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Proponents of a 12-year extension of a temporary tax used to bolster education funding may ask voters to consider the measure prior to a full vetting, with critics demanding accountability.

By law, the state Controller’s office is supposed to audit Proposition 30’s Education Protection fund, which doles out the funds according to a strict formula. Although the law gave no time requirement, the audit has not yet happened and isn’t projected to be complete until around a month before the November election, which one critic says shows a lack of transparency.

“Voters were told that Prop. 30 funds would be audited, and there is a presumption among the voters that that audit would be conducted in a timely manner,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. “And to be told that the audit … isn’t going to be completed until the month before the election is not exactly full transparency.”

History

Prop. 30, which passed in 2012, implemented a tax on incomes exceeding $250,000 and a quarter-cent sales tax, which were both used to stave off severe budget cuts to education and the general fund.

To quell concerns that the tax revenue would actually go to funding education and not some unrelated expense, the measure called for two levels of oversight: annual audits of spending by local agencies, like school districts, charter schools and community college districts, and a periodic audit of the state’s Education Protection Account.

The local audits are being completed, but no audit of the EPA has been performed to date, which the law says the Controller “shall” perform. To clarify, the local audits verify how schools are spending the money, while the EPA audit would verify how the state is spending the money.

When will the audit happen and is it necessary?

The controller’s office told CalWatchdog the audit would likely be completed by October. Assuming the initiative qualifies for the ballot, which it hasn’t yet, that is only a month before voters go to the polls.

Also, only the income tax provision, which expires in 2018, is part of the extension; the sales tax provision expires at the end of 2016 either way.

Proponents — primarily teacher unions and health care advocates — are asking for the extension two years early, making the timing of the audit more immediate. But they argue the audit is not necessary because two other Controller-prepared reports, both which look at the state’s finances in a general way, satisfy the requirement.

“We know how the money has been spent and the new measure has the same accountability requirements,” said Jennifer Wonnacott, spokeswoman for the measure’s committee, Californians for Protecting Public Education and Budget Stability, Sponsored by Teachers, Health Care Providers and Labor Organizations. “The law as written under Prop. 30 has been fulfilled by these two reports, so if the Controller goes above and beyond that that’s for their office to decide.”

The Controller’s office still believes an audit is required to ensure the state is adhering to the required 89/11 percent split between K-12 and community colleges, and is satisfying other funding requirements.

“While it’s reasonable to conclude that (the other reports) meets the Proposition 30 audit requirement, the State Controller’s Office still has a duty to monitor compliance and conduct whatever field audit we believe is necessary,” said John Hill, spokesman for the Controller’s office. “That’s why we plan to audit the EPA within the next six months.”

Is there even a problem?

Despite the dispute over whether another audit is required, everyone agrees that oversight of the program was warranted. After all, the extension has also included the auditing requirements. However, no one has suggested the money is being used improperly. In fact, an independent analyst suggests there’s little cause for concern.

“These rules are relatively straightforward and we don’t have any technical concerns at this point about the way the state is distributing the funds,” said Kenneth Kapphahn, an analyst with the independent Legislative Analyst’s Office.

Timing

The measure has not yet qualified for the November ballot, but it’s well-funded, making its chances good. Assuming it does qualify, voters may be forced to make a hasty decision. Coupal called on the Controller’s office to speed up the timeline, pointing to the fact that the measure passed four years ago, which gave ample time to perform the audit.

“We would urge the controller to expeditiously move on an audit and complete the audit at least three months prior to the election,” Coupal said.

Denise Cross / flickr

Unexpected bipartisan opposition has formed against a piece of legislation designed to cut down on California’s sometimes outrageous ballot initiatives.

In addition to the left-leaning Consumer Watchdog organization, citizens’-rights groups like the California Taxpayers Association and the Howard Jarvis Taxpayers Association have mustered their members against the bill. Carmen Balber, executive director of Consumer Watchdog, told the San Francisco Chronicle “that only six of the 26 states that allow citizen initiatives have filing fees and that the highest is $500, in Mississippi and Wyoming.”

Hoping to stave off a shift in fortunes, Assemblyman Evan Low, D-Campbell, has already tweaked Assembly Bill 1100 in an effort to calm the drama. Co-authored by Assemblyman Richard Bloom, D-Santa Monica, the bill originally proposed a massive increase in the fee charged by the state to file an initiative. Currently just $200, Low and Bloom set out to hike the fee to $8,000 — a daunting number for some, but calculated to just about cover what it costs the state to pay the attorney general’s office for drafting each initiative’s title and summary.

Low was inspired to push for the reform by a contentious recent effort that would have created a so-called Sodomite Suppression Act. “Huntington Beach attorney Matt McLaughlin submitted a ballot measure in February that would have ‘any person who willingly touches another person of the same gender for purposes of sexual gratification be put to death by bullets to the head or by any other convenient method,'” as the Sacramento Bee recalled. “Determined to prevent the measure from moving forward, Attorney General Kamala Harris took the measure to court and was relieved of the official duty to write the title and 100-word summary necessary before signature-gathering.”

A checkered past

Proponents of Low’s reform insisted that the bill was about more than shutting down such lurid proposals. California’s ballot initiative system has seen its fair share of half-baked ideas over the years, drawing criticism from more conservative analysts concerned that the state’s view of direct democracy was too romantic and naive.

As the Chronicle noted, initiatives have now been filed that would ban alimony, create a secession commission, eliminate private power companies, fly the state flag above the national flag, “and call the state’s top elected official ‘president of California.'”

Another ongoing challenge, some critics noted, was guiding voters away from voting in favor of unaffordable but otherwise appealing measures.

In fact, Low’s efforts to curb crazy initiatives have not been the first — nor the first to do so by jacking up the price of admission. “Given the sheer number of proposals that have been submitted recently, the Legislature has actually already tried to make filing fees more expensive,” Civinomics noted. “Laws were submitted in 2009, 2010, and 2011 to raise the fee, but two of them were vetoed by then-governor Arnold Schwarzenegger and the other was dropped by the bill’s author.”

GOP opposition

For now, Republicans have recently tended more toward supporting a permissive initiative process, concerned that California lacks many other effective hedges against the state’s near-one-party rule and its more liberal judges, who largely dominate the courts. So when AB1100 came to a vote in the Assembly, votes for and against split almost exactly along party lines. Assemblywoman Shannon Grove, R-Bakersfield, put forth a popular argument on the right, warning “the higher fee would make it difficult for individuals and nonprofit groups to file for an initiative,” as the Los Angeles Times reported. “She said that if the increase in the cost of living since the fee was implemented was figured in, it would now be $2,700.”

Then, as the bill made its way to the Senate, reality set in. In committee, “the filing fee was trimmed from $8,000 to $2,500 and then to $2,000,” the Chronicle recounted. “The plan to hike the charge in lockstep with increases in the Consumer Price Index also disappeared.” Nevertheless, the changes weren’t enough to satisfy critics, who will likely have to count on Gov. Jerry Brown to stop the bill from becoming law.

By John Hrabe

Anti-tax groups face a tall order this November. There’s priority one: defeating the competing multi-billion-dollar tax-increase plans of Gov. Jerry Brown and liberal activist Molly Munger. Both propositions will receive tens of millions of dollars in campaign contributions from unions and special interest groups.

Even if both measures fail, Democrats have a backup plan to push tax increases through the state Legislature. State tax increases require two-thirds approval of both houses. Democrats are expected to be within just a handful of seats in the state Assembly. In past years, when Republicans held only a notch above one third of the seats, legislative Democrats have successfully picked off a few moderate Republican votes for tax increases.

Thanks to redistricting gains and a chronically underfunded opposition, Democrats are a lock to reach two-thirds control of the state Senate. “A candidate’s view on taxation will be the central issue in swing senate districts,” wrote Joel Fox, editor of Fox & Hounds and president of the Small Business Action Committee.  “A newly Democratic controlled Senate will vote for taxes from time to time. Especially if taxes are perceived to fall on someone else — that famous man behind the tree in the ditty, ‘don’t tax me, don’t tax thee’ tax the man behind the tree’.”

But, before you send a bigger check to Sacramento, consider an ironic scenario that could be taxpayers’ saving grace in 2013. Two even-numbered state senators running in two different congressional races could set off a chain reaction of events that would effectively block tax increases for most of the year.

State Senators Gloria Negrete McLeod and Juan Vargas, both of whom have records of supporting tax increases, have made their respective runoffs for the House of Representatives. If both pro-tax Democrats win their congressional races, their state Senate seats would remain vacant until they could be filled by special elections. The pair’s victories would reduce the Democratic caucus by two members and effectively erase Democrats’ two-thirds’ advantage.

“The vacancies do not change the threshold for the two-thirds requirement, which is 27 seats in the Senate,” confirmed Bernadette McNulty, chief assistant secretary of the Senate. In other words, taxpayers would be temporarily protected with the career advancement of the two pro-tax Democrats.

Vacancies Filled by Special Elections

Prior to being sworn into Congress, the pair would need to resign from the state Senate. Depending on how quickly Gov. Brown called a special election, it could take up to 120 days from the date of their resignation to fill the vacant seats. During that period, Democrats would need to pick up additional Republican votes for tax increases. In 2011, it took approximately 16 weeks for then-Assemblyman Ted Gaines to fill a vacant state Senate seat.

Both Negrete McLeod and Vargas hold safe Democratic seats, so it would be only be a matter of time until Democrats regained their supermajority control of the state Senate. However, it would likely be a zero-sum game for legislative Democrats. Every seat picked up by Senate President Pro Tem Darrell Steinberg, D-Sacramento, could be a direct loss for Assembly Speaker John Perez, D-Los Angeles.

After all, the strongest contenders in an abbreviated campaigns would be members of the state’s lower house, who have built-in name identification and a proven fundraising network. In the process of filling Senate seats, there could be vacancies in the state Assembly. More importantly, every member of the Assembly to move up to the Senate would trigger another special election process and potential four-month delay.

Howard Jarvis Taxpayers: ‘Appreciate Any No Vote’

The Howard Jarvis Taxpayers Association, the state’s leading anti-tax group, says that when it comes to tax increases, any no vote is a good vote.

“While our first choice is a responsible Legislature that recognizes that taxes are too high, not too low, in the real world we appreciate any ‘N0’ vote, even if that vote is the result of a vacancy,” explained Kris Vosburgh, executive director of the Howard Jarvis Taxpayers Association. “California already ranks at or near the top in tax burden, and taxpayers are grateful for any advantage that helps level the playing field.”

He added that the goal of Proposition 13 “was not to make tax increases impossible, but to create a system that required taxes to be approved with a strong consensus based on clear, demonstrable need.”

An Empty Seat: The Best Representative?   

Not all Republican leaders see the vacancies as a positive development for California, conservative philosophy or the Republican Party.

“If one’s over-riding interest is a narrow definition of tax policy, then, yes, I suppose an empty seat might be preferable to one filled by a hard-line anti-tax conservative who might question the narrow edict of The Pledge in the interest of pursuing the larger strategic priorities,” said former Republican Assemblyman Roger Niello, who broke ranks with his caucus in 2009 to support Republican Gov. Arnold Schwarzenegger’s $13 billion dollar tax hike. “But with the tax pledge (and this could apply to others, too), the rigid dogma attached to it has elevated a no tax policy to an over-arching strategy.  That is true dysfunction.”

Niello added that conservative philosophy involves more than just taxes and includes “such things as personal responsibility, free market economy, limited government, effective and efficiently focused government responsibilities and local control.”

Top Two Primary Turns Senators into Strong Challengers

So how likely is it that 2013 turns into another year of special elections? For starters, the pair of Democratic state senators must win their congressional races. Both are plausible candidates; one is almost guaranteed.

Vargas, who is running for the open 51st House seat, faces only token opposition from Republican challenger Michael Crimmins. In the June primary, Vargas’ vote share was more than double that of Crimmins. Altogether the Democratic field combined for more than 70 percent of the vote.

Meanwhile, Negrete McLeod’s road to Washington is more difficult. She is challenging fellow Democrat Rep. Joe Baca in the 35th House district. In the June primary, Baca finished first with 45 percent of the vote. Negrete McLeod wasn’t far behind, trailing by only 2,500 votes or 8.5 percentage points. The only other candidate, the Green Party’s Anthony Vieyra, pulled in nearly 19 percent of the vote.

The Top Two primary system could also bolster Negrete McLeod’s chances. There’s likely to be little difference between the Democrats’ voting records in Congress. Republican voters without a Republican on the ballot might be encouraged to support Negrete McLeod, if for no other reason than to temporarily block state tax increases.

State Senate Campaigns: Central Issue Taxes

Of course, this unexpected turn of events also relies on Democrats first taking a supermajority of the state Senate. Most Capitol insiders believe the State Senate is a lost cause for California Republicans, who spent more than $1.2 million on a futile attempt to advance a referendum on the Citizen Redistricting Commission’s Senate maps. Ultimately, that money could have been spent to bolster the campaigns of the party’s three swing candidates in the 5th, 27th and 31st districts.

Democrats need to win just one of three swing state Senate races this cycle in order to reach the all-important two-thirds threshold. Those three seats are the 5th Senate race between Bill Berryhill and Cathleen Galgiani; the 27th Senate race between Todd Zink and Fran Pavley; and the 31st race between Jeff Miller and Richard Roth. 

In addition to the two Democrats, another state senator, Republican Doug LaMalfa of Oroville, has a free shot at Congress. He holds a safe Republican seat and has signed Americans for Tax Reform’s Taxpayer Protection Pledge.