Proposition 58 was aCalifornia ballot proposition on the March 2, 2004 ballot. It passed with 4,535,084 (71.2%) votes in favor and 1,841,138 (28.8%) against. It was officially called theCalifornia Balanced Budget Act. It requires thestate legislature to pass abalanced budget every year, which means that budgeted recurrent expenditure, including repayment of pastdebt, does not exceed estimatedrevenue. The act does not require that capital works programs be funded out of current revenues. TheCalifornia Constitution has always allowedbond issues (state debt) for specified capital works, above a certain value. Bond measures must be approved by a statewide ballot.
The Act created a reserve fund called the Budget Stabilization Account in case of future financial trouble. It also prevented the creation of any future bonds to pay off deficits like that inProposition 57 (the California Economic Recovery Bond Act). Proposition 58 took effect only because Proposition 57 also passed.
Propositions 57 and 58 were the centerpiece ofGovernorArnold Schwarzenegger's plan to resolve California's budget problems. Schwarzenegger campaigned heavily for both propositions' passage.
While Prop 58 was to provide balanced California budgets, the deficits continued in subsequent years, growing larger over time.[citation needed]
Summary of Legislative Analyst's Estimate of Net State and Local Government Fiscal Impact:
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