Pro - Con On California's Proposition 30
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August 20, 2012 1:08 p.m.
Kyla Calvert, KPBS Education Reporter will join us from the Governor's Proposition 30 rally
Richard Rider, chairman of San Diego Tax Fighters.
Murtaza Baxamusa, Secretary-Treasurer, Middle Class Taxpayers Association-San Diego
Related Story: Gov. Brown Makes 'Yes on 30' Campaign Stop In San Diego
MAUREEN CAVANAUGH: Testing, testing. California Gov. Jerry Brown brings his tax initiative campaign to San Diego. This is KPBS Midday Edition. It is the first day of the new semester at San Diego City College and it is also the scene of a rally in support of proposition 30. That is the temporary sales and income tax increase supported by the Governor. Most of the tax increase would go to cash-strapped K-12 schools. We will hear from a supporter and an opponent of prop 30. Speaking of cash-strapped we will discuss a new alert warning Californians about the high cost of Internet payday loans and then a San Diego floral designer tells us about the restorative power of flowers. I am Maureen Cavanaugh. KPBS Midday Edition is next. First the news. Gov. Brown comes to see Diego making a hard pitch for his tax initiative to support schools and public safety and a California agency says high-cost payday loans are moving to the Internet. This is KPBS Midday Edition. I'm Maureen Cavanaugh. It's Monday, August 20. Our top story on Midday Edition is the rally at City College today held by Gov. Brown and the San Diego school leaders in support of proposition 30. That is the tax initiative on the November ballot. KPBS education reporter Kyla Calvert attended the rally this morning. Hi, Kyla
KYLA CALVERT: Hello, Maureen. I was there on (inaudible) the day of the first day of classes at City College. So there was a lot of students there to hear from the governor and also representatives from local K-12 districts in the county.
MAUREEN CAVANAUGH: So do any of the remarks made during rally stand out for you?
KYLA CALVERT: Gov. Brown has one very simple message that is pushing the proposition and that is if it fails in November there will be $6 billion in cuts to schools and colleges, public schools colleges and universities in California. So locally for school districts, in San Diego unified for example that would mean 19 fewer school days and it means fewer school days in many of the districts around the County.
MAUREEN CAVANAUGH: Kyla, tell us about what new taxes are included in prep 30.
KYLA CALVERT: The proposition proposes a tax increase on the state's highest 1% of earners and also increases the sales tax for everybody a quarter of a cent.
MAUREEN CAVANAUGH: And the revenue the taxes are supposed to bring in?
KYLA CALVERT: They are estimating it would bring a $6 billion that would be cut from schools if it fails and that's an estimation, and it lasts seven years.
MAUREEN CAVANAUGH: What opponents say happens to school funding if a proposition doesn't pass
KYLA CALVERT: The big charge against the measure seems to be that there is no guarantee that the money will be spent on schools in the future. The governor said no the money goes into a trust and it must be use for schools. I myself am still waiting from an e-mail from the Gov.'s office clarifying where the language is and everything so that seems to be the big push against it.
MAUREEN CAVANAUGH: I've been speaking with KPBS education reporter Kyla Calvert. Thanks so much.
KYLA CALVERT: Thank you.
MAUREEN CAVANAUGH: Joining me now, two people with opposite views about the need for the proposition 30 tax initiative. Richard Rider is chairman of San Diego tax fighters. Richard, glad to have you back.
RICHARD RIDER: Good to be back.
MAUREEN CAVANAUGH: Good to see you. Murtaza Baxamusa is secretary-treasurer of the Middle-class Taxpayer's Association of San Diego. Welcome.
MURTAZA BAXAMUSA: Thank you for having me.
MAUREEN CAVANAUGH: Now I just want to reiterate the things that Carlos I just declare the focus of the Gov.'s tax initiative is to close the state's budget deficit by imposing a temporary general sales cast tax increase by a quarter of the cent a temporary increase in incomes tax rates for families making $500,000 a year or more. Richard writer you are against this way of raising revenue, why?
RICHARD RIDER: I think the more fundamental question is are we under-taxed adequately test are overtaxed in California most people feel we pay enough some people feel that we pay too much very few people outside the public sector think that somehow we are shortchanging the state of California and there is lots of data that indicates that in many different categories we are at the highest are close to the highest income taxes already the second-highest income tax in the nation. The sales tax is the highest statewide sales tax in the nation. We already pay lots of taxes. It is a cliché but it fits. It is not the taxes, it's not the revenue, it's the spending where we see.
MAUREEN CAVANAUGH: So even after multiple years of deep cuts to school budgets, you still feel that the budget should be cut more?
RICHARD RIDER: I think the key is whether we are doing the way of reform the governor had a very minimum reform on pensions and the legislature refused to even consider it. We are building a train from nowhere to nowhere with billions of dollars. We seem to be blithely ignoring our needs. The state of California the state legislature has issued pay raises to hundreds of employees and immediately afterward they call a pay freeze after they should open pay increases you really get a sense that the cavalier attitude in Sacramento toward the people outside the public sector our economy is doing terribly are the third-highest unemployment rate. We do not need to raise taxes in such a high tax state.
MAUREEN CAVANAUGH: Murtaza, school leaders are in unison about the need for passage of prop 30. What will happen to school funding the measure doesn't pass?
MURTAZA BAXAMUSA: Maureen fundamentally the discussion as we are looking at it from an education point of view is investment in our education system. We have one of the lowest person per capita spending in the nation, the nation so in order to be competitive we need to prepare the workforce on a global scale. Some going back to Richard's point, well we have the lowest per capita spending since 1970s. This is currently the lowest rate. When Gov. Brown went into office he asked that the plan be supported and healed you raised revenue, and it was approved by voters in California. He was optimistic that people would see that there is underinvestment in the state's education system and I think we are saying that he has cut $6 billion first time in history of the state he vetoed a budget and deeply cut a lot of social programs. He cut cars commissions benefits, all across the board. So now what we have is a clear choice where we continue to invest in education and safety to make California the cutting-edge state we would like to see in the world.
MAUREEN CAVANAUGH: Now the head of the state branch of the natural Federation of Independent business Richard is quoted as saying his huge tax increase will destroy our small businesses, do you agree with a statement like that?
RICHARD RIDER: Even without the increase California small businesses have a failure rate that is the worst in the nation, 69% higher than the average national average we are extremely anti-business and particularly anti-small business state. The last thing you need to do is to say you know we should start taxing the little businesses and big businesses about enough that's true on a per capita basis we don't pay as much taxes as some other states but that's because we have a hugely progressive taxes to the family of four with two minor kids taking standard deduction California pays a whopping $73 in income tax that's where we end up with so much taxes on people making more. Is it really could policy to raise our taxes as the governor suggested. If the governors taxes raised and we would be by far the highest in the nation. We will be 16% higher than the second-highest state which is I'm sorry 21% I believe which is Hawaii. We are 34% higher than organ which by the way which just let them millionaires tax drawback this past January and will be a heck of a lot higher than the rest of the states click seven have no tax at all. People will leave the country because of high taxes a lot of rhetoric of most of it is nonsense but the Democrats are pretty clear they believe the state and the people leave are the people who make money and anybody who is my age and I'm in the 60s we know the number one problem for families in California is that our children are leaving, are going to where the opportunity is elsewhere. We have a huge outflow in the last 10 years we lost a net in terms of domestic migration between states we lost a net 1.5 million people. 1.5 million people left the great state of California more than moved here, and that's something we need to turn around I'm tired of seeing families split up in California.
MAUREEN CAVANAUGH: Would that was be just as likely because by the fact that education system is going down rather than high taxes in California?
RICHARD RIDER: No from the year 2000 2007 we were losing at the rate of 250,000 people annually. This was back when the money was rolling in. That's when everything was going on T-3. Actually paradoxically since 2007 we have seen a drop in the net outflow although we still have it flowing the past year 2011 we lost 67,000 people as opposed to 250 the differences now people can't sell their homes and there are a lot of people sitting around waiting to leave California attracting equity out of their homes trying to ruin their credit. Paradoxically if we do have a housing rally which I don't think we will have much of one we will have some that will increase the outflow of people to other states if you want to rent a U-Haul from here to Texas it will cost you four times more than a U-Haul from Texas to San Diego.
MAUREEN CAVANAUGH: Let me ask you Murtaza, one of the things that opponents of proposition 30 are saying, they are making the argument that there is no new funding for schools and property. They want to make that clear to voters. Our supporters claiming that there is new funding in this initiative?
MURTAZA BAXAMUSA: This is really a choice of dire consequence that the the state faces should prop 30 not pass. $5.43 billion in funding in addition there's a quarter billion dollars to the CSU system and another quarter billion to the UC system. The system really needs it. If you look at the San Diego unified school budget for example it was passed on the contingency that prop 30 would pass. If not there will be dire concepts of consequences in terms of teacher layoffs, short school days and in terms of class sizes. So if we want to continue to have an advanced system of education it is very important to us to invest in and. People come to California for two reasons. In fact, the birth and entrepreneurship of new businesses is one of the highest in the world. They come to California for two reasons, education and quality of life. This money that is being used is our investment in our future to maintain our education and quality of life. That's what makes California a great.
MAUREEN CAVANAUGH: I went to pick up on something Richard Rider said. It is the idea that a lot of this money is coming, will be if this initiative is passed is coming from the wealthiest Californians. But there's also a sales tax increase included in this initiative which I know is generally thought of as sort of a regressive tax in that everybody pays the same thing. Is that from your point of view a good balance in this initiative, or would you like to see more of one and less of the other?
MURTAZA BAXAMUSA: Well, this is a tax where, this is a ballot measure where everybody is expected to do their share. And the sales tax therefore is spread out one quarter cent sales tax continues what we had in the past. In other words, it's not exactly an increase. So it will continue it temporarily until 2016, but it does make it difficult for families that are making ends meet to see that on their bill. However, this is an investment that is broadly shared.
MAUREEN CAVANAUGH: I want to ask you Richard about the public safety aspect of this tax. There is one part of it that guarantees counties like San Diego will get that extra money they need for prison realignment costs. Is that an important aspect of property?
RICHARD RIDER: I think what we have to look at is that people we are locking up in prison are going back to the system. 180,000 people in California locked up compared to 1980. A situation where we had 20,000 people locked up. That's an incredible differentiation and we need to figure out a way to deal with that increase. We pay the highest prison guard salary in the nation. We pay the highest per prisoner cost on the state level and on the local level we also face a very similar situation. We need to bring those costs in line and reassess the fact that we are looking up thousands of people for common drug usage be it marijuana even, third strikes which are incredibly expensive for misdemeanor offenses. We have a real incarceration mentality in the state. We need to go at this differently and reassess who is important enough to be locked away in their people we want locked away and many others who should not. Hopefully one of the good things about an economic, type situation is that it forces reform. If, and the other side of that is that if we give more money to the state, reform will not come. We've seen this over and over in the local level in the state level if we will reform we first have to say no more.
MAUREEN CAVANAUGH: There's a lot riding on this issue if you listen to supporters of proposition 30, Murtaza there's a lot riding for California schools law enforcement and public safety but you know we are still going through hard times as a community, as a state. How difficult do you think it will be to get voters to approve a tax hike?
MURTAZA BAXAMUSA: This is a difficult economic time, especially with the high unemployment we face, around 9%. However, this is also a time where we have to think about investing in the future. Now, just going to the issue that Richard raised regarding we should look at all the locking away the part of the money will go to a substance abuse treatment field supervision of the release to make sure there is no recidivism recidivism. If we keep locking people away the Keeps going up this is really an investment to make sure that this kind of thing doesn't happen so therefore I think that this is really a turning point in our economic outlook to say we are confident about an optimistic future that California will recover and that we will have invested through 2016 or 2019. In our future.
MAUREEN CAVANAUGH: Richard?
RICHARD RIDER: It is an investment but it's a question of whether it's an investment in if you look at the money that's been contributed as above 14 August I don't have the current figures but it's over $10 million almost exclusively from the public employee labor unions, the state Democratic Party and of course on the other side you have Charles Scott, the evil Coke brothers getting massive amounts of money of course none of it has shown a button or the evil bogeyman is that the total amount of opponents have raised is 300,000 every server to nine dollars and I expect the disparity to continue. That being said I'd wager more than even money that this thing will fail for a number of reasons high-speed rail is probably our poster child for this thing. It's a wonderful measure. We are taking one for the team spending a few billion dollars to stop the $50 billion Texas will save us a lot of money.
MAUREEN CAVANAUGH: Let me stop you, high-speed reform and I'm not clear but that the monies dedicated to the high-speed rail coming from bonds and federal funds. They are not coming at certainly of the general fund, so therefore they could be spent on anything other than high-speed rail.
RICHARD RIDER: They will be spent on high-speed rail but it's only a down payment. It will not get us from Los Angeles to San Franscisco.
MAUREEN CAVANAUGH: But it couldn't keep the schools open.
RICHARD RIDER: It's indicative of the thinking. Were going to build from Bakersfield to Modesto and the bonds do cost us money because the state of California out of the general fund has to pay the bonds every year the interest and principal on the bonds has to be paid off not only that if you ever build the thing which will be the eighth wonder of the world because people around the world will wonder why we built a train in the middle of nowhere we will have to run it and there's always going to cover the cost by the way just give you a simple example in order to make the numbers work out the state is assuming that by 2020 the price of a gallon of gasoline will be $40 a gallon this meet up figures to try to justify this it's absolute putting poppycock in the lesson that it was the listed one of the goes against the real victims back to the ballot and the census is it's the plebiscite for high-speed rail in the sales pitch is simple from our side if we can afford high-speed really don't need a tax increase and we think that is resonating let me give you one other thing in the last eight tax increases that went on the ballot statewide tax increases all of them failed since 2013. 2003 all of them failed all but to feel by double digits as much as I'm concerned about the tax increases I just see this as another notch and of course lastly let me say that we have a two preposition circular firing squad problem 38 and 30 will cancel each other and people will vote against both of them and we are going to pass either one of the tax increases.
MAUREEN CAVANAUGH: Finally Murtaza it does require two thirds of the voters?
MURTAZA BAXAMUSA: No it's a majority of the voters.
RICHARD RIDER: It's a simple majority the idea that it takes two thirds has been around a long time statewide increase takes a simple majority and also failed.
MURTAZA BAXAMUSA: I do want to say Gov. Brown has taken significant leadership on this issue is nature's annual audits to ensure that money is spent in a constitutionally locked up fund for education and public safety so I do give credence to that and acknowledge that as a safeguard for taxpayers that the money will be spent wisely.
MAUREEN CAVANAUGH: And I get the last word because I'm a spokeswoman takes a majority of voters to pass proposition 30. I want to thank my guests very much Richard Rider is chairman of the San Diego, San Diego tax fighters, Murtaza Baxamusa is secretary-treasurer of middle-class taxpayers Association San Diego. Thank you both very much.
RICHARD RIDER: Thank you.
MURTAZA BAXAMUSA: Thank you, Maureen.