Facts

As part of the 2011-12 budget, the Legislature enacted AB99, transferring $1 billion from a trust fund for the First 5 Program, a developmental program for children from the prenatal stage to age five, funded by Proposition 10, to spend on MediCal programs for children.

Prop 10 was passed by the voters in 1998. The trust fund established by Prop 10 is funded by a 50 cent a pack tax on cigarettes and other tobacco products. Prop 10 could only be amended by the voters or, alternatively, by a two-third majority of both houses of the state legislature provided that the legislative amendment further the act and be consistent with its purposes.

PETITIONERS' CONTENTIONS:
The First 5 commissions of Fresno, Madera, Merced, joined by seven other county commissions, filed suit against Governor Brown, Controller Chiang and Director of Finance Matosanto, alleging the transfer violated California Constitution, Art. II, section 10(c), and Prop 10. Petitioners alleged that AB 99 violated the state constitution because AB 99 was not approved by the voters. They also alleged that AB 99 violated the constitution and Prop 10 because AB 99 did not further nor was it consistent with the act. In particular, AB 99 violated a provision that required 80% of the trust funds be allocated by local First 5 commissions, based on local needs and priorities, and not by the state legislature. Further, petitions argued that AB 99 violated the provision of Prop 10 that prohibited the use of the trust funds to pay for existing programs such as MediCal.

RESPONDENTS' CONTENTIONS:
Respondents contended that shifting the funds was necessary due to the budget crisis, and such transfer was allowable under Proposition 10, which allowed amendment by a two-thirds vote of the Legislature.

Result

The court granted the petition for a peremptory writ of mandate and held AB 99 invalid because its provisions were not consistent with nor furthered the purposes of Prop 10. The court held AB 99 could only have been validly enacted by the voters. In particular, the court agreed with the petitioners that expenditure of the trust funds under AB 99 violated Prop 10's provision that the trust funds could not be used to fund existing services, in this case MediCal. The court agreed that AB 99 violated Prop 10's provision that 80 percent of the trust fund be allocated by local First 5 commissions based on local priorities and not by the state legislature.