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Delivering on his pledge to ask the people of California to vote on the best path forward, Governor Jerry Brown this week hailed the passage of Proposition 30 as a clear and resounding victory for children, schools and the California dream.
“Last night, Californians made the courageous decision to protect our schools and colleges and strengthen the California dream,” said Governor Brown. “We joined together as Californians first in a resounding victory for education and fiscal integrity. The people of California have put their trust in a bold path forward and I intend to do everything in my power to honor that trust.”
Governor Brown was elected on a promise to confront the state’s perennial budget crisis with honesty and resolve. When Governor Brown returned to Sacramento after almost three decades, California faced a $26.6 billion budget deficit – the result of years of budget gimmicks, a failure to match spending with tax revenues and a massive economic downturn.
Since Governor Brown took office he has cut billions in spending from the budget. State spending as a share of the economy has hit the lowest level since Ronald Reagan was governor-and the state’s credit outlook has shifted first from negative to stable, and then from stable to positive.
However, without additional revenue a deficit remained. The Governor proposed a budget that combined deep cuts with a temporary extension of then-existing taxes. But Republicans blocked an election, refusing to put the measure on the ballot and let the people decide.
Facing the necessity of crippling cuts to education without new revenue, Governor Brown introduced Proposition 30 (The Schools and Local Public Safety Protection Act of 2012), which makes California’s tax system more fair, guarantees funding for public safety realignment and invests in education.
Proposition 30 raises the income tax on those at the highest end of the income scale – those who can most afford it – while families making less than $500,000 a year will pay no additional income taxes. It also temporarily increases sales tax by Â¼ cent, keeping the overall sales tax rate lower than it was in early 2011. The revenue generated through Proposition 30 prevents $6 billion in cuts to our schools this year and will provide billions for our schools in the future.
The new taxes in this measure are temporary. The sales tax increase will expire in four years, and the income tax increase for the wealthiest taxpayers will end in seven years.
The new revenue is guaranteed in the California Constitution to go directly to local school districts and community colleges. Proposition 30 bars use of funds for administrative costs, but provides local school governing boards discretion to decide, in open meetings and subject to annual audit, how funds are to be spent.
Proposition 30 also provides constitutional protection of funding for public safety services realigned from state to local governments.
To ensure all of these funds go where the voters intend, they are put in special accounts that the Legislature cannot touch. Proposition 30 funding is also subject to an independent audit every year to ensure it is being spent only for schools and public safety. The audit will be open to the public so that voters and parents know that the funds are being spent properly.
The sales tax increase is effective January 1, 2013 and the income tax increase is effective starting with the 2012 tax year.
Published: November 8, 2012 – Volume 11 – Issue 30