Perhaps the biggest news in the world of initiatives as of late is the governor’s decision to reach a compromise with a rival tax plan in order to increase the chances of success at the ballot this November. The governor has simply been unable to knock off competing measures, which crowded the ballot and many believed hurt the chances of voters approving a revenue measure to allay the state’s budge woes. The governor stated, “This united effort makes victory more likely and will go a long way toward balancing our budget and protecting our schools, universities and public safety.” The team effort is in collaboration with the California Federation of Teachers; the union’s own initiative, the Millionaires Tax Initiative, will now be integrated with the governor’s proposal.
Here are the adjustments outlined in the newly-formed initiative:
- Lowers the proposed sales tax increase from ½ cent to ¼ cent
- Adjusts the top two upper income brackets from a 1.5% increase to a 2% increase for incomes over $600,000 for joint filers and from 2% to 3% for incomes over $1 million for joint filers. (The bracket for incomes over $500,000 for joint filers remains at a 1% increase)
- The income tax increases will be in place for an additional 2 years, through 2018, while the sales tax increase will still sunset after 2016
The goals of the new initiative continue to be funding realignment, preventing cuts to schools, balancing the budget, and placing a higher tax burden on the wealthy. The initiative will still have the title of the governor’s proposal (it will just be version 3). You can read the text that was submitted to the Attorney General’s Office here. Overall, the key points are that the sales tax hike would go from 7.25 to 7.5 percent, instead of 7.75, and last for four years. Also, revenues, expected to be about $9 billion in 2012-13 and $7.1 billion in 2013-14, would go into a fund for schools, freeing up general fund dollars.
Joshua Pechthalt, President of the California Federation of Teachers and a co-chair of the Millionaire Tax Campaign, commented the following about the partnership:
“Our coalition welcomes the opportunity to join Governor Brown, Senate pro Tem Steinberg, Speaker Pérez and their allies in crafting this win-win measure. Our values and principles are clearly reflected in this new initiative that now includes a 50% decrease in the sales tax rate, reduces the burden on working families and ensures a greater contribution from the 1%. These changes will generate an additional $2 billion in vital funding for the next fiscal year, and we are determined to ensure those funds benefit the communities that have been hit hardest by budget cuts and our cash-strapped higher education institutions.”
Republican critics of the governor’s proposal and the new joint-measure have described as nothing more than putting lipstick on a pig.
Another key factor to note is that the new initiative will certainly face a bit of time crunch, as signature-gatherers must start from scratch and once again gather the necessary signatures, which means the price tag for the campaign will certainly go up. The governor also has to worry about upsetting business groups who may not be happy with the new initiative; in addition, voters may not be as receptive if it seems as though unions are controlling the agenda, as the governor was the one forced to make the compromise.
Finally, the new joint effort still has competition: civil rights attorney Molly Munger's $10 billion tax hike for schools is also in the running.
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