Voters will face two conflicting tax measures on the November ballot. The first is backed by Gov. Jerry Brown, whose attempt to close the budget gap by raising personal income taxes through the state legislature failed late last year. Instead, Brown made a plea directly to the people with a petition drive. Prop 30, an initiative constitutional amendment also known as the Schools & Local Public Safety Protection Act, is the result of that campaign. The other tax measure is Prop 38, which has been funded almost exclusively by its proponent, wealthy tax attorney Molly Munger. Both ballot measures put the focus on protecting education funding, but they go about it in different ways.
MoreFollow the Money: Interactive database lets you look at who's funding both sides of the Schools & Local Public Safety Protection Act
Read the Full Text: Read the proposed law as published in the state's Voter Information Guide
Video: Hard-Hit Community Colleges Could Face Steeper Cuts After Election
Interview: Gov. Jerry Brown Unwavering Even As Polls Slip for Prop 30
Prop 30 would raise the personal income tax rate on individuals making more than $250,000 per year for the next seven years (see table below). Rates would go up by as much as 3 percent for those in the highest income bracket, but individuals making less than $250,000 and couples making less than $500,000 a year would see no increase. Prop 30 would also raise the state sales tax by a quarter cent for the next four years. Both tax increases, then, are temporary.
New revenues would be used to help balance the state budget and to fund schools, though indirectly. The budget has a built-in minimum guarantee for education funding that was introduced with voter-approved Prop 98. Because the guarantee is tied to the general fund, an increase in revenues automatically results in more education funding. Technically, money from the new taxes will be placed in a special account called the Education Protection Account. The amount will depend on how much is raised each year, though the 2012-13 budget anticipates an additional $6.6 billion for education. That money would be divvied up, with 89 percent going to K-12 schools and 11 percent to community colleges.
But here's the catch. The budget approved by the state legislature is tied directly to the fate of Prop 30. If voters reject it, a series of spending reductions known as the "trigger cuts" would go into effect. Schools and community colleges would take a hit of nearly $5.4 billion, and many other departments would see reductions, too (see "What Your Vote Means" below for a detailed breakdown).
But wait, there's more! Prop 30 also includes several constitutional amendments that would ensure the state continues to pay for certain public safety programs it handed over to local governments in 2011. The programs include the incarceration of some adult prisoners, supervision of parolees, and substance abuse treatment.
One critical point to consider in all this is how the two November tax measures (Prop 30 and Prop 38) would affect each other should both pass. The state constitution already provides that when two measures conflict, the one with the most votes prevails. In addition, sections in each proposition explicitly bar the other from taking effect. Even if you vote for both, only one can win. And, of course, if Prop 38 gets more votes, that would mean Prop 30 loses (even if voters approved it) and the so-called "trigger cuts" would go into effect.
What Your Vote Means
Voting YES means that the personal income tax would go up for those earning more than $250,000 and a quarter-cent sales tax increase would go into effect. Also, the state would continue to fund certain public safety programs it handed over to counties in 2011.
|Single Taxable Income||Joint Taxable Income||Head of Household Taxable Income||Tax Rate Increase|
|Under $250,000||Under $500,000||Under $340,000||--|
|Over $500,000||Over $1,000,000||Over $680,000||3%|
|Source:||Legislative Analyst's Office|
Voting NO means that no new taxes will be introduced. The following trigger cuts would go into effect and schools would face billions in reduced funding.
|Schools and community colleges||$5.35 billion|
|University of California||$250 million|
|California State University||$250 million|
|Department of Developmental Services||$50 million|
|City police department grants||$20 million|
|DWR flood control programs||$7 million|
|Local water safety patrol grants||$5 million|
|Department of Fish and Game||$4 million|
|Department of Parks and Recreation||$2 million|
|DOJ law enforcement programs||$1 million|
|Source:||Legislative Analyst's Office|
Who/What It Would Affect
Taxpayers: The first chart above shows how the personal income tax increase would affect those in each bracket.
Consumers: Everyone would pay an extra quarter cent sales tax at the point of sale.
Public Schools: If the measure passes, schools could see up to $6.6 billion in increased funding. If it fails, funding could go down by as much as $5.4 billion.
State Government: If it passes, the state would see an increase of billions of dollars to help cover education and balance the budget. If not, it would face a serious shortfall and begin making a series of trigger cuts to government programs to reduce overall spending.
Local Governments: Local governments, mainly counties, have already been required to take on new responsibilities in public safety, including supervising parolees and handling incarceration for some adults. The state helped by providing funds for these programs last year, but Prop 30 would ensure that these payments continue annually.
Who's Behind It
This is the tax increase Gov. Jerry Brown has been trying to get approved for more than a year, part of his strategy to close the budget gap. It has the support most notably of the League of Women Voters and the two major teachers unions. The teachers unions have together donated millions to the campaign. Key financial backers include:
- California Teachers Association
- California Federation of Teachers
- Service Employees International Union's Local 1000
- Democratic State Central Committee
Who's Against It
So far only a small amount has been donated to the opposition campaign, with the largest contribution so far from the Small Business Action Committee. Joel Fox, the president of that group and editor of the political blog Fox&Hounds, is actively involved in the campaign to defeat Prop 30 and has put his name to the official arguments against that will appear on the ballot. So far the key financial contributors are:
- Small Business Action Committee
- Howard Jarvis Taxpayers Association
Arguments Being Made For
- Prevents an additional $6 billion in school cuts and provides new funding for education this year.
- Establishes a guarantee for public safety funding in the state's constitution, where it can't be changed without voter approval. "It keeps cops on the street."
- Balances the budget and pays down California's debt.
- Only the highest income earners pay more income tax. Couples earning below $500,000 a year will pay no additional income taxes.
- It's temporary. PIT goes up for 7 years and sales tax for 4.
- The money goes into a special account the legislature can't touch.
- Mandatory, independent audits will ensure funds are spent only for schools and public safety.
Arguments Being Made Against
- Legislature can take existing money for schools and use it for other purposes, replacing it with money from Prop 30, effectively resulting in no new money for education.
- There are no requirements or assurances that any more money actually goes to classrooms.
- Prop 30 rewards the dangerous behavior of spending more than the state has by giving politicians billions of dollars more with no real reforms.
- The governor, politicians and special interests are threatening voters by saying, "vote for our massive tax increase or we'll take it out on schools," but they refuse to reform the education or pension systems to save money.
FOR THE RECORD: An earlier version of this post may have implied that voters are only allowed to choose one of the tax measures, Prop 30 or Prop 38. Voters are free to cast their ballots how they choose. For a more detailed explanation of what would happen if both should pass, see this explainer.
Top Photo: Speaking at a news conference in May, California Gov. Jerry Brown proposed $8.3 billion cuts in California to help close a projected $16 billion budget shortfall. | Credit: Kevork Djansezian/Getty Images