of dues deduction for its membership. This language has been objected to by some organizations because of their position of opposition to exclusive negotiation and to membership protection provisions.

After these amendments, especially the change in the definition of scope and agency shop were adopted, and also after the defeat of all of the comprehensive collective bargaining bills, the teacher groups, the CFT and CTA, began to be more responsive to the bill, SB 160.

During the entire negotiations the School Administrators and the School Boards had accepted the bill as amended and did everything they could to help achieve its enactment. It was because the bill finally had the support of the major elements of the educational community that I was able to achieve favorable action by the Legislature and place the bill on the Governor's desk.

We introduced one major amendment to satisfy the Governor; we changed the membership of the Board. The Board was to have had five members originally, but we reduced the membership to three, all of whom were to be appointed by the Governor. These individuals, it was recognized, might in the future function in the administration of a law affecting all public employees in the state; the Board membership could then be expanded. If that amendment had not been accepted, we would not now have a teacher collective bargaining law. I am convinced of that.

We all kept faith with each other, and it was that kind of conscientious effort that solved a very difficult problem. The School Boards and the School Administrators wanted the law because of the Winton Act's wide open definition of scope as interpreted by the courts; they wanted a negotiating council which spoke for the majority of the teachers; they wanted a vehicle in law which could be interpreted by a state board—the Educational Employment Relations Board—so that everyone concerned could know what the law was, what the standards were, and what the rules and regulations were statewide. And I think that the law has provisions which are for the benefit of the teachers, too. They recognized this; thus, they fully supported it.

The new law is no panacea; its success will largely be determined by the objectivity of its administration by the Board. The educational community has acted responsibly; the Legislature has acted responsibly; it is now the obligation of the Board to act responsibly.

A biographical sketch of Albert S. Rodda

The Rodda Project: Biographical sketch

Albert Stanley Rodda's political career did not begin with his election to the California State Senate in the Democratic landslide year of 1958, nor did it end with his upset defeat for re-election in the Reagan landslide year of 1980. While his 22 years in the State Senate marked the apogee of his power and influence, they also fit neatly into the context of interests and activities that both preceded and followed his time in the State Capitol.

More than anything else, Albert Rodda was an educator. He held an earned doctorate in history and economics from Stanford University. At the time of his initial election to the Legislature, Rodda was a faculty member at Sacramento City College, teaching history and economics. He retained his teaching position (going on leave during semesters when the Legislature was in session) until the Legislature became a full-time job in 1966, at which point he retired from the college. Later, after leaving the State Senate, he became an adjunct professor at Sacramento State University, teaching his students from the perspective of an experienced and practical politician.

He was back in elective office soon after his departure from the Legislature, taking a seat in 1983 as a representative on the Los Rios Community College District board of trustees. The Los Rios district included Sacramento City College, which in 1980 had dedicated its big new administrative and classroom complex in his honor. He served two terms on the board, lending his deep knowledge of state education policy and school finance to the deliberations of the college trustees.

Rodda's focus on education had been reflected in his legislative career, during which he spent several years as chair of the Senate Education Committee. While over six hundred of his bills were enacted into law, for most knowledgeable people the words “Rodda Act” refer to the landmark measure (SB 160) that established the right of public school teachers to collective bargaining. SB 160 was born of the Senator's personal knowledge of the stark imbalance between the rights of teachers and the authority of administrators and school boards. Both he and his wife, Clarice Horgan Rodda, had been teachers in Sacramento high schools.

A generally quiet and introspective gentleman, Albert Rodda departed from many of the stereotypes we associate with politicians. He cared more about getting things done than getting credit, so many times he deferred to colleagues who were eager to take leading roles in addressing the popular issues of the day. When rival bills were introduced in the Legislature, the authors would jockey for position as they sought to get their proposals to the Governor's desk. Sometimes they'd find that Rodda was willing to drop his own bill so long as his particular concerns were addressed to his satisfaction in the rival legislation. Thus a colleague's name would appear as lead author on a senate bill presented to the Governor for his signature, but many of the words in it would have been crafted by Al Rodda.

Early life

Albert S. Rodda, Jr., was born in Sacramento on July 23, 1912. He and his older brother, Richard Rodda, lost their mother in the worldwide flu pandemic of 1918. Their father remarried and the boys were raised by a devoted stepmother. The Rodda brothers both ended up dedicating their long lives to the service of the people and institutions of Sacramento, Richard in journalism and Albert in politics and education.

An alumnus of Sacramento High School (Class of 1929) and Stanford University (Class of 1933), Albert became a high school teacher himself. It was at Grant Union High School that he met Clarice Horgan, whom he married in 1941. The entry of the U.S. into World War II after Pearl Harbor prompted Albert to enlist in the U.S. Naval Reserve, where he became a gunnery officer (lieutenant, junior grade). The Senator used to reminisce about his military service, humorously describing his gunnery assignment as the great secret scandal of his life.

From the scuttlebutt of the time, Albert had heard that the Navy was assigning to the Atlantic theater those enlistees who had the highest scores on the mathematics portion of the officer candidate exams. Those who passed with lower scores were going to the Pacific instead. As a newlywed with a young wife in California, Albert much preferred to serve his country in the Pacific theater of war, where it might be possible for him to see Clarice during occasional shore leaves. He pulled some of his punches on the math problems and did not score quite as high as he was capable. [The Senator used to tease me that, as a math teacher, I must be horrified that he had underachieved on a math test. —TB] Whatever the reason, Albert soon found himself serving as a gunnery officer in the Pacific.

Mustered out of the Naval Reserve in 1946, Albert Rodda became a faculty member at what was then known as Sacramento Junior College. He and his family lived in a home in Curtis Park (where he still resides today), right around the corner from the college campus. He returned to Stanford University for graduate studies, completing his Ph.D. in history and economics in 1951. (His dissertation was on the economic mind of the 18th century colonial American, and the Senator used to joke that he should never have given a copy to Ronald Reagan.)

Entering politics

Though a Republican in the forties, Rodda became active in Democratic politics and the labor movement during the fifties and began to contemplate running for the Legislature. He had already been elected president of Local 31 of the California Federation of Teachers and was confident in his leadership abilities. Rodda wondered whether he should seek a seat in the Assembly or Senate. His high profile in Sacramento Democratic circles, where he served on the central committee (part of the time as its chair), was a mixed blessing, since it led him into conflict with the biggest Democratic name in the county, conservative incumbent state Senator Earl Desmond. Sen. Desmond made no secret of his opposition to any Rodda candidacy, certain that Albert would upset the old-boy network in which Desmond was comfortably ensconced.

It was ironic, therefore, that it was Desmond's death in office that opened the way for Albert Rodda to succeed him in the Legislature. Rodda defeated Desmond's son in the 1958 special election to fill the remainder of the late senator's term. It was a good year for Democrats, Edmund G. Brown, Sr., winning the Governor's office for the first of two terms that transformed California public education, water policy, and infrastructure. Albert Rodda entered the Legislature just in time to participate in a dynamic new era in California politics.

Because Rodda was elected to a vacant seat, he was sworn into office immediately after his victory was confirmed. Two years later, in 1960, he was elected to a full four-year term in his own right, a feat he repeated in 1964. That term, however, was truncated. The U.S. Supreme Court invalidated the then-existing apportionment of the State Senate's 40 seats by counties (or groups of counties). The one-man/one-vote decision required the new districts to be essentially equal in population. All forty senators were forced to run in 1966. To restore the tradition whereby only half of the Senate came up for election in even-numbered years, half of the senators ran for two-year terms and the other half for the customary four-year terms. Albert ended up with another two-year term.

At the same time, the California legislature went from a part-time institution to a full-time governmental body. The Senator had to make a difficult decision. He decided to continue his legislative career, now a full-time job, and to step down from his faculty position at Sacramento City College. Albert was re-elected to his Sacramento-area district in 1968, 1972, and 1976. As his seniority grew, he attained the position of dean of the Senate (he was senior to Walter Stiern of Bakersfield by several weeks, having taken office in 1958 just before Stiern took his own seat).

Leadership

The Senator was approached at one point and asked to consider taking the position of president pro tempore of the Senate, but he was not interested in the top leadership position in the upper house. He knew that he had been approached as a compromise candidate, an acceptable alternative to more ambitious Democrats who had divided the house in their efforts to secure the leadership. (The position eventually went to James Mills of San Diego.)

Albert did, however, accept the chairmanship of the Senate Finance Committee under similar circumstances, again coming to the attention of his colleagues as an acceptable alternative to two powerful rivals. He picked up the gavel of Senate Finance with some reluctance because it required him to step down as chair of Senate Education, but he presided with panache over his new committee during his last four-year term of office.

Much of the Senator's effectiveness stemmed from the respect his fellow senators had for him. No one regarded Sen. Rodda as ambitious for personal political advancement, making him more widely trusted than senators who were actively positioning themselves for future statewide campaigns, judgeships, or post-elective jobs in the private sector. The Senator knew how to draw on his colleagues' trust in crafting successful legislation.

Landmarks

As noted, when people refer to “the Rodda Act” they are usually talking about SB 160, the Senator's landmark 1975 legislation that gave collective bargaining rights to public school teachers. There are, however, over six hundred other measures authored by Sen. Rodda that were enacted into state law. These ran the gamut of his constituents' concerns, but major areas of focus were education policy and fiscal policy. The Senator was a long-time member of the Senate Education Committee and was its chair for ten years. During his four years as chair of the Senate Finance Committee, Rodda was the lead author of the Senate version of the state budget bill and a member of each year's two-house conference committee that settled areas of disagreement between the Senate and Assembly versions of the budget.

Proposition 13 in 1978 was the big landmark in what many people called a "tax revolt." Sen. Rodda worked with his colleagues to soften the impact of 13's enormous reduction in property tax revenue. Their success, however, opened the way for 13's sponsors to argue that more tax reductions were needed. The follow-up was Proposition 9 in June 1980 to slash the personal income tax. Sen. Rodda worked diligently to analyze the impact of enactment of Proposition 9 and demonstrated that it would be disastrous, especially in the absence of a state surplus to cushion its effects. Rodda's analyses (issued in two separate documents) were a crucial weapon in the successful campaign to defeat Proposition 9. Although the June balloting was a great vindication of the Senator's position, with Proposition 9 losing by 61% to 39%, it also drew attention to him as an opponent of the tax-revolt leaders in the state. The political right drew a bead on him, and ammunition was plentiful. Some critics began to point to the number of votes Rodda missed during absences from the floor of the Senate; they neglected to point out that there was no way he could be present during the sessions that the Senate held concurrently with meetings of Senate Finance or the budget conference committee. Ironically, his success and seniority as a legislator would be used against him.

The election of 1980

Sen. Rodda was aware that many local politicians were hoping that he would retire in 1980 and create an opportunity for their advancement. Upon due consideration, Albert decided to run for another term. He did not want to set off a major primary battle among Democratic Party members, particularly in a census year. The new U.S. census would be followed by redistricting, making it important that the Democrats maintain their majorities and thus control the new district lines. Rodda was considered a sure bet for re-election by most observers (the nonpartisan California Journal rated his race “Safe Democratic”), although his district's demographics were moving in a more conservative direction.

The Senator himself was more concerned than most of his allies. He reluctantly approved a bigger campaign budget than in previous contests, sensing that 1980 might prove to be a difficult year for Democrats. He also drew a maverick Democrat as an opponent in the June primary. That was unusual. While Rodda beat him handily, he worried about the minority of Democrats who had declined to vote for him. In addition, the Republican nominee elected to oppose him was a young legislative assistant from Senator H. L. Richardson's office. Richardson was California's right-wing guru and an early pioneer of computer-generated campaign fund-raising and targeted mass mailing. Was Richardson's aide a sacrificial lamb, or did Richardson think they had a genuine chance at a major upset?

Just before the election, when Rodda was beginning to feel that his campaign had done enough to secure one more term, the Republican's secret weapon was unveiled. It seemed (to those of us on Rodda's staff, anyway) that Richardson had a political ally in the person of the Sacramento county district attorney. The DA indicted a state senator on charges of lewd and lascivious conduct with minors. The criminal charges were among the biggest local news stories in the days immediately preceding the election. The indicted legislator was Senator Alan Robbins of Van Nuys, but some thought the timing of the indictment indicated that the real target was Senator Albert Rodda of Sacramento. We received phone calls in the Senator's office denouncing him as a dirty old man. People were easily confused by the similarity of the names Alan Robbins and Albert Rodda. We also heard reports of a door-to-door whispering campaign in which people expressed concern about re-electing an accused sex criminal to the State Senate.

Ronald Reagan's landslide victory over Jimmy Carter sealed Albert Rodda's fate. Many good Democrats were swept out of office as the GOP turned out in force for the presidential election. The media's early call of a Reagan victory and Carter's immediate concession were depressing to West Coast candidates, who decried the president's acknowledgment of defeat while the polls were still open. On top of the local smear campaign, Carter's premature concession statement was probably the last straw. We noticed that Sen. Rodda had carried the absentee vote, a traditionally Republican portion of the electorate. Rodda's defeat was caused by last-minute events, because he won the early balloting. The final tally went against him by 123,844 to 115,795, a margin of barely 8,000 votes (3.4% of the total vote).

Enter Unruh

The shock waves from Rodda's defeat reverberated through the State Capitol. Many Democrats worried that a nasty new era of political campaigning had begun. (As we know now, they were right.) Soon, however, major political figures came courting. Governor Jerry Brown offered Rodda a seat on the Agricultural Labor Relations Board. Although the legislation establishing the ALRB bore another senator's name as lead author, Rodda had been deeply involved in the details of establishing collective bargaining rights for state farmworkers. Farm labor unionization was controversial and Gov. Brown decided that Albert could be a calming influence, as well as certain to obtain Senate confirmation from his erstwhile colleagues.

State Treasurer Jesse M. Unruh, however, had other ideas. The former Assembly Speaker had built the constitutional post of State Treasurer into a major state power center. Unruh was the statutory chairman of the new Commission on State Finance, the latest agency to be created within the Treasurer's Office. The new commission was charged with tracking and forecasting state revenues and expenditures. Its creation was evidence of Unruh's continuing influence over state government, since Gov. Brown signed the legislative measure despite the reservations of his Department of Finance (which correctly recognized the Commission on State Finance as an indication that neither the Legislature nor the State Treasurer was content to trust the budget numbers coming out of the Administration or the Legislative Analyst's Office). The new commission needed an executive officer who could put the agency on the map of state government. Unruh offered the position to Albert Rodda.

Rodda quickly recognized that he was likely to find much more job satisfaction in the Treasurer's Office than at the Agricultural Labor Relations Board. He tendered his regrets to the Governor and accepted the State Treasurer's offer to become executive secretary of the Commission on State Finance.

Albert's presence as chief officer of the commission enabled Unruh to fully staff the infant agency. The commission began to issue quarterly reports on state revenues and expenditures, as well as long-range forecasts. The staff tracked legislation with fiscal impact and forecast the general fund cost of servicing general obligation bonds. The Governor's Department of Finance was not delighted with the existence of the State Treasurer's Commission on State Finance (several years later, in fact, Gov. Pete Wilson used his line-item veto to abolish it), but a fairly high level of cooperation was established between the two state agencies during Rodda's tenure. Unruh's plan for an independent check on the Governor's Department of Finance was in place.

Rodda stayed at the Commission on State Finance until 1983, when the Los Rios board of trustees beckoned. People in Area 5, the college district where Albert and Clarice resided, came to the Senator with a request that he chair a search committee to recruit a new trustee to represent them. Each person he approached said the same thing: “Why don't you run, Al?” No naïf, Albert soon realized that those who had approached him had had him in mind in the first place. They just wanted him to discover the degree of support for him within the district. Soon he was on the campaign trail and Area 5 voters swept him into office by a gratifyingly large majority.

Later years

Albert Rodda enjoyed relatively robust good health for many decades. No one, however, could have maintained the high standard he had set indefinitely. He gradually slowed down after retiring from the Los Rios board at the age of 80. The Senator continued to enjoy meeting friends for lunch, but he gradually withdrew from discussions of the day's political issues. Albert had high standards; when he no longer had the time and energy to keep up on the details of California and national politics, he preferred to reserve judgment rather than pontificate without information. (How many politicians do you know with that kind of fundamental honesty or restraint?) The Senator increasingly devoted himself to telling jokes and stories at meetings of his lunch group. His penchant for repeating his favorites became a running gag (including inspiring a contest at his 90th birthday party, in which people competed in their recollection of the jokes when given only the punch lines).

The Senator's greatest loss came with the passing of Clarice, who had been his steadfast partner and helpmate for so long. Albert eventually gave up on living alone and tried a retirement community, but he wasn't happy there. After a serious illness left him an invalid, his children arranged for Albert to move back home with live-in companions to care for him. In familiar and comfortable surroundings, the Senator eased into a quiet and tranquil life. He liked to receive visitors, but would tire quickly and no longer cared to converse at length. On April 3, 2010, Albert died at the age of 97.

Legacy

In addition to his many enacted legislative measures, Albert Rodda's legacy consists of family, friends, and schools. The Los Rios district continues to deliver Albert's dream of open access to higher education, Rodda Hall at the Sacramento City College campus serving as a visible reminder of his impact. His children have distinguished themselves in public school classrooms, on the state bench, and in the state attorney general's office, continuing their parents' accomplishments in education and law. Albert's many students and legislative staffers are an extension of his legacy, and we are everywhere.

Fiscal implications of Jarvis II, part 2

The Rodda Project: The battle against Proposition 9 (1980)

The background to Senator Rodda's paper

The attempt to follow up the success of Proposition 13 ran into a snag with Proposition 9. Ballot initiatives in California are not required to meet any particular standards of clarity or specificity. The drafters of Proposition 9 neglected to contain any language relating to its effective date. Some suggested that its adoption by the voters in the June 1980 primary election would cut personal income taxes in half for the entire calendar year, retroactively effective back to January. With the state budget due to take effect on July 1, the state could conceivably find its revenue base cut out from under it with only weeks to drastically overhaul that state spending plan.

The Legislature contained a number of so-called “Proposition 13 babies,” freshman assemblymen and senators elected in the wake of the passage of Proposition 13 in 1978. Several of them were eager to ride the tax-cutting bandwagon further. Other conservative legislators, some of whom had opposed Proposition 13 as too extreme, sought to outflank their junior colleagues and atone for their tardiness in embracing the tax-revolt movement. They seized on the ambiguities in Proposition 9 as opportunities to soft-pedal the impact of the initiative and make it appear less draconian. Legislative measures were introduced to stipulate the effective date of the proposition, if enacted by the voters, and to specify the initiative's impact on personal income tax brackets. These bills would have the effect of mitigating the initial impact of Proposition 9, postponing its biggest shockwave till the next year.

Senator Rodda's initial analysis of Proposition 9, Fiscal Implications of Jarvis II, was published on January 15, 1980. It was snatched up as a vital resource by the opponents of Proposition 9. However, Rodda's paper was criticized by the initiative's proponents because it did not address the mitigating legislation being sponsored by Proposition 9 supporters. Rodda recognized this as a legitimate point and hastened to address it. Only three months after his first analysis, the Senator released a 34-page supplement. That supplement provides the content of this article.

—TB

Supplement to January 15 Paper on Fiscal Implications of Jarvis II or Proposition #9 as Viewed from the Perspective of a Practical Politician

Part I: Possible Responses to Proposition #9: Three Scenarios

Part II: Impact of Campbell Legislation to Repeal Retroactive Implementation

Part III: Impact of Imbrecht Legislation to Apply 1978 Tax Brackets to Indexing of Personal Income Tax and to Repeal Retroactive Implementation of Proposition #9

Calculations and Interpretation by Senator Albert S. Rodda

Comment

The material in this Supplementary Paper is designed to clarify the issues which relate to Proposition #9 and to indicate the impact upon state financing of changes in current law and different estimates of the magnitude of the state's revenues and one-time surplus. Three Scenarios are discussed and projections for Fiscal Years 1980-81 and 1981-82 are made. Totally accurate projections, of course, are impossible; however, if the assumptions are realistic, such forecasts have the ability to indicate the general direction in which trends are developing. That is what these calculations are designed to accomplish: to provide the reader with more than a vague apprehension of the fiscal future for the State of California if it must function after its major source of General Fund Revenues, the Personal Income Tax, is significantly reduced in 1980-81 and succeeding years by Proposition #9. The Personal Income Tax now provides about 35% of the state's General Fund Revenues; Proposition #9 will reduce the future level of support from that source, since the state will receive only 47% of the amount it now receives from the Personal Income Tax. If predictions are accurate, the Personal Income Tax will provide, therefore, only about 19% of the state's General Fund Revenues after Proposition #9 and the fiscal impact upon the state will be very significant. Of particular importance to California will be the fiscal impact upon school funding. The first negative effect will be experienced in the loss of state funding for school facility construction and maintenance because of the transfer of the Tideland Oil Revenues to the General Fund. A second implication will be an almost certain reduction in the level of state funds for allocation to local government in the form of Proposition #13 “bail-out” money, approximately 74% of which is paid to the schools, Kindergarten through the Community Colleges. A third implication will be the possibility of a significant reduction in the state's General Fund apportionment to the School Fund and in State Budget expenditures to finance categorical aid programs.

The standard dictionary definition of the verb “mitigate” is: “To make less harsh, severe, or painful.”

The proponents of Proposition #9, including Mr. Jarvis, are seeking to “mitigate” or make less “painful” the fiscal impact of Proposition #9. The mitigation is to be achieved by raising the Personal Income Tax rates for tax year 1980, and thereafter, above the level provided by Proposition #9.

Under “Minimum Mitigation,” the tax increase will be zero.

Under “Moderate Mitigation,” the tax increase will equal $1.4 billion for Fiscal Year 1980-81.

Under “Maximum Mitigation,” the tax increase will equal $2.0 billion in Fiscal Year 1980-81 and about $600 million each year thereafter.

Part I: Potential Responses to Proposition #9: Three Scenarios

Those who are interested in the fiscal implications of Proposition #9 upon the state and local government, including the schools, should realize that there are several ways of interpreting the effect of Proposition #9. In my original paper, dated January IS, 1980, and the two supplementary analyses which followed, three different sets of assumptions were used. As a consequence, the first-year impact, Fiscal Year 1980-81, is calculated as producing three different outcomes with respect to the state's revenue loss. I have classified them, therefore, on the basis of their net effect on the State Budget for that year as producing:

1. Minimum Mitigation (Scenario I)
2. Moderate Mitigation (Scenario II)
3. Maximum Mitigation (Scenario III)

When the fiscal implications resulting from the three sets of assumptions and fiscal data are projected into the second year, the results or effects are very similar and indicate that the impact of Proposition #9 will significantly impair the ability of the state to fund its fiscal obligations to state, local government, and the schools. Unfortunately, the proponents of Proposition #9 are ignoring Fiscal Year 1981-82, and thereafter, and are claiming that the opponents are employing scare tactics in their opposition to Proposition #9, and that the fiscal effects will be less serious than claimed. They then present an analysis or interpretation of the effect of Proposition #9 for Fiscal Year 1980-81 which is predicated upon assumptions reflected in either Scenario II, labelled Moderate Mitigation, or Scenario III, labelled Maximum Mitigation. In each instance, they assume that current law relating to the Personal Income Tax will be changed prior to the election on June 3rd and that the state's surplus will be considerably larger than was estimated in the early part of the year.

In my Jarvis II paper, written in January, 1980, I made no specific dollar calculations with reference to the effect of Proposition #9 after taking into consideration those variables relating to General Fund Revenue projections, increases in the Tideland Oil Revenues, or the magnitude of the Year-End Surplus. I merely stated that the state was confronted with a potential deficit for Fiscal Year 1980-81 of approximately a billion dollars, had a one-time surplus in June 1980 of $1.8 billion and would lose $4.9 billion in revenue during Fiscal Year 1980-81 if Proposition #9 were approved. I also commented that the Tideland Oil Revenues would be employed to offset future revenue losses from Proposition #9. If the available data had been used to estimate the first-year revenue loss, the conclusion would have been that the net Short-Fall or deficit would amount to approximately $4.5 billion: current revenues of $19.3 billion, plus the one-time surplus of $1.8 billion, minus the $4.9 billion Proposition #9 effect, equals a total revenue, ongoing and one-time, of $16.2 billion. If this is subtracted from the January 10, 1980, Budget of $20.7 billion and the Tideland Oil Revenues in the amount of $400 million are transferred to the General Fund, the Short-Fall will amount to $4.5 billion if $400 million is added to the state's Federal Revenue balance and these funds are maintained as a state Prudent Reserve in the amount of $550 million.

Since the analysis reflects the January 1980 state revenue estimates and surplus, it is no longer meaningful. A more current and responsible analysis produces what I classify as Scenario I, or Minimum Mitigation of the first-year effect of Proposition #9, and it is predicated upon certain assumptions with respect to the implementation of Proposition #9 and a moderate estimate of the increase in the state1s revenues and magnitude of the one-time surplus.

Scenario I — Minimum Mitigation

Assumptions: Current law remains unchanged and Proposition #9 is interpreted as becoming effective on January 1, 1980, and full indexing remains in effect as provided under existing law. The one-time surplus is estimated at $1.8 billion and the unanticipated state revenue increase is calculated to be $600 million, reflecting a 3% error in the January estimate. The Tideland Oil Revenues are estimated to be $500 million and that sum is transferred to the General Fund. The state1s current Federal Revenue Sharing money is calculated to be $150 million and a total of $400 million is added to that balance in order to create a responsible Prudent Reserve of $550 million. If the State Budget is reduced by the $400 million identified in the Duffy Report as a reserve for “economic uncertainties,” the Budget in 1980-81 will be $20.4 billion; however, a minimum of $400 million must be added to that amount to reflect the Tideland Oil Revenues to be allocated under the provisions of SB 1426 for the capital outlay needs of public education, Kindergarten through the University, and for the establishment of an Energy and Resources fund. When these proposed state expenditures are taken into consideration, the state's expenditures subject to reduction in 1980-81, after Proposition #9, will amount to $20.7 billion.




The first-year effect, utilizing these assumptions, is that the state's next year net deficit, or Revenue Short-fall, will amount to $3.8 billion after, of course, establishment of a Prudent Reserve of $550 million.

1980-81 Revenues = $16.9 billion, and Revenue Short-fall = $3.8 billion. When projected into 1981-82, Revenues = $18.8 billion, and the Revenue Short-fall = $4.0 billion, assuming a 13% revenue increase and a Budget increase of 10% over 1980.

Two other calculations, which are predicated upon different assumptions, I classify as Moderate Mitigation and Maximum Mitigation.

Scenario II — Moderate Mitigation

Assumptions: The Campbell legislation to change current law in order to make Proposition #9 effective in June, 1980, and to establish Personal Income Tax rates equal to 71% of the 1978 rates for the 1980 Tax Year, is enacted into law. It is further assumed that the state's revenues exceed the original estimate in the amount of $600 million, that the Tideland Oil Revenues are approximately $500 million, and that the federal Revenue Sharing Reserve is $150 million. The first-year effect, utilizing those assumptions, is that the state's net deficit will amount to $2.4 billion. This calculation is based upon the assumption that the state's expenditure reduction of $400 million through deletion of the appropriation identified in the Duffy Report as a reserve for “economic uncertainties” is offset by the planned $400 million expenditure for the capital outlay needs of public education and for the establishment of an Energy and Resources fund.

Fiscal Year 1980-81 Revenues = $18.3 billion, and the Revenue Short-fall = $2.4 billion. When projected into 1981-82, Revenues = $18.8 billion, and the Revenue Short-fall = $4.0 billion, assuming a 13% revenue increase and a 1980 Budget increase of 10%, and a decline in Personal Income Tax income in 1981-82 of approximately 53.5%.

Scenario III — Maximum Mitigation

Assumptions: The Imbrecht legislation is enacted into law and changes the effective date of Proposition #9 to January 1980, as provided in the Campbell legislation, and applies in 1980-81 the full indexing of the Personal Income Tax to the 1978 tax brackets and has the effect, therefore, of increasing the tax payments for this year and the future over the payments which would be made if the current indexing brackets remained in effect. The effect of these two changes in law will be to cause a significant one-year reduction of the state's revenue loss for fiscal Year 1980-81 from Proposition #9, which otherwise would occur in the magnitude of approximately $2.0 billion, and a modest ongoing reduction in the amount of $500 million. In addition, it is assumed that the state's unanticipated revenue increase for next year will be $700 million, that the State Budget contains a $400 million one-time reserve for “economic uncertainties” and that the Tideland Oil Revenues will increase by $400 million. If the Budget is reduced by the $400 million, the reserve for “economic uncertainties,” it will be $20.14 billion, but that will be offset by the $400 million to be allocated under SB 1426 for the capital outlay needs in public education and the establishment of an Energy and Resources fund. If all of the revenue sources are utilized except $400 million, which are added to the federal Revenue Sharing balance of $150 million in order to establish a Prudent Reserve of $550 million, the revenue loss because of Proposition #9 will be significantly reduced.

The first-year effect of Proposition #9, based upon these assumptions, is calculated to be in the amount of a Short-fall in 1980-81 of $1.8 billion, assuming a Prudent Reserve of $550 million is established.

Fiscal Year 1980-81 Revenues = $18.9 billion, and the Revenue Short-fall = $1.8 billion after the elimination from the Budget of the reserve for “economic uncertainties” and an augmentation by an equivalent amount, $400 million, for public education capital outlay needs and the establishment of an Energy and Resources fund. It is, also, assumed that $400 million is allocated from the state's revenues for the creation of a Prudent Reserve of $550 million, of which $150 million is federal Revenue Sharing money. When projected into 1981-82, Revenues = $19.3 billion, and the Revenue Short-fall = $3.5 billion, assuming a 13% increase in the state's revenues and a 1981-82 Budget increase of 10% over the previous year.

Conclusion

Scenario II — Moderate Mitigation seems to be most likely to occur. If that proves correct, the state's estimated Revenue Short-Fall for 1980-81 will be $2.5 billion, assuming a Prudent Reserve, and $4.0 billion in 1981-82.

The two-year average Revenue Short-Fall will be approximately 15% of what could have been budgeted had Proposition #9 not been approved, or approximately 12% in 1980-81 and 18% in 1981-82. It is interesting to note that in Fiscal Year 1979-80, the current year, the state's General Fund expenditures are $18.7 billion. Assuming that Moderate Mitigation occurs, state expenditures will be $18.2 billion in 1980-81, and in 1981-82 they will be $18.8 billion.

In Fiscal Year 1981-82, the state will have a Budget approximately equal to that in Fiscal Year 1979-80, the current year, after two years of unusual inflation.


Addendum

An alternative analysis predicated upon a projection of the state's revenues for 1980-81, after reduction of the revenue loss from Proposition #9, at a rate of increase equal to 11%¹, produces very similar fiscal results with respect to fiscal Year 1981-82 State Revenues and the Budget Short-fall for that year. In the alternative analysis, the assumption is made that the retroactive implementation of Proposition #9 to January 1, 1980, is repealed and that there is no change in the current tax brackets for indexing the Personal Income Tax.

After the revenue calculation which reflects these assumptions is made and the $600 million in Tideland Oil Revenues are added to the state's revenues, the resultant total can be regarded as the General fund Revenues available for expenditure in 1981-82.

Under both the Minimum Mitigation and the Moderate Mitigation Scenarios, given these assumptions, the Revenues = $18.9 billion, and the Budget Short-fall = $3.9 billion.

Under the Maximum Mitigation Scenario, the assumption of which is that the Imbrecht legislation is enacted, the Revenues = $19.5 billion, and the Budget Short-fall = $3.3 billion.

Part II: Impact of Campbell Legislation to Make Proposition #9 effective in June, 1980, rather than in January, 1980

Evidently, Howard Jarvis is apprehensive about the first-year revenue loss estimated to result from voter approval of Proposition #9. That estimated loss is $4.9 billion, or approximately 25% of the state's projected revenues for Fiscal Year 1980-81. Because of his apprehension and because he claims that he did not intend the amendment to become effective as of January 1, 1980, which is a mandate of existing tax law², Mr. Jarvis is supporting a bill, SB 1464, authored by Senator William Campbell, which will (1) make the amendment effective on June 4th upon its certification of voter approval by the Secretary of State, and (2) provide a 1980 Calendar Year tax rate of approximately 71% of the 1978 tax rate, rather than the 50% required by the specific language in the Jarvis Initiative.

It has been suggested that such action may be of questionable constitutionality; however, it has widespread political support despite the fact that it will increase the 1980 tax rates above the level to be established by Proposition #9, and there is reason to believe that it may become law and its constitutionality upheld.³

If the Campbell legislation is enacted and the tax rate for the Calendar Year 1980 is increased from 50% to approximately 71% of the 1978 rates, the potential $4.9 billion revenue loss in Fiscal Year 1980-81 from Proposition #9 will decline to an estimated $3.5 billion.

The important factor, of course, is that, although this will provide a reduction in the first-year estimated revenue loss because of Proposition #9 from $4.9 billion to $3.5 billion, it will not affect future years. In the years following, the state's revenue loss will be of a magnitude to reflect approximately a 53.5% reduction in the state's Personal Income Tax, a loss calculated in 1981-82 to be approximately $4.2 billion, which will increase in fiscal years thereafter.

The projected state resources for June of 1980 have increased slightly over the estimate which was made in January. The margin of error in the estimate has been calculated to be in the neighborhood of 2% to 4% of the January projection.⁴ I have concluded that an error in the amount of 3% is responsible and an error of that magnitude will result in revenue receipts of $600 million over the estimate.

Assuming that the Year-End Surplus is increased by that amount, the surplus money available to offset the revenue loss because of Proposition #9 will amount to $2.4 billion and not the $1.8 billion surplus as previously estimated. Furthermore, additional revenues in the amount of approximately $500 million above that anticipated in the Governor's Budget may be transferred to the General Fund as a result of the decontrol of heavy oil prices.⁵ Since the state normally maintains a Prudent Reserve as security against a decline in its revenues because of adverse economic conditions, it may be assumed that $400 million of the surplus will be used for that purpose and that it will be augmented by the state's Federal Revenue Sharing money, approximately $150 million, which would establish the reserve at a level of $550 million.⁶

On the basis of these assumptions, one can make some interesting projections about the magnitude of the revenue and expenditure reductions in Fiscal Years 1980-81 and 1981-82 which will result because of voter approval of Proposition #9.

The state's revenues for Fiscal Year 1980-81 were estimated in January to be $19.3 billion. If it is assumed that the state's General Fund Revenues are reduced by an estimated $3.5 billion, to reflect the first-year implementation of Proposition #9, presuming the Campbell legislation is enacted, the state's revenues will decline to the level of $15.8 billion. If the one-time or Year-End Surplus is added to that revenue estimate in the amount of $1.8 billion and if it is further augmented by $600 million from increased state revenues, the General Fund dollars available to fund the 1980-81 Budget will be in the amount of $18.3 billion. That will consist of the state's ongoing revenues after Proposition #9, the Tideland Oil Revenue increase, and all of the one-time surplus, with the exception of the Prudent Reserve in the amount of $550 million.⁷

The State Budget, however, assuming no augmentations are approved by the Legislature prior to voter approval of Proposition #9, will be in the amount of $20.75 billion. The Duffy Report identifies a $400 million reserve for “economic uncertainties” in the 1980-81 Budget, and if that is deleted, the Budget will be $20.33 billion. It is important to realize, however, that administration-sponsored legislation, SB 1426, to utilize a portion of the increase in Tideland Oil Revenues to establish an Energy and Resources Fund and to finance school construction and maintenance for all segments of education, Kindergarten through the University, will establish the level of support at an annual amount of about $400 million. This expenditure, of course, is not included in the Budget as introduced, and since it is planned to finance those needs with the Tideland Oil Revenue increase which will be transferred to the General Fund as an offset to the Proposition #9 revenue loss, the state will be deprived of the fiscal ability to proceed in the financing of these very urgent needs; it is reasonable, therefore, to include that amount, $400 million, as an ongoing state expenditure. It will offset the $400 million reduction in the Budget which was achieved through the elimination of the reserve for “economic uncertainties”; thus, the state's expenditure level appropriate for calculating the Proposition #9 Short-Fall should be established at the $20.7 billion level provided in the Budget when introduced in January.

If the voters approve Proposition #9, the Budget for 1980-81 will have to be reevaluated and placed upon the Governor's desk in an amount not to exceed the state's projected revenues of $18.3 billion; it will have to be reduced, therefore, in the amount of $2.4 billion, or approximately 12% of the original Budget expenditure.


Projection for 1981-82

In order to determine the impact of Proposition #9 on Fiscal Year 1981-82, an assumption may be made that the state's 1981-82 revenue base will reflect an increase of 13% over the previous fiscal year.⁸ This increase is equal to a three-year average percentage increase, 1978-79, 1979-80, and 1980-81, and the last year, however, 1980-81, is only an estimate of the increase over 1979-80. It might be argued that the percentage of increase should be estimated at a lower rate because of the fact that full indexing of the Personal Income Tax will be in effect and because Proposition #9 will result in an annual loss of 53.5% of the state's Personal Income Tax, which in 1980-81 was estimated to account for 35.7% of General Fund Revenues.⁹ The loss of revenues from those two changes in the Personal Income Tax will significantly affect the total revenues that the state can expect to receive, not only in 1980-81, but in 1981-82 and each fiscal year thereafter. That loss will reduce the state's revenue elasticity, or the tendency for revenues to increase at a rate greater than the increase in the state's Gross National Product. A 13% estimated increase in revenues, therefore, considering the impact of indexing and the 50% reduction in Personal Income Tax rates amounts to what I think is a responsible figure.

The assumption is made that the estimated 1980-81 state revenues in the amount of $19.3 billion are augmented by the $600 million increase in state revenues over the $19.3 billion estimate. As a consequence, the revenues are $19.9 billion and that amount is adjusted to reflect a 13% rate of increase for 1981-82.

Based upon those data, the state's total revenues in 1981-82 would, under the current tax rate or voter rejection of Proposition #9, amount to $22.5 billion. This may be increased by its augmentation of $600 million in Tideland Oil Revenues.¹⁰ The total revenues would be $23.1 billion and these revenues would constitute the only source of funding available to the state in Fiscal Year 1981-82 since there will be no “carry-over surplus,” all of it having been exhausted in Fiscal Year 1980-81 as an offset to Proposition 9.¹¹

The 1981-82 Budget may be assumed to increase at a rate of 10% over that of 1980-81: $20.75 billion plus $2.07 billion. The amount, therefore, will equal $22.8 billion.

The Personal Income Tax currently is producing about 35.7% of the state's General Fund; therefore, assuming that Proposition #9 is approved, the loss in revenue from that source will amount to 53% of 35.7%, or 19% of the state's General Fund. Such a percentage of the state's tax base would amount to a $4.3 billion reduction in the revenues which would have been collected absent approval of Proposition #9. Deducting that revenue loss from the estimated $23.1 billion of the state's total revenue, the result is $23.1 billion minus $4.3 billion, or $18.8 billion, and that will be the General Fund revenue base for Fiscal Year 1981-82, or $100 million more than is being spent in Fiscal Year 1979-80, the current year. The Short-Fall will be $4.0 billion, or a Budget of $22.8 billion minus revenues of $18.8 billion.

Interestingly, the result is the same for the Minimum Mitigation Scenario if a 1981-82 projection is made, since the basic assumptions are the same and since the Campbell legislation is effective only in the first year and has no impact upon the second year, 1981-82, or succeeding year revenues.


Conclusion

The critical factors affecting the state's fiscal situation if Proposition #9 is approved are:

1. There is no huge, $1.8 billion, one-time surplus remaining after Fiscal Year 1980-81, only a Prudent Reserve of $550 million, the maintenance of which is essential to sound fiscal management and the protection of the state's fiscal solvency.
2. Since the State Budget must not exceed estimated revenue projections for any fiscal year, future revenues will determine the level of state expenditures, unless, of course, a one-time surplus develops, or if Proposition #4 mandates a spending level below revenues.
3. Personal Income Tax Revenues, as a consequence of Proposition #9, will decline by approximately 53.4% and will contribute about 18.6% of the General Fund Revenues instead of the 35.7% as estimated in the Budget for 1980-81. This estimate is for Fiscal Year 1981-82.

The state has two basic options: (1) imposing the reduction in expenditures totally upon state allocations and subvention to schools and local government, particularly county health and welfare allocations; or (2) distributing the state's revenue loss in such a manner as to reduce total government expenditures in California—state, cities, counties, special education, and the schools.

To accomplish the above result, the state will have to enact a number of changes in current law:

1. Modify the deflator mechanism in AB 8.
2. Reduce the amount of school property taxes transferred to other segments of local government as provided in AB 8.
3. Reduce the amount of tax relief allocated to local government because of the homeowner exemption, the business inventory buy-out, the Williamson Land Conservation Act and revenues raised by the cigarette tax and transferred to local government.

In any event, substantive changes in the present state response to Proposition #13 will result and government will experience a decline in its level of support.

The fiscal impact of Proposition #9, assuming (I) the Campbell legislation is enacted, (2) the state's revenues are $600 million above the January estimate of $19.3 billion, and (3) the Tideland Oil Revenue increase in the magnitude of about $500 million is transferred to the General Fund, is calculated as follows:

1. Fiscal Year 1980-81 estimated Budget reduction of about 12%, or $2.4 billion if a Prudent Reserve of $550 million is maintained.
2. Fiscal Year 1981-82 estimated Budget reduction of about 18% from the normal State Budget for that year, or approximately $4.0 billion.
3. Two-year revenue loss of $6.4 billion, assuming a Prudent Reserve is maintained of $550 million.

State level of General Fund expenditures will be as follows:

1979-80 $18.7 billion

1980-81 $18.3 billion (assuming a Prudent Reserve of $550 million)

1981-82 $18.8 billion (assuming a Prudent Reserve of $550 million)

Obviously, drastic Budget reductions will have to be made over the two-year period.

It is now recognized that the state's economy may experience a decline beginning in the third quarter, July to September. If this occurs, the state revenues may decline in Fiscal Year 1980-81. That could easily exhaust the Prudent Surplus. If the result were greater than the magnitude of the surplus $550 million, the effect in 1981-82 would be more serious than the 1981-82 revenue loss of $4.0 billion. It could rise to $4.5 to $4.8 billion, depending upon the magnitude of the economic slowdown; a 5% reduction in state revenues could produce a net $800 to $900 million revenue loss.

Furthermore, if inflation continues at a high rate into 1980-82, the 10% Budget increase may be inadequate. If it were increased by 2%, to 12%, the normal Budget would increase by about $500 million in 1981-82, which would increase the revenue deficiency that Proposition #9 would produce in that year.

Part III: Impact of Imbrecht Legislation re Indexing of Personal Income Tax and Implementation of Proposition on January 1, 1980

The Vice Chairman of the Assembly Ways and Means Committee, Assemblyman Gordon Duffy, has published a very scholarly paper on the impact of Proposition #9.

It presents a number of options for estimating the first- year effect of Proposition #9 if approved by the voters on June 3. This is an analysis of that impact based upon three assumptions which will most significantly reduce the first-year (1980-81) revenue loss resulting from Proposition #9.

The assumptions are:

1. A very liberal estimate of the state's surplus at the end of Fiscal Year 1979-80.
2. Enactment of legislation to repeal the retroactive provisions of current tax law which relate to the implementation of Proposition #9, SB 1464, Campbell, and AB 3020, Imbrecht.
3. Enactment of AB 3020, Imbrecht, to implement Personal Income Tax indexing in Tax Year 1980, as required by the Bergeson Act, AB 276, 1979 Session, but at the tax brackets in effect for Tax Year 1978.

The total fiscal effect of a very liberal estimate of state revenues and a Personal Income Tax increase in Tax Year 1980, which are the essential elements of these assumptions, would be significantly to reduce the state's revenue loss from proposition #9 in Fiscal Year 1980-81. The effect will be substantively to mitigate, therefore, the negative impact of Proposition #9 during the first year of its implementation. In the second and succeeding years, however, the state's Revenue Short-Fall will become quite large and, unfortunately, the second-year, or 1981-82, impact of Proposition #9 is being ignored by the proponents of Proposition #9, and it was not addressed in the Assembly Ways and Means Committee Report.

The general consensus is that, predicated upon the above-mentioned assumptions, the first-year (1980-81) effect will be to reduce the projected state revenue loss, as a consequence of voter approval of Proposition #9, from an estimated amount of $4.9 billion, if the state's revenue increase and its one-time surplus are disregarded, to a level of $1.8 billion. Since the legislative change to reduce the Revenue Short-fall from Proposition #9 will be effective only for one year, fiscal Year 1980-81, and since the state's 1980-81 Year-End Surplus will be exhausted, the state will experience in Fiscal Year 1981-82 to a much greater degree the adverse fiscal effects of Proposition #9. As a consequence, the state's revenues for that year, 1981-82, and thereafter, will decline significantly from the level which normally would accrue to the General fund, and this could prove of critical importance to the state. The following calculations indicate the basis for that revenue projection.

If the state's estimated 1980-81 General Fund Revenues of $19.3 billion are increased by $700 million, the revenue increase which the Duffy Report indicates to have occurred over the original January 1980 projection, the state's General Fund Revenues will equal $20.0 billion. If a transfer of Tideland Oil Revenues to the General Fund in the amount of $500 million is made, the total revenues available to the state will attain a level of $20.5 billion for Fiscal Year 1980-81. If from that amount the $3.0 billion tax reduction which is estimated to result from Proposition #9 is deducted¹², after enactment of the Imbrecht legislation, the state’s available revenues will amount to $17.5 billion. If that revenue base is augmented for 1980-81 by the addition to it of the estimated $1.8 billion, one-time Year-End Surplus for Fiscal Year 1979-80, the state will have a total revenue source to fund the State Budget in 1980-81 in the magnitude of $19.3 billion. If $400 million is added to the $150 million Federal Revenue Sharing Reserve, the state will have a Prudent Reserve of $550 million and a revenue source of $18.9 billion. State expenditures, as provided in the Budget as introduced on January 10, 1980, will amount to $20.7 billion, and if the assumption is made that that amount is reduced by $400 million, the amount budgeted for “economic uncertainties,” the Budget will amount to $20.3 billion. Since that reduction will be offset by the $400 million to be allocated from Tideland Oil Revenues for the creation of an Energy and Resources Fund and for public education capital outlay under the provisions of SB 1426, the Budget must be reduced by $1.8 billion, assuming the maintenance of the $550 million Prudent Reserve, and by $1.4 billion if only the $150 million in Federal Revenue Sharing is retained as a State Budget Reserve.


Projections for 1981-82

In making an estimate of the state's revenues for the next year, 1981-82, I utilized the estimated General Fund Revenues of $19.3 billion for Fiscal Year 1980-81 as a base and increased that amount by the addition of the unanticipated revenue increase of $700 million. The result is an ongoing revenue base of $20.0 billion for Fiscal Year 1980-81. By adjusting that amount for a 13% increase, which is 1% less than the average rate of increase for the last two years, the total revenues available to the state for General Fund expenditures for 1981-82 can be expected to attain a total of $22.6 billion, and if $600 mil1'ion from the Tideland Oil Revenues is added to that amount, the General Fund Revenues will be $23.2 billion.

That $23.2 billion in revenues available for 1981-82 must be reduced, however, if Proposition #9 is approved, since the Personal Income Tax rates will be established at 50% of the 1978 rates. That reduction can be estimated through a calculation of the personal Income Tax loss. In 1980-81, the Personal Income Tax Revenues produced approximately 35.7% of the General Fund income; if that percentage were to continue into 1981-82, the Personal Income Tax could be expected to generate $8.3 billion of the state's $23.2 billion in revenues for that year. Because of the effect of Proposition #9, however, that revenue estimate must be reduced and the reduction will be in the amount of $4.39 billion, or 53% of the Personal Income Tax which otherwise would be collected.¹³ If that amount is deducted from the estimated revenues of $23.2 billion, the General Fund income source will decline to $18.8 billion in Fiscal Year 1981-82. Since the Imbrecht legislation will increase state Personal Income Taxes because of its reversion to the 1978 tax brackets, an additional $400 million should be added to that amount for a total revenue base of $19.2 billion. In addition to this revenue, however, the state will possess as a carry-over the Prudent Reserve of $550 million established in the previous year, 1980-81.

For the purpose of further analysis, one may assume that the Budget for 1980-81, as introduced, is not increased by 13%, the percentage increase applied to the state's revenue, but by only 10%. That would constitute a very responsible level of increase and will produce an hypothetical level of state expenditures for the 1981-82 Budget Year equal to $22.8 billion. In addition, of course, there will be available the previous year's Prudent Reserve of $550 million, apart of which is the $150 million in Federal Revenue Sharing money.

Since expenditure reductions will have to be made, because the amount of the state's General Fund Revenues will determine the amount the state may spend, the Budget may not exceed $19.2 billion, which is $3.6 billion below the “normal” expenditure level.


Conclusion

In the 1979-80 Budget, the one now in effect, the expenditure level for General Fund purposes is $18.7 billion. On the basis of my estimate of the “Imbrecht effect,” or the Maximum Mitigation of the first-year revenue loss from Proposition #9, the estimated state expenditures which may be incurred in 1980-81 will be $18.9 billion. On the basis of the calculations which I have explained and which are also predicated on the “most favorable” assumption, the state may project an expenditure level for Fiscal Year 1981-82 of approximately $19.2 billion. In effect, after three years of severe inflation, the state may spend in 1981-82 approximately $500 million more than was budgeted in Fiscal Year 1979-80, the current year.

The deflator mechanism will be implemented, as provided in AB 8, in Fiscal Year 1980-81 since that must occur if the state's fiscal resources, both ongoing revenues and the Year-End Surplus, are estimated to be $100 million less than $20.5 billion. When that takes place and if no reductions in the state's Budget are implemented, and if the deflator mechanism is applied pursuant to current law, 50% of the reduction must be experienced by the schools for a total state revenue loss of approximately $900 million in 1980-81. An equal amount would also be withheld from state allocations to other segments of local government. As a consequence, the bail-out, which began in 1978 at $4.3 billion, would be reduced in 1980-81 from a level of $5.3 billion to considerably less, or about $3.9 billion, an amount below that provided in 1978-79 in SB 154.

The impact will be so dramatic that the deflator will have to be rewritten. Of course, those expenditures which relate exclusively to state services could be reduced and that action would mitigate the impact of the deflator mechanism upon the schools and other segments of local government; but even if that were done, the revenue loss to local government would still be substantive.

Furthermore, in the following year, 1981-82, the state's fiscal situation will be even more tenuous, and there is no question that very significant and controversial decisions will have to be made in the determination of the appropriate expenditure reductions, state and local. It will not be as simple a challenge as was that in 1978, when the state responded to the implications of Proposition #13 in SB 154.

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¹The Legislative Analyst's Budget Analysis for 1980-81 indicates that state revenues increased in 1979-80 over 1978-79 at a 16.8% rate. It is estimated, however, that the increase in 1980-81 revenues over 1979-80 will be at an 8.5% rate, the decline being largely the result of the impact of the 1978 one-time tax credit and full indexing of the Personal Income Tax upon Tax Years 1980 and 1981. Had the one-time 1978 tax credit and the full indexing effect been disregarded, the estimated revenue increase for 1980-81 would have been 12.3%. To assume a revenue increase in the magnitude of 11% is, therefore, a responsible compromise which, if it has a bias, has one favorable to Proposition #9.

²Revenue and Taxation Code, Div. 2, Part 10, Section 17034.

³Legislative Counsel's Opinion, March 7, 1980, re the constitutionality of the provisions of SB 1464. If a bill authored by Assemblyman Imbrecht, AB 3020, is enacted, the tax savings from the retroactive implementation of Proposition #9 will be repealed and, also, the indexing of the Personal Income Tax, as provided in current law, will be repealed and the 1978 tax brackets made applicable in 1980. This will result in another tax increase for 1980-81 in the magnitude of $500 million in addition to the $1.4 billion which will result from the repeal of retroactivity. .The Imbrecht bill will, therefore, increase Personal Income Taxes in 1980 by $1.9 billion over what is current law in the event that Proposition #9 is approved.

⁴As of February 29, 1980, the revenues were 2-1/2% greater than estimated, the same percentage as that produced on January 31, 1980. Report on General Fund Disbursement issued by Kenneth Cory, State Controller.

⁵SB 1426, legislation sponsored by the administration, and now in the Assembly, will provide that a large percentage of this money will be used to finance Capital Outlay for the schools, K through the University, and the Energy and Resources Fund. If transferred to the General Fund, money for school construction and conservation and development of renewable energy sources will be practically unavailable.

⁶Federal Revenue Sharing money may not be regarded as on-going income since there is a strong likelihood that the program will be repealed by Congress in its attempt to balance the Federal Budget.

⁷The Reserve, as stated, will consist of a $400 million one- time allocation from the state's increased revenues and $150 million in Federal Revenue Sharing money.

⁸Legislative Analyst Analysis of the Budget Bill for Fiscal Year 1980-81, p. A-29, Table 15. Had the effect of the one-time tax credit increase and full indexing of the Personal Income Tax been excluded, the revenue increase would have averaged over the three-year period, 1978-79, 1979-80, and 1980-81, at 14.5%.

⁹This revenue reduction will occur even if the Imbrecht bill to change the tax brackets is enacted, since full indexing will begin in 1981-82.

¹⁰Tideland Oil Revenues are anticipated to reach a maximum level in 1982-83, between $600 and $700 million, and to decline thereafter. This is the most optimistic projection of the State Lands Commission.

¹¹If in Fiscal Year 1980-81 the Prudent Reserve remains intact, it will be available to offset a Budget deficit which might result as a consequence of a serious slowdown in the economy and a decline in revenues.

¹²This reflects a reduction from the $4.9 billion revenue loss as a consequence of the enactment of the Imbrecht legislation to repeal the retroactive implementation of Proposition #9 and to initiate indexing of the Personal Income Tax in Tax Year 1980 based upon the 1978 tax brackets.

¹³This percentage reflects the fact that Proposition #9 will halve the tax rates, but cause a 53% to 54% loss of revenues to the state because of the fact that tax credits remain at current levels.