Prop 30 Cheat Sheet: Jerry Brown's Tax Measure

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.

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 IncomeJoint Taxable IncomeHead of Household Taxable IncomeTax Rate Increase
Under $250,000Under $500,000Under $340,000--
$250,000-$300,000$500,000-$600,000$340,000-$408,0001%
$300,000-$500,000$600,000-$1,000,000$408,000-$680,0002%
Over $500,000Over $1,000,000Over $680,0003%
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
CalFire$10 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

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As a point of comparison, I've created a chart showing the current California income tax rates and the proposed Proposition 30 increases compared to the MAXIMUM income tax rates in 49 other states.
http://www.twitpic.com/a68drw/full

While it is true that Proposition 30 raises the maximum California income tax rate by 3%, don't forget that previously-passed Proposition 63 (2004) also imposes an additional 1% surtax for those earning over $1 million.

Also, here's a chart comparing California's current state sales tax rate and Proposition 30 hikes compared to the state sales tax in 49 other states.
http://www.twitpic.com/a68e2d/full

My full analysis on Proposition 30 is available here.
http://soquelbythecreek.blogspot.com/2012/07/california-proposition-30-governor.html

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All any informed voter needs to do is look at the arguments against. I literally don't think I can say it any better than this cheat sheet does.

Why Prop 30 sucks:

" 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."

It's time California started living within it's means. We're all going to have to tighten our belt straps. It isn't pretty, but it's necessary. Tax reform and pension should be top priorities for Sacramento right now.

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BLECH!!! All this Tea Party BS makes me want to vomit all over your stupid comments. Man up! Stop whining about taxes. Grownups pay taxes--that's what we do, for the good of the state and the nation! This is the greatest state in the nation, and I'm happy to pay taxes to support the level of services and education that made this golden state great! If you don't like taxes, go live in some red state--there are plenty to choose from.

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@osahon: I love it. "Tighten our belt straps. Live within our means." But when Sacramento says: "if you really want us to do that, we will"; you say "look! they're taking it out on schools". If you want taxes cut and spending reduced, stop whining when spending gets cut.

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@soquel: It's good to know that the only way states get money is via personal income taxes. It's good to know that there's a magic fairy in Wyoming who somehow manages to spend $16,000 per person despite having no income tax, compared to California's $11,000 per person. Good to know that the Wyoming state sales tax, property tax, gasoline taxes, and inheritance tax are utterly irrelevant.

C'mon, are you republicans really that stupid?

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@cesium62 Do you honestly think that the best thing to do when your tax dollars are not being used properly is to simply throw more tax dollars at it, and hope for the best? I pay taxes, and I don't mind: however, I take exception to mismanagement of my tax dollars, and I would rather see policy changes that manage my money more effectively than to see a bill for additional charges that I didn't incur.

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I apologize for the triple post; every time I attempted to post, the browser insisted that my connection had timed out, and that my post had failed.

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This proposition is only before the voting block because the politicians cannot and will not manage their money. They spend spend spend and then say.. Oh your children's edcuation and the safety of your neighborhoods is at stake. Those lies are getting very old. Tax us to death - watch the population of high wage workers leave this state.

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When are we going to have an electorate that can budget? I'm sick of increasing taxes - in fact if this passes they'll have to find some one else to bear the burden as I, along with many of my colleagues, will be packing up my company and leaving this state and taking our high-paying jobs with me.

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cesium62, you should check out my blog post on Proposition 30.
http://soquelbythecreek.blogspot.com/2012/07/california-proposition-30-governor.html
Did you know that California's expenditures this year will be near a record high, even accounting for inflation?
Did you know that California has some of the nation's highest income taxes, gas taxes, and sales taxes?
Yet amazingly, despite all this, our California Legislature cannot come up with money to sufficiently fund public education. Sure, they found $200 MILLION for a Hollywood tax credit and billions more for a not-so-high-speed train that even train advocates don't like. But, nope, no money for education. Californian's were duped by 1998's Proposition 98 and 2000's Proposition 25. Remember, they were going to fix public school funding. Are you willing to play the sucker for Proposition 30? California NEEDS REFORM, NOT HIGHER TAXES.

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Just a few quick points: (A) Cal. Expenditures are down, not up; (B) Gov. Brown has budgeted a surplus this year; (C) "Reform", "Tightening our Belts" etc cannot save enough money to cover the monies generated by Prop 30 - shuttering the States 15 largest programs (including the entire court system) would only account for 1/2 of the money needed. For actual fact-based analysis including source citations on these issues and more visit this site: http://politomuse.wordpress.com/propositions-nov-2012/proposition-30/

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In essence, we are damned if we do and damned if we don't. So not only will we have major cuts in funding to education, but If you look carefully, if both 30 and 38 pass then we go into he popular vote fight. Either way, my conclusion is that when we vote for prop 30 we are keeping the govt from reduced funding of 5.354 Billion dollars. Which means that we are giving funding to education. So I'm going for 30 and no on 38.