Calif. Governor Asks Voters For Tax Increases
Thursday, December 8, 2011
Gov. Jerry Brown filed a ballot initiative on Monday asking California voters to increase taxes on themselves to generate more money for schools and public safety.
Assemblyman Ben Hueso (D) joins us Thursday to discuss Brown's plan.
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Brown posted an open letter to the people of California on his website (posted below), saying he wants to temporarily increase taxes on the rich and raise the statewide sales tax by half a cent, to 7.75 percent. The proposal would raise about $7 billion a year for five years.
"The stark truth is that without new tax revenues, we will have no other choice but to make deeper and more damaging cuts to schools, universities, public safety and our courts," the Democratic governor wrote.
He said he is going directly to voters because he does not "want to get bogged down in partisan gridlock as happened this year" in the Legislature, where he failed to reach a tax compromise earlier this year as the state faced a $26.6 billion budget deficit.
Assembly minority leader Connie Conway, R-Tulare, dismissed the proposal ballot initiative as part of a plan to increase government spending.
"Assembly Republicans will again stand united as the last line of defense for taxpayers and will fight these reckless taxes every step of the way," Conway said in a statement.
Brown filed a measure titled "The Schools and Local Public Safety Protection Act of 2012" with the state attorney general's office on Monday. It would appear on the November 2012 ballot if supporters collect 807,615 valid voter signatures.
It is backed by Democratic leaders and some labor groups and could face competing tax initiatives from groups that want to raise taxes even higher.
If voters approve Brown's plan, individuals earning $250,000 up to $300,000 would pay an additional 1 percent income tax, bringing their tax rate to 10.3 percent. Individuals earning more than $300,000 but not over $500,000 would be taxed an additional 1.5 percent, bringing their tax rate to 10.8 percent.
And individuals earning more than $500,000 would be taxed at 11.3 percent. The income amounts double in each category for joint filers.
The income tax hike would be retroactive to January 2012 and last five years. The sales tax increase would start Jan. 1, 2013, and last four years.
Brown and Democratic supporters say the initiative would place the additional revenue into a special account dedicated to school districts and community colleges, which would in turn free money for other services.
The measure also gives constitutional protection to a recent shift that directs more money to local governments for taking on additional responsibility for thousands of lower-level criminals, who would be incarcerated in county jails instead of state prisons.
Assembly Speaker John Perez, D-Los Angeles, said he believes Brown's plan is something all Californians can support.
"The plan asks the wealthiest among us to pay their fair share and takes us another major step forward on getting control of our long-term finances," Perez said in a statement.
Also on Monday, a coalition led by California Federation of Teachers and Courage Campaign filed a tax initiative seeking to raise personal income taxes only on individuals who make $1 million or more annually. The California Funding Restoration Act would raise the income tax rate by 3 percent for individuals making more than $1 million, and hike the rate for those making more than $2 million by 5 percent.
The group said its proposal is the only one that targets the rich, which has been a rallying cry for the Occupy movement.
"This is the only initiative proposal that would restore funding devastated by the recession, and rehire thousands of teachers, senior care providers and public safety personnel, without affecting the wallets of working families and the middle class," said Rick Jacobs, chairman and founder of Courage Campaign.
Attorney Molly Munger, the daughter of Charles Munger, a longtime financial partner of Warren Buffett, is leading a separate initiative that would impose a sliding scale income tax hike to raise $10 billion for California schools.
"We're going to continue to press forward and wait and see how this all shakes out. ... We don't know how the voters are going to start reacting to these (different) proposals yet," Munger said.
She said polls for the first time are showing that Californians now believe education cuts have been so deep that they are willing to pay higher taxes to fix them.
California has cut tens of billions of dollars in state spending since the recession began in late 2007 and sent tax revenue plunging. The state general fund this fiscal year is $86 billion, down from $103 billion before the recession.
The state is facing a projected $13 billion shortfall over the next 18 months. With tax revenue running behind projections, the budget passed last summer calls for automatic spending cuts after the first of the new year to higher education, public schools and some social services.
Among the options for school districts is slicing another seven days off the state's minimum 175-day school year, which already is five days shorter than before the recession began.