Formally yes—determining government spending is arguably the most fundamental job of the legislature.
Practically, however, the legislature must build the budget inside a cage formed by decades of ballot measures. The biggest bars on the cage are:
- Proposition 98 (1988), which guarantees that roughly 40 percent of General Fund revenue goes to K–12 and community college education.
- Proposition 2 (2014), which requires the legislature to devote funding to rainy-day fund deposits and debt payments.
- Proposition 4 (1979), which created the Gann Limit that caps total appropriations at the state and local level and can even force taxpayer rebates when tax revenue is booming.
- Proposition 13 (1978) and its descendants, which require a two-thirds legislative vote to increase most taxes.
When you also consider federally imposed budget requirements (for example, Medicaid rules requiring that the state match federal grants) and court orders (such as requirements for improvements to prison mental health care), the legislature’s budgetary discretion appears limited.
What is “ballot-box budgeting?”
Ballot-box budgeting refers to the practice of voters creating the array of budgeting rules that the legislature must work within. This happens when ballot propositions earmark particular tax revenues for specific uses, rather than being used at the legislature’s discretion.
For example, Prop 99 (1988), Prop 10 (1998), and Prop 56 (2016) increased tobacco taxes and directed that the revenues be routed to support early childhood and healthcare programs. Prop 63 (2004, later restructured by Prop 1 in 2024) levies a 1 percent tax on income over $1 million and directs the revenue to support behavioral health programs. In a similar way, bond measures constrain future state budgets by committing the state to paying debt service for decades.
Each proposition-created earmark made sense to its electorate at the time it was passed. However, the accumulation of constraints and debt means that each new legislature inherits a budget that is already mostly spoken for.
Meanwhile, each public service without constitutionally protected funding must compete for an increasingly small share of unrestricted tax revenue. This becomes especially problematic during economic or budgetary crises.
Why do new measures keep exempting themselves from the previously set rules?
Previous propositions, like Prop 13, also create constraints on future ballot measures. As a result, new ballot measures include language exempting themselves from those previous rules.
Prop 40 (2026) is a good example. It amends the constitution specifically so its revenue:
- Does not count toward the Gann Limit;
- Does not trigger the Prop 98 public education earmark; and
- Cannot be allocated by the legislature.
This tactic is nonpartisan. Prop 13 itself entrenched the two-thirds tax rule, and Prop 69 (2018) created a similar “lockbox” that requires fuel taxes to be spent on transportation projects. The only remarkable aspect of ballot-box budgeting is how routine it has become.
Regardless of the justifications for this approach, each new constitutional restriction creates constraints for the next legislature, making the budget process increasingly unwieldy since each change tends to be protected against revision.
Does the two-thirds rule still matter now that one party holds supermajorities?
The rule requiring a two-thirds legislative vote threshold to increase taxes still matters, but in a different way than when it was created.
The rule from Prop 13 (tightened by Proposition 26 in 2010) was designed as a check on government power that created an advantage for the minority party. However, with current Democratic supermajorities in the House and Senate, the marginal voter is now in the majority party, meaning that the constraint has shifted from partisan toward intra-party politics.
Proposition 25 (2010) created an interesting asymmetry: Budgets can now pass by a majority vote, but taxes still need two-thirds approval.
The change has enabled government fees and fund shifts (and ballot measures) to help address revenue gaps that can’t be addressed by increasing taxes.
What should a voter conclude from all this?
There are two takeaways to consider.
First, the constitutional constraints imposed by ballot measures exist because voters did not trust the legislature to follow voter intentions, often for good reason. It’s also useful to remember that each constraint has a constituency and a political logic that motivated its creation and opposes its reform.
Second, and more importantly, the sum of the manifold constraints leads the legislature to produce annual budgets that nobody really wants and where accountability for the problem is blurred.
Legislators can truthfully say their hands are tied, voters are annoyed at their inability to effect meaningful change, and proponents of the next ballot-box budgeting proposition earnestly believe their cause deserves protected funding, too.
