Friday, October 26, 2012

California 30-38

No, "California 30-38" is not a sports score, and, no, it's not a highway designation. 30 and 38 are competing propositions in the November 6 election, and Californians are in such agreement about the problem they each seek to address, that we're going to send them each down to defeat. But let me explain what they are first, and then tell you why we're probably screwed.

Here's the basic problem: Our state is broke. Our June 2012 budget gap was about $16.6 billion. The budget deal worked out between Governor Brown and the legislature balanced the budget with about $8.1 billion in spending cuts, $2.5 billion in "transfers," and the last $6 billion in new taxes "pending voter approval."

Prop 30 was placed on the ballot by the Governor as part of that budget deal. The $6 billion hole is filled by increasing the tax on incomes over $250,000 (or $500,000 for couples filing jointly) for a period of seven years, and a 1/4 cent per $1 increase in sales tax for four years. The funds go into an "Education Protection Account" within the state General Fund. Because it's within the General Fund, it increases the Prop 98 guarantees to education (K-12, plus Community Colleges), but also frees up some existing funds for other purposes.

The Prop 30 taxes go into effect immediately to cover the $6 billion gap in the current year's budget. If it fails, the budget deal included "trigger cuts." We will have a balanced budget this year, no matter what. Those $6 billion in automatic cuts include $5.3 billion from public schools for the current school year. Ever wondered what would happen if thousands of teachers got laid off in the middle of the school year? Or if your local school district defaulted on its bond payments? You might just find out if Prop 30 fails to pass.

Prop 38 is an alternative tax plan, not negotiated by the legislature, but put on the ballot by Molly Munger, who has spent about $33 million of her own money to pass it.  (Coincidentally, Molly's brother, Charles Munger Jr., has spent about $22 million of his own to lead the fight against Prop 30). Prop 38 raises income taxes on just about everybody (incomes over $7,000) for twelve years, but leaves sales tax alone. The money goes into an "Education Trust Fund," but this one is outside of the General Fund, so it is in addition to the Prop 98 guaranteed funding from the (diminished) General Fund. Prop 38 does not include Community College funding, but does include early childhood education.

Prop 38 could be an interesting alternative to the Governor's plan, except for one fatal flaw: It takes effect next year, leaving the "trigger cuts" in place for this year. Prop 38 might help in the future, but the chaos the trigger cuts would cause in education this year would do incredible harm to 100% of public school students in the state this generation. But I will vote for it anyway.

Yes, I will vote for 38, AND I will vote for 30. The proponents of each have campaigned as though we have to make a choice, and can only vote for one or the other. That is not true. And this is why I say we are doomed.

California law provides for a way to reconcile two propositions passing which each address the same issue: The one with the most votes prevails. Yes, if you vote for 30 & 38, and they both pass, you don't get two tax increases, you only get the one with the most support.

Prop 30 was headed for victory, until the Mungers, Molly and Charles, put over $55 million of their fortunes into ads against 30 and for 38. Now support for 30 has dipped to 46% approval. Meanwhile, Prop 38 only has 39% of voter approval in current polling. Now, it's been a while since I was in school, but in the old days 46+39 equaled 85% in favor of one or the other. Even if we assume there's some overlap in support, there's clearly a majority in favor of some tax increase.

Despite the fact that the majority of Californians agree that we need to enact one or the other tax increase to save our schools, and our state's competitive edge, both propositions will fail because we're being presented with the election as a "choose one only" option. The majority are for saving the state, but those who would rather destroy California than pay one cent more in taxes win by dividing and conquering the majority. Which, the conspiracy-minded might wonder, may have been what the Mungers had in mind all along.

If you're a Californian voter, I hope that you'll join me in voting for both propositions, 30 & 38, and may the better solution prevail.

Here's my quickie ballot guide to the rest of the California initiatives:

30 - taxes/budget Yes
31 - budget reform No
32 - special exemptions No
33 - auto Insurance undecided
34 - end death penalty Yes
35 - human trafficking Yes
36 - 3 strikes reform Yes
37 - GMO labeling Yes
38 - tax rates Yes
39 - business tax Yes
40 - redistricting Yes

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