Prop. 30 and Prop. 38 tax-and-spenders dogfight

Nov. 2, 2012

By Dave Roberts

When the Assembly Budget Committee held an informational hearing in September on Proposition 30, it featured a classic liberal-conservative debate. Trudy Schafer of the League of Women Voters argued that taxes need to be raised in order to save public schools, which have been decimated by budget cuts in recent years.

David Wolfe with the Howard Jarvis Taxpayers Association countered that a $6 billion yearly tax hike would be another blow to California’s struggling economy, and that Sacramento politicians cannot wisely spend the money they already have.

But later in that hearing the discussion turned to Prop. 30’s doppelganger, Proposition 38. Then it became a dogfight between Prop. 30 tax-and-spend liberals and Prop. 38 tax-and-spend liberals over who should get their hands on taxpayers’ wallets.

Prop. 38 is sponsored by wealthy lawyer Molly Munger. It would put a much bigger bite on taxpayers, siphoning $10 billion annually for 12 years by increasing the income tax on nearly all earners. Top earners would be hit hardest, paying an extra 2.2 percent of their income to the state.

For the first four years, about $6 billion would go to K-12 public schools annually, then increase to about $8.5 billion. Childcare and preschool programs would get about $1 billion annually. For four years the state General Fund would receive about $3 billion annually.

Prop. 38 is joined at the hip with Prop. 30. If both measures pass, only the one receiving the most votes would take effect. Prop. 30’s money is targeted for schools. But unlike Prop. 38, it would actually all go into the General Fund to be spent however the Legislature wished.

The arguments in favor of Prop. 38 made by Carol Kocivar, president of the California State PTA, were similar to those made by Schafer for Prop. 30.

“Imagine a kindergarten class that’s small enough for a teacher to meet the individual needs of each young child,” said Kocivar. “Imagine an elementary school with a librarian, a middle school that teaches art and music, a high school with enough counselors to help our kids take the right courses to get into college. Imagine restoring the instructional time that’s been cut from our public schools. That’s what’s going to happen in our local schools when Proposition 38 passes.

“For way too long, education funding in California has been cut and our children have lost. That’s why the California PTA helped write Proposition 38. To restore what we have lost: music, science, small-class size. This makes education a priority again. Parents and families, voters throughout California believe adequate funding for our schools and access to a complete quality education is an urgent matter. And it is time to stop engaging parents and communities in heart-breaking decisions on how to cut things out of our schools. And start engaging our parents and communities in those important decisions on how we can start to restore the programs that we need in every school in California.”

Economic harm

Kocivar did not address the potential economic harm from raising taxes in a state that is still struggling to recover from the Great Recession. She did note that “millionaires and multimillionaires pay more, and those making less pay little or none.” That’s true, but in order to not be hit by the tax, you would have to earn less than $7,316 per year, which is nearly impossible to get by on in any state, let alone in expensive California.

There was not a word in the Prop. 38 debate about its potential for economic harm. Instead, the opponents essentially argued that they don’t like the measure because they aren’t guaranteed a cut of the action.

“I like the world Ms. Kocivar would have us imagine,” said California Medical Association Vice President Lisa Folberg. “But what I don’t want to imagine is California children sitting in that classroom unable to see the blackboard because they haven’t been able to get access to the health care they need to get basic preventative services, including getting their eyesight checked. I don’t want to imagine that child with an empty stomach coming to school.

“The physicians that care for the state’s low-income population through the Medi-Cal program know the reality of the budget. They’ve been caught in the crosshairs of an unsustainable budget model in California for quite some time. That’s a model in which expectations and revenues are not aligned. The CMA understands that something needs to change. But we do not believe that Prop. 38 is the right solution.

“Prop. 38 restricts the purposes of new funds without other funding priorities in the state. This limits California’s ability to be flexible and to respond to changing needs and priorities. I don’t think any of us would have imagined five years ago we would have been gearing up to implement federal health reform, for example. A dollar that is not coordinated with the General Fund may not lead to logical solutions.”

Prop. 10 disaster

An example of the illogical allocation of budget dollars is what occurred with passage of Proposition 10 in 1998, said Folberg. That 50-cent per pack cigarette tax hike brings in hundreds of millions of dollars annually, which can only be spent on programs for children under 6. Some counties have been challenged to come up with programs to spend the money on.

“Proposition 10 brought in billions of dollars of revenue for the state,” said Folberg. “But there was no flexibility for the Legislature and governor to spend that money in an appropriate way. For example, as we were looking at very severe cuts in the Medi-Cal program to the very lowest income children in our state on the one hand, on the other hand when I had my daughter I received a welcome box from the Proposition 10 Commission folks because they were trying to find ways to spend their money. And that is a very illogical way to budget in the state of California.

“One of our concerns with Prop. 38 is that you will end up with a version of that. The goals of where the money goes in Prop. 38 are very laudable. But the concern is that you are not coordinating with the General Fund, with other state priorities. And you could potentially end up in a similar kind of situation where the Legislature isn’t able to evaluate the budget needs of the state and budget accordingly.”

Higher education

Ironically, although Prop. 38 is touted as helping education, it does nothing at all for higher education, which is why it’s opposed by the California Faculty Association, which represents professors, librarians, counselors and coaches in the state university system.

“I also would love to live in Ms. Kocivar’s projected world,” said CFA representative Charu Khopkar. “Unfortunately, that world does not seem to include any sort of higher education. Imagine the student who is able to go to their counselor and talk about their options for college, and facing the reality of a restricted California university system that does not have room for them. Or in fact has room but with a 5-, 6-, 7-year graduation timeline.

“The passage of Prop. 38, which inevitably means the failure of Prop. 30, would mean an immediate $250 million cut to the CSU, making it $1 billion [in cuts] over the past two years. That would mean another student fee increase, which is on top of the 318 percent increase over the last 10 years, 20,000 students denied enrollment in the CSU system, and 1,500 faculty and staff layoffs. Which means fewer classes, longer timelines for students graduating and becoming teachers, business people, scientists, what have you, graduating and becoming taxpayers here in California.”

And once they become taxpayers, they could be stuck paying the extra tax burden posed by either Prop. 30 or Prop. 38. Or perhaps not. The Nov. 1 Field poll indicates that both measures could fail to gain a majority. Prop. 30 has 48 percent support with 38 percent opposed. Prop. 38 fares worse with only 34 percent support and 49 percent opposed.

So does that mean that the $6 billion educational Armageddon threatened by Gov. Jerry Brown is inevitable? He said cuts would be “triggered” should his tax increase fail. Not so fast, said Assemblyman Don Wagner, R-Irvine.

“The bottom line is the trigger cuts are a function of action by this Legislature in this year’s budget passed on a majority vote,” said Wagner. “And they can be undone next year on a majority vote if that’s the will of the Legislature. So isn’t that the answer? We really don’t need to worry about these trigger cuts. The Legislature next year can undo them all if education is really a priority. There’s no reason other than throwing a hissy fit to enact the trigger cuts if the revenue comes through a different vehicle. So I think that’s the answer: We make education a priority and look for other cuts.”

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