In a scenario possible only under California’s bizarre budgeting process, the state’s general services budget for the next 18 months is now in the hands of a ballot measure to temporarily tax high personal incomes to fund education.
Prop. 30, the Schools and Local Public Safety Protection Act of 2012, would raise taxes for seven years on personal incomes starting at $250,000 a year, with rates rising from 10.3 percent at that level, to 12.3 percent on incomes of $1 million or more.
At the same time, the state’s sales tax would rise by 0.25 percent for four years.
If Prop. 30 passes, public education will receive an estimated $6.8 to $9 billion in 2012-13 and somewhat less in following fiscal years, with 89 percent going to K-12 education and 11 percent to community colleges.
The measure would also guarantee funding for public safety services which have been shifted from the state to local governments, under a realignment process initiated by Governor Jerry Brown and approved by the legislature.
If Prop. 30 fails, K-12 schools and community colleges will suffer “trigger cuts” of $5.4 billion while the University of California and California State University systems will be cut $250,000 each.
Public education in the state has already endured repeated cuts in recent years, as have all human services including state-funded health care programs, in-home supportive services to frail seniors and the disabled, welfare programs and child care services for people moving from welfare to work.
Supporters say Prop. 30 would also free up general fund monies, allowing cuts to health and human services programs to be restored.
The measure’s history reveals much about California’s tortured budget process. Prop. 30 was born out of the stalemate produced by the years’-long refusal of a Republican legislative minority to approve any increase in state revenues.
Though state budgets, long held hostage by the same Republican adherence to Grover Norquist no-new-taxes pledges, can now be passed by majority vote, new revenues still require a two-thirds vote, and the Democratic majority falls short of that level.
The decision to gather voters’ signatures to field an initiative for the November ballot came after Republican legislators refused last year to support a budget combining deep cuts with extending temporary increases in sales and income taxes, and vehicle license fees.
Brown, a Democrat, and unions led by the California Teachers Association, initially fielded separate initiatives before agreeing on Prop. 30 as a compromise measure.
Despite vigorous campaigning by labor and many community organizations, Prop. 30 is currently polling at just above 50 percent, down from 57.5 percent in late September.
Prop. 30 is also getting competition from a rival measure, Prop. 38, “Our Children, Our Future,” initiated and bankrolled by wealthy attorney Molly Munger, daughter of billionaire Charles Munger, Warren Buffett’s partner at Berkshire Hathaway.
Prop. 38 would progressively tax incomes starting at $7,316, to fund early childhood and K-12 education and state debt reduction.
Molly Munger has funded the Prop. 38 campaign with over $30 million of her own money.
Molly Munger’s brother, Charles Munger Jr., has given millions to oppose Prop. 30 and to help bankroll another ballot measure to silence unions’ voices in electoral politics.
Should both Props. 30 and 38 pass, the one with the higher total vote would take effect. Prop. 38 is polling far lower and has little chance to pass. But observers say it is deflecting voters who would otherwise back Prop. 30, which could lead to failure of both measures.