CalWatchdog Morning Read – April 15, 2016

By CalWatchdog Staff

Hello, everybody! A California appeals court on Thursday reversed a two-year-old landmark decision that upended teacher tenure laws.

The Vergara case challenged several state laws establishing layoff procedures based on seniority, dismissal procedures and how tenure (permanent status) was awarded. Presiding Justice Roger Boren decided the plaintiffs failed to show how the tenure laws “make any certain group of students more likely to be taught by ineffective teachers than any other group of students.”

“It is clear that the challenged statutes here, by only their text, do not inevitably cause poor and minority students to receive an unequal, deficient education,” Boren added.

The ruling is a big win for unions and is likely to be appealed. CalWatchdog has more.

In other news:
– In honor of Tax Day (which is Monday), a new Field Poll says that 54 percent of Californians think their income taxes are too high. Unsurprisingly, that sentiment is more popular with Republicans (80 percent said they pay too much) than Democrats (only 42 percent said they pay too much).

– Income taxes generate roughly two-thirds of the state’s revenue. Nearly 90 percent of that comes from the top one-fifth of taxpayers ($91,000 annually and above), which is the only group of taxpayers whose average income has increased over the last twenty years, reports The Sacramento Bee.

– Two more state lawmakers are asking for UC Davis Chancellor Linda P.B. Katehi to step down in response to several unflattering stories by The Sacramento Bee about outside positions she held and a six-figure effort to scrub the Internet of negative details of an 2011 pepper-spraying-of-students scandal. CalWatchdog has more.

– The legislature approved $176.6 million “to conduct testing and cleanup of lead contamination in the neighborhoods surrounding the closed Exide battery recycling plant in Vernon,” reports the Los Angeles Times.

Assembly:
– Gone ’til Monday at 1 p.m.

Senate:
– Gone ’til Monday at 2 p.m.

Gov. Brown:
– No public events scheduled.

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A measure backed by the California Teachers Association would extend Prop. 30’s higher tax rates on the wealthiest Californians until 2030, with an estimated $7.5 billion each year going to public schools and community colleges.

 

Another measure, this one by the California Hospital Association and the Service Employees International Union-United Healthcare Workers West, makes those higher tax rates permanent and sends half the annual estimated $10 billion to public schools, colleges and universities, 40 percent to Medi-Cal for low-income health care and 10 percent for early childhood development programs. It also imposes a new, higher tax rate on those who make more than $1 million annually. …

 

[Negotiators] for the teachers group and the hospital association have been talking about a third option, which would extend Prop. 30’s higher tax rates and split the money between schools and health programs. That measure is awaiting approval from the state Attorney General’s Office, and a decision about whether to aim that initiative for the ballot won’t be made until later this month. …

 

“We’d prefer one measure, especially on a crowded ballot,” said Gale Kaufman, a political consultant working on the teachers’ measure. “My instincts say less is better always, but it’s difficult to have any hard and fast rules.”

The focus isn’t just on income tax ballot measures, though they have gotten the most early attention. The Chronicle notes that the Making Poverty History initiative “would add a surcharge to the tax bill for land and buildings with an assessed value of $3 million or more. The $6 billion raised annually would go toward programs to reduce poverty in the state, including prenatal services, expanded child care, tax credits and job training grants.”

Steyer follows Schwarzenegger strategy

Tom Steyer, the billionaire environmentalist who is exploring a 2018 run for governor, also is looking to make a political name for himself with a ballot measure, as Arnold Schwarzenegger did in 2002 with Proposition 49, a successful ballot measure funding after-school programs, a year before the recall election that ousted Gov. Gray Davis.

Steyer is behind the Save Lives California campaign, which would use a $2-a-pack tax on cigarettes to shore up state Medi-Cal funding and to pay for health-promotion and anti-smoking programs.

A previous ballot measure that successfully raised cigarette taxes was also sponsored by a non-politician believed to be interested in running for governor. Championed by Hollywood producer-director-actor Rob Reiner, Proposition 10 added a 50-cent levy on a pack of cigarettes, with proceeds used mostly to fund early childhood education programs.

But Reiner, unlike Schwarzenegger, never ran for state office.

By Chris Reed

Richard Rider, the dean of the small-government/low-tax movement in San Diego County, has come up with some stunning number-crunching on his blog:

“Here’s the fact that EVERYONE (including me) initially undervalued concerning [Rancho Santa Fe pro golfer Phil] Mickelson and CA state income taxes. Starting in 2013, Mickelson’s NET state income tax has jumped 83.6%!  And yes, this huge increase hits most Californians making more than $2 million income.

“Here’s why. Until 2013, state income taxes were deductible for federal income tax purposes. Starting in 2013, for the really rich, this deductibility largely goes away (as does deducting property taxes and many other deductions). For people with over $2 million of income, they lose 80% of such deductions.

“With Proposition 30 passed in November, CA has raised its income tax on the wealthy by 29%. The combined tax increase is breathtaking. Do the math, and you find that in 2011 the net CA income tax for Mickelson was 6.7%. In 2013 his net CA income tax is 12.3% — an increase of 83.6%.”

This is mind-boggling. No wonder Phil said he was contemplating “drastic changes.”

Rider makes another great point as well:

“The big taxers love to point to a bogus study by the Stanford Center on Poverty and Inequality (the name says it all regarding their objectivity) ‘think tank’ which concluded that the California 1% millionaire’s tax increase in 2005 had little or no effect on millionaire’s leaving. While the study has since been largely discredited, the magnitude of that 2005 increase vs. the 2013 CA increase is worth considering.

“In 2005, the maximum CA income tax went up from 9.3% to 10.3% for those with over a million dollar income. At the time, the CA income tax was fully deductible. With a 35% maximum federal tax bracket, that meant that the increase cost the rich a net 0.65%.

With the changes I’ve discussed, the 2013 NET CA income tax increase is 5.6% — 8.6 TIMES HIGHER than the 2005 increase. Only a fool would think that such a massive increase would still not motivate many of the wealthy to depart the ‘Golden State.’

“Parenthetically might I add that California abounds with such fools.”

And many of them inhabit the newsrooms of the Golden State.

Will the Dan Morains and George Skeltons of the world give this context when writing about state tax policy? Don’t hold your breath. They are what they are — extensions of a Sacramento establishment in which the media’s and the Democrats’ conventional wisdom are often close to identical. That conventional wisdom has long held that the key to making life in California even more glorious is even higher taxes. Groan.

Thank you, Richard Rider, for your vigilance and smarts.