TAX AND EXPENDITURE LIMITATIONS

Initiative Constitutional Amendment. Limits State expenditures; restricts use of defined surplus revenue to tax reductions, refunds, or emergencies. Constitutionally eliminates personal income tax for lower income persons, reduces others\u27 1073 tax up to 20% from surplus, and reduces subsequent year rates 7 ½ %. Requires two-thirds legislative vote for new or changed State taxes. Limits local property tax rates except school districts\u27. Requires State funding of new programs mandated to local governments. Provides for tax and expenditure limit adjustments when functions transferred. Contains special indebtedness obligation provision . Allows local tax rate and expenditure limit increases upon voter approval. Summary of legislative analyst financial impact estimate: $170,000,000 annual reduction in Sate tax revenues and probable undeterminable future revenue reductions; reduction in projected State program expenditures of estimated $620,000,000 in first year to $1,366,000,000 in fourth year and increasing thereafter, with probable substantial offsetting cost and tax increases to local government. The initiative provision exempting certain low income persons from income taxes and granting a one-time 20% credit on 1973 income taxes for all taxpayers has been accomplished by legislation passed August 23, 1973, granting low income persons exemptions and granting others a 1973 tax credit ranging from 20 to 35%