Direct Democracy and Fiscal Gridlock: Have Voter Initiatives Paralyzed the California Budget?

Publication Date: September 2005

Publisher: Initiative & Referendum Institute

Author(s): John Matsusaka

Research Area: Banking and finance; Politics

Type: Report

Coverage: California

Abstract:

Does direct democracy make it impossible to balance the government budget? I address this question with evidence from California, where it is widely believed that voter initiatives have paralyzed the state budget process by locking in high spending while at the same time prohibiting tax increases. A review of all initiatives approved since 1912 shows that no more than 32 percent of appropriations in the 2003-04 budget were locked in by initiatives, and initiatives placed only minimal constraints on the legislature's ability to raise revenue. Moreover, it seems likely that the legislature would have allocated much of the money to its dedicated purpose even if not required to do so by initiative. Initiatives do not appear to be a significant obstacle to balancing the state budget in California.