In 1998, voters approved Proposition 10, which imposed additional taxes on cigarettes and other tobacco products, with revenues used to pay for early childhood development programs. The initiative created the California Children and Families Program (now commonly known as the First 5 program) to expand early development programs for children up to age five.
Proposition 1D would temporarily allow Proposition 10 revenues to be used to fund other state health and human services programs for children up to age five. It would also make permanent changes to the operations of state and local commissions that manage First 5 funds.
Revenues from the Proposition 10 excise taxes on tobacco products are deposited into the California Children and Families Trust Fund. A state-level commission administers 20 percent of Proposition 10 revenues, while the remaining 80 percent is allocated annually to 58 county commissions. Any unspent revenues are carried over for use in subsequent years. As of mid-2008, the state commission had about $400 million in unspent funds, and the local commissions had about $2.1 billion in unspent funds.
Under Proposition 1D, up to $340 million of the unspent state commission revenues as of July 1, 2009 would be redirected to other health and human services programs for children five and under. Additionally, a portion of future revenues would be similarly redirected. From 2009-10 through 2013-14, $268 million would be diverted annually from Proposition 10 funds, with $54 million coming from state commission funds and $214 million from local commission funds.
In addition to these temporary changes, Proposition 1D makes the following permanent changes:
- New Audit and Report Distribution Requirements. The measure requires that the county commissions also submit their annual audits and reports of their expenditures to the county board of supervisors and the county auditor. In addition, it requires that each county auditor serve on the local First 5 commission.
- Changes in Allocation of State Commission Funds. This measure also amends the allocation requirements for the state commission’s 20 percent of Proposition 10 revenues. Specifically, it deletes the allocation now provided for mass media communications (now 6 percent) and increases the allocation for general program purposes (from 2 percent to 8 percent). Under the measure, the state commission must also ensure that every county commission receives at least $400,000 each year.
- County Borrowing of First 5 Funds. Finally, it allows a county controller to borrow local commission funds for that county’s general fund, unless the transfer would interfere with local commission activities. Any borrowed funds must be repaid with interest.
Public Opinon Resources
Reports and Studies
What Would Proposition 1D Mean for California? California Budget Project
Audio and Video
Center for Governmental Studies