ACA 13 is a proposed amendment to the California Constitution that packages four fiscal changes into a single measure: it raises the legislative vote threshold and changes timing rules for General Fund appropriations and agency-imposed charges; it authorizes state and local governments to contract out governmental services; and it constrains state employee cost growth. The measure moves several long‑standing budget and administrative practices into the Constitution rather than statute.
Professionals tracking state finance, labor costs, procurement, and regulatory fees should treat this as a structural rewrite of how California controls spending and raises revenue. If enacted, agencies, unions, vendors, and the Legislature would face new procedural and quantitative constraints that reshape bargaining leverage, procurement cycles, and the mechanics of fees and payroll growth.
At a Glance
What It Does
The amendment requires any General Fund appropriation to clear a two‑thirds vote in each house by removing current exceptions, and it bars state agencies from imposing or raising charges unless a two‑thirds Legislature ratifies the action. It authorizes contracting out governmental services and forces agencies to competitively bid at least 10% of program spending annually and every program at least once every seven years. It also caps total state employment costs to a 2024–25 baseline initially and thereafter ties year‑to‑year increases to national average wage growth as measured by the BLS.
Who It Affects
State and local agencies, the California Legislature, state employees and their unions, private vendors offering government services, and Californians subject to regulatory fees or charges. Agencies will face new procurement and approval processes; the Legislature will see altered appropriation and fee‑ratification responsibilities.
Why It Matters
By moving these controls into the Constitution, the bill makes procedural constraints harder to change, shifts many executive and administrative authorities to legislative supervision, and creates binding numerical ceilings for payroll growth. That increases the political cost of budget and administrative flexibility and elevates procurement and compensation as permanent levers of fiscal discipline.
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What This Bill Actually Does
ACA 13 rewrites parts of the state Constitution to make fiscal controls more rigid and to vest more budgetary power with the Legislature. It eliminates certain budgetary exceptions that allow faster or lower‑threshold passage of appropriations and puts agency fee increases squarely within the Legislature’s purview, requiring supermajority approval for actions that would raise charges on people or businesses.
Rather than leave those authorities to statute or executive action, the measure embeds them in constitutional text so only a future constitutional amendment could easily reverse them.
On procurement and service delivery, the measure reverses historical restrictions against outsourcing by expressly authorizing state and local governments to contract with private entities to perform governmental services. To ensure recurring competition, it obligates state agencies to subject at least 10 percent of their program activities—measured by budgetary expenditures—to fair and open bidding each year, and to put every program activity through competitive bidding at least once every seven years.
Sworn law enforcement work is carved out of this requirement.The payroll constraint imposes a concrete numerical ceiling on statewide employment costs. It freezes total state employment costs relative to the 2024–25 Budget Act (a defined baseline) through fiscal year 2028–29 at a lowered percentage, and then requires future-year growth to be limited to the previous year’s total adjusted by national wage inflation as measured by the federal Bureau of Labor Statistics.
The California State Auditor is charged with certifying agency compliance with these limits, making the Auditor a gatekeeper of constitutional fiscal discipline.Taken together, the changes shift several areas of routine administrative discretion into constitutional guardrails: appropriations, agency fees, sourcing of services, and the aggregate payroll envelope. That design reduces the universe of policy choices available to governors and agencies, increases the Legislature’s role in revenue and fee-setting, and sets hard numerical boundaries on labor costs that will influence collective bargaining and staffing strategies.
The Five Things You Need to Know
The measure removes the constitutional exception that currently allows the budget bill and related appropriation bills to pass by a simple majority, thereby making any General Fund appropriation subject to a two‑thirds rollcall vote in each house.
It adds a new constitutional prohibition preventing any state agency action that would impose a new charge or increase an existing charge on a person from taking effect unless ratified by a bill passed by two‑thirds of each legislative house.
Article XXIII permits state and local governments to contract out governmental services and requires each state agency annually to put at least 10% of its program activities by budgetary expenditure up for competitive bidding and to bid every program activity at least once every seven years.
The amendment sets a payroll cap that, beginning in fiscal year 2028–29, limits total state employment costs to 95% of the amount appropriated for employment costs in the 2024–25 Budget Act, and from 2029–30 onward ties allowable increases to the prior year adjusted by national average wage growth as measured by the BLS.
The California State Auditor must certify compliance with the employment‑cost limits, and the text excludes services performed by sworn law enforcement personnel from the outsourcing and bidding requirements.
Section-by-Section Breakdown
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Tightens appropriation rules and deadlines
This section revises the existing budget framework in several ways: it keeps the Governor’s duty to submit a budget and preserves the June 15 deadline for the Legislature to pass a budget bill, but it eliminates the present constitutional carve‑out that permits the budget bill and related appropriation bills to be passed by a simple majority and to take effect immediately upon signature. Practically, that makes General Fund appropriations uniformly subject to the two‑thirds requirement (with school appropriations handled separately elsewhere). Also retained are procedural penalties for failing to pass the budget by the June 15 deadline, such as suspension of legislative salaries. The change forces reliance on a supermajority for most appropriation decisions and removes the expedited effectiveness date that historically lets the budget take immediate effect.
Legislative ratification required for agency fees and charges
This new constitutional subsection bars any state agency action that would create or increase a charge on a person from taking effect without a ratifying bill passed by a two‑thirds vote in each house. The provision defines ‘person’ broadly to include individuals, associations, and business entities. Because it is constitutional text, agencies cannot rely on routine regulatory rulemaking or statutory fee‑setting delegated by the Legislature to increase fees without clearing the supermajority hurdle first.
Caps total state employment costs to a fixed baseline and indexes subsequent growth
This clause establishes a two‑phased cap on statewide personnel spending. First, beginning in the 2028–29 fiscal year, aggregate state employment costs cannot exceed 95% of the amount appropriated for employment costs in the 2024–25 Budget Act as originally enacted. Second, from 2029–30 onward, total employment costs are allowed to grow only by the annual percentage change in national average wages as measured by the BLS. The California State Auditor is explicitly assigned the duty to certify compliance, turning an auditor function into a constitutional gatekeeping role for payroll limits.
Authorizes contracting with private entities and mandates competitive bidding
Article XXIII overturns prior constitutional restrictions on contracting for governmental services by affirmatively authorizing both the State and local governmental entities to contract with private firms. It then imposes procurement discipline on state agencies by requiring that at least 10% of program activities (measured by budgetary expenditures) be put out for fair and open competitive bidding annually, and that every program activity be competitively bid at least once every seven years. The article expressly exempts services performed by sworn law enforcement personnel from these requirements, but otherwise embeds recurring competition into agency program cycles.
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Who Benefits
- Taxpayers and regulated parties concerned about fee increases — the constitutional ratification requirement forces legislative scrutiny and creates a higher barrier to agency fee hikes.
- Private vendors and contractors — the express authorization to contract for governmental services plus mandated regular competitive bidding creates recurring market opportunities for third‑party providers.
- Fiscal conservatives and budget oversight entities — embedding numerical payroll caps and two‑thirds thresholds provides structural tools to constrain executive and legislative spending growth.
Who Bears the Cost
- State employees and public‑sector unions — the payroll cap limits the universe for wage and benefit increases and will be a central factor in collective bargaining and staffing decisions.
- State agencies and procurement offices — they must redesign program portfolios to meet annual 10% bidding targets and seven‑year cycles, incurring compliance, transition, and monitoring costs.
- The Legislature and informal budget actors — moving fee increases and many appropriation decisions behind a two‑thirds gate raises the political price of budgeting and could incentivize off‑budget workarounds that complicate governance.
Key Issues
The Core Tension
The central dilemma is between stronger, constitutionally entrenched fiscal controls that increase legislative oversight and predictability, and the loss of administrative flexibility needed to operate government efficiently: tightening decision rules can improve accountability but also magnify the costs of delay, reduce agencies’ ability to respond to changing conditions, and shift pressures into off‑budget workarounds or service reductions.
ACA 13 stitches multiple fiscal controls into constitutional text, which reduces legal and administrative flexibility. Requiring a two‑thirds vote for General Fund appropriations and for agency fees transfers operational authority from agencies and the executive to the Legislature, but it also empowers a legislative minority to block routine fiscal adjustments and fee updates that previously relied on delegated authority or majority rule.
That trade‑off can increase transparency and accountability in some cases, but it also raises the probability of legislative gridlock and the incentive to use exemptions, transfers, accounting maneuvers, or special‑purpose funds to circumvent the supermajority requirement.
The outsourcing and competitive‑bidding mandates come with practical headaches. Agencies must identify which program activities can be bid without violating service quality, privacy, or statutory constraints; they must build procurement capacity to run fair and open competitions; and they will face near‑constant contract transitions if 10% of spend is cycled each year.
The seven‑year rule creates a predictable cadence but may also discourage long‑term investments in certain in‑house capabilities. Meanwhile, the payroll cap invites definitional disputes—what counts as ‘total state employment costs,’ how one treats pensions, benefits, temporary workers, and off‑budget entities—and may push costs outside the state employment ledger or to local governments.
Finally, embedding the California State Auditor as the constitutional certifier of payroll compliance centralizes enforcement, but it also creates single‑point tension: the Auditor may be asked to interpret ambiguous accounting rules or to adjudicate disputes between the Governor, the Legislature, and agencies. The measure lacks an explicit emergency or hardship waiver for unexpected fiscal shocks (natural disasters, recessions, federal funding shifts), which raises question about how resilient the caps and bidding rules would be under stress.
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