Big money readies for fight over tax extension

Dollar Puzzle 02

A hospital association just pumped $12.5 million into an effort to extend a tax on top earners — a tax that’s provided billions of dollars in education funding since 2012.

In fact, the California Association of Hospitals and Health Systems quadrupled its investment from four years ago when Prop. 30 passed. So why do hospitals care so much about education funding?

Because there’s billions of dollars per year in health care funding at stake.

Health care funding

Since Prop. 30 passed — during an economic downturn when the state was confronted with sharp budget cuts — it has largely funded education with some money bolstering the general fund, which includes some health care programs.

But the 12-year extension vying for a spot on the November ballot — two years prior to the expiration date — would add up to $2 billion in funding per year for Medi-Cal, the state’s Medicaid program. The contributions to Medi-Cal would come once other funding requirements have been met (the Prop. 2 rainy-day fund requirement and the Prop. 98 minimum education funding requirement).

Prop. 30

Prop. 30 imposed a “temporary,” seven-year personal income tax increase on earnings of more than $250,000, and a quarter cent sales tax increase for four years.

Some of the revenue went to help balance the state budget, but most went to education funding — 89 percent to K-12 and 11 percent to community colleges.

The extension

The proposed extension allows the quarter cent sales tax to expire, but extends the income tax increase until 2030, securing funding far enough into the future “to provide long-term stability for our schools,” said Jennifer Wonnacott, spokeswoman for the “Yes” campaign.

“We still need this investment,” said Wonnacott. “This is about asking those who can afford to pay a little bit more to keep doing so for a little while longer.”

Big money

With the heavy early investment from the California Association of Hospitals and Health Systems — which only spent $2 million to help Prop. 30 pass in 2012 — this is shaping up to be one of the costliest battles this cycle.

Prop. 30 was a $135 million issue, one largely supported by the California Teachers Association ($11.4 million), Service Employees International Union ($10.7 million), Democratic State Central Committee of California ($5 million) and the American Federation of Teachers ($4.1 million).

In total, proponents spent $65.6 million to pass the measure. It has generated $13.1 billion in education funding since its passage, according to the state controller’s office.

The extension measure is again supported by the California Teachers Association and Service Employees International Union, which — along with the hospitals — forms a formidable alliance. The California Teachers Association and Service Employees International Union has already given $1.2 million on the effort.

While it won’t take a formal position unless the measure qualifies for the ballot, the Howard Jarvis Taxpayers Association will make this a top target if it does qualify — the measure has reached the 25 percent mark for required signatures as of Sunday.

Many political donors will also fight this measure. In 2012, Charles Munger Jr. contributed $35 million to the “No on 30” campaign in opposition to Prop. 30, according to Ballotpedia.

Timing

Instead of waiting until the next cycle when the Prop. 30 income tax provision expires, proponents are banking on a favorable turnout, as Democrats vote in larger percentages in presidential cycles than they do in midterms.

There had been competing Prop 30 extension proposals, but the efforts consolidated around this measure, said Wonnacott.

13 comments

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  1. NTHEOC
    NTHEOC 10 March, 2016, 16:07

    California voters always do the right thing and this extension will pass no problem! Sorry DOOMERS, another sad day for you.

    Reply this comment
    • Rex the Wonder Dog!
      Rex the Wonder Dog! 11 March, 2016, 11:09

      Hmmm…care to make a friendly eager on that??

      I personally do not care about the top tax rate. but the SALES TAX is a regressive tax that kills the poor.

      Sales tax should be CAPED at 5%.

      Reply this comment
  2. Dawn Urbanek
    Dawn Urbanek 10 March, 2016, 19:50

    “a tax that’s provided billions of dollars in education funding since 2012.”

    Prop 30 taxes never made it to students- 80% went to the unions in the form of salaries – pensions and benefits see:

    http://trackprop30.ca.gov/K12State.aspx

    Also- 80% of Lottery Money goes to Public Employee Salaries Pensions and Benefits

    http://disclosurecusd.blogspot.com/2016/02/where-did-all-lottery-money-go-as-usual.html

    Reply this comment
  3. desmond
    desmond 11 March, 2016, 05:40

    Wasn’t t it great when Ted Cruz said last night to shut off all federal aid to municipalities that are self proclaimed sanctuary cities? isn t that the entire state of Taxifornia? I am sure that will provoke ” we won t transfer our taxes to the Fed’s.”
    There are plenty of patriotic Americans in other states who would enlist to bring some social justice to California.

    Reply this comment
  4. Spurwing Plover
    Spurwing Plover 11 March, 2016, 08:59

    Sacramento is full of tax and spend liberal demacrats and Moonbeam is the biggist tax and spender of them alll

    Reply this comment
  5. dc1
    dc1 11 March, 2016, 15:07

    The state is awash in money and doesn’t need this. It was passed to get the state through the recession, and the state has. The tax should expire as originally intended. Heck, even the governor wants the taxes to expire. This proposed extension is driven by the public sector unions only. Anything they are for, I tend to be against..and this is no exception. The state’s tax burden is unfairly high on everyone, wealthy and not wealthy.

    Reply this comment
  6. desmond
    desmond 13 March, 2016, 19:52

    Rex,
    Lara, “butt, butt…butt, for the children.”

    Reply this comment
  7. Rex the Wonder Dog!
    Rex the Wonder Dog! 20 March, 2016, 18:13

    A hospital association just pumped $12.5 million into an effort to extend a tax on top earners — a tax that’s provided billions
    OK, here is the part I don’t get, $#12.5 million is PEANUTRS compared to the amount of $$$$$$$$$ the billionaires of this state have, WHY don’t all the Bazillionaires toss in $5 million each and have a $250 million war chest to blow this tax out of the water????

    Reply this comment

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