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California's Fiscal Problems

California's fiscal situation had become increasingly grim since the passage of Proposition 13 in 1978, which limited local government's ability to raise property taxes and forced the state to take over funding for many locally provided services, and of the Gann Limit (Proposition 4) in 1979, which limited yearly increases in government spending. The two measures passed during a period when the state had built up a substantial financial surplus, which buffered their effects. By the time Proposition 99 was before the Legislature in early 1989, the situation had changed: the state was facing a deficit. Elizabeth Hill, the Legislative


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Analyst, said that she expected the state to end the 1988-1989 fiscal year as much as $126 million in the red and that the subsequent year's budget problems might be “even worse.”[25] The Legislative Analyst is a widely respected nonpartisan official who has a reputation for objectivity and is charged with preparing an analysis of the governor's budget for the Legislature.

Proposition 99 brought in new money whose expenditure was not restricted by the Gann Limit, and there was nothing requiring that the money be used only for the programs that the Coalition wanted. The CMA, CHHS, and the Western Center wanted more money for medical services for poor people. The Service Employees International Union (SEIU), a labor union representing county employees, particularly in the health care field, and the County Supervisors Association of California (CSAC), an organization representing California county governments, saw Proposition 99 as a new source of jobs and money for their constituents. Governor George Deukmejian had many cash-starved programs under his administration's Health and Welfare Agency. So did the CDE, which reported to the State Superintendent of Public Instruction, not the governor. The Research Account initially attracted the attention of California's research universities, especially the University of Southern California, Stanford University, and the University of California, which saw it as a new source of money. None of these new players had any particular commitment to tobacco control.


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