COMPARING THE TWO MAJOR STATE SCHOOL FUNDING PROPOSITIONS: PROP 38 AND PROP 30
This Year voters will have to decide between
two conflicting tax measures on the November ballot. One is Prop 38, also
referred to as the Local Schools and Early Education Investment and Bond Debt
Reduction Act, which has been funded almost exclusively by its proponent,
wealthy tax attorney Molly Munger. The other is Prop 30,
which is backed by Gov. Jerry Brown. Brown took his plan to the people after an
earlier attempt to close the budget gap by raising personal income taxes failed
in the state legislature. Both ballot measures focus on protecting education
funding, but they go about it in different ways.
Prop 38 (M. Munger) would raise the income tax rate on almost all
Californians, where Prop 30 (Gov. Brown)
targets only those who make more than $250,000 a year. The amount of the
increase would depend on the individual's tax bracket (see "What Your Vote
Means" below). The revenues would go into a special fund called the
California Education Trust Fund, or CETF. From there, the money would have to
be used for three specific purposes, in the following proportions:
pay for schools (60%)
pay for Early Care and Education (ECE) programs (10%)
pay down state debts (30%)
However, beginning in fiscal 2017, the proportions would shift.
The amount allotted for schools and ECE would be capped using a formula that
takes into account the average growth in Californians' per capita income during
the first five years the law is in effect. Any revenues in excess of this cap
would go toward debt payments. The rest would be split, with 85% going to
schools and 15% going to ECE.
One critical point to consider is that the two November tax
measures (Prop 30, Gov. Brown and Prop 38, M. Munger) would negatively affect the other
should both pass. The state constitution already provides that when two
measures conflict, the one with the most votes prevails. In addition, sections
in both Prop 30 and Prop 38 explicitly bar the other from taking effect. Even
if you vote for both, only one can win. However, if Prop 30 (Gov. Brown) loses, the much feared "trigger cuts," built into the current state budget, would go into
effect.
Prop 38 (M. Munger) has a number of very specific
rules about the distribution of funds, and it is well worth your time to read
the summary from the
Legislative Analyst's Office. And here's the full text of
the prop.
Prop 38 (M. Munger) WHAT YOUR VOTE MEANS
Voting YES means that you approve of the new taxes and would like them to be allocated to schools, ECE programs, and state debt repayment. If Prop 38 prevails, then Prop 30 cannot, and a series of trigger cuts built into the state budget will go into effect. Taxes would increase according to the following table:
Single Filer
|
Joint Filer
|
Head-of-Household
|
Tax Rate Increase
|
<$7,316
|
<$14,632
|
<$14,642
|
--
|
$7,316-$17,346
|
$14,632-$34,692
|
$14,642-$34,692
|
0.4%
|
$17,346-$27,377
|
$34,692-$54,754
|
$34,692-$44,721
|
0.7%
|
$27,377-$38,004
|
$54,754-$76,008
|
$44,721-$55,348
|
1.1%
|
$38,004-$48,029
|
$76,008-$96,058
|
$55,348-$65,376
|
1.4%
|
$48,029-$100,000
|
$96,058-$200,000
|
$65,376-$136,118
|
1.6%
|
$100,000-$250,000
|
$200,000-$500,000
|
$136,118-$340,294
|
1.8%
|
$250,000-$500,000
|
$500,000-$1,000,000
|
$340,294-$680,589
|
1.9%
|
$500,000-$1,000,000
|
$1,000,000-$2,000,000
|
$680,589-$1,361,178
|
2.0%
|
$1,000,000-$2,500,000
|
$2,000,000-$5,000,000
|
$1,361,178-$3,402,944
|
2.1%
|
Over $2,000,000
|
Over $5,000,000
|
Over $3,402,944
|
2.2%
|
Source:
|
Legislative Analyst's Office |
Voting NO means that you reject the tax
increase. The school funding and debt repayment plan laid out by Prop 38 will
not go into effect.
Prop 38 (M. Munger)
WHO/WHAT IT WOULD AFFECT
Taxpayers: Most Californians would be faced with at least some form
of tax increase. See the table in "What Your Vote Means" above.
Public Schools: Public schools could receive as
much as $10 billion in the first year. The bulk of that money (70%) would be
distributed to schools on a per-student basis, with more money for students in
higher grades levels. Additional money (18%) would be allotted to schools based
on the number of low-income students enrolled. The final portion (12%), also
distributed on a per-student basis, would be dedicated solely to technology --
allowing for the purchase of new equipment and teaching materials and also for
teacher training. The money would be tied to a series of restrictions and
mandates, including that school districts seek public input before deciding on
how to spend the money.
Early Care and Education Programs: ECE programs
are those that, like preschool, begin before kindergarten. Current funding
levels don't come close to supporting the number of children eligible for
subsidized programs in the state (of children ages five and younger, about half
are eligible but only 15% are served, according to the legislative analyst's
office). Prop 38 would restore some of the funding that was cut in a series of
budget reductions since 2008. It would also create a rating system for ECE programs,
establish a statewide database to support program management, begin an Early
Head Start program modeled after the federal one, and would expand subsidized
preschool for children of low-income families, among other things. ECE programs
are expected to get about $1 billion a year for the first few years if Prop 38
passes.
State Budget: A share of CETF funds each year
will go toward paying down state debts, with the priority on education
debt-service costs. That means more General Fund money can go to other public
programs and to balancing the budget, according to the legislative analyst.
Prop 38 (M. Munger) WHO'S BEHIND IT
Wealthy tax lawyer Molly Munger is the principal financial backer and proponent of Prop 38. Other than her own contributions, only one minor donation has been reported as of Aug. 14 -- $25,000 from the Atlas Family Trust, compared with $13.8 million from Munger herself.
Wealthy tax lawyer Molly Munger is the principal financial backer and proponent of Prop 38. Other than her own contributions, only one minor donation has been reported as of Aug. 14 -- $25,000 from the Atlas Family Trust, compared with $13.8 million from Munger herself.
Prop 38 (M. Munger)
WHO'S AGAINST IT Those interests that have lined up behind Jerry Brown's tax
measure, Prop 30, are naturally opposed to the Munger plan. In addition, the
California Democratic Party has come out against the measure. However, no major
donations to the opposition campaign have been registered with the Secretary of
State's office
ARGUMENTS BEING MADE FOR restores education money that was cut from the budget in recent
years, guaranteeing billions of dollars to local schools based on enrollment --
an average of $10 billion annually over 12 years.
It will prevent more cuts by setting aside $3 billion a year
through 2017 to help repay state education bond debt.
It prohibits the legislature from diverting or borrowing the
money, and the money cannot be used to replace current education funding.
Money is distributed on a per-pupil basis and must be spent at
the school.
The money cannot be spent to increase salaries or pensions of
school personnel.
Spending decisions will be made locally and will require public
input.
School districts will be accountable for improvement at each
school and must report how they money was spent.
ARGUMENTS BEING MADE AGAINST
Prop 38 is a massive tax hike for middle-class taxpayers and small businesses. It would damage small businesses that pay income taxes as individuals rather than as corporations.
Prop 38 is a massive tax hike for middle-class taxpayers and small businesses. It would damage small businesses that pay income taxes as individuals rather than as corporations.
It would kill jobs in small and family businesses where most job
growth is taking place.
It can't be changed once it's passed, so it will continue for 12
years even if there is evidence of fraud or waste.
It gives Sacramento $3 billion a year for four years to spend
without restriction.
It creates a costly new bureaucracy by forcing schools to go
through complex red tape just to receive basic funding, and it creates new
programs even while necessary school functions have been cut back.
It will do almost nothing to improve student performance.
Prop 30 (Gov. Brown) WHAT YOUR VOTE MEANS
Voting YES means that the personal income tax would go up for those earning more than $250,000 as well as a quarter-cent sales tax increase would go into effect. Also, the state would continue to fund certain public safety programs it handed over to counties in 2011.
Single Taxable Income
|
Joint Taxable Income
|
Head of Household Taxable Income
|
Tax Rate Increase
|
Under $250,000
|
Under $500,000
|
Under $340,000
|
--
|
$250,000-$300,000
|
$500,000-$600,000
|
$340,000-$408,000
|
1%
|
$300,000-$500,000
|
$600,000-$1,000,000
|
$408,000-$680,000
|
2%
|
Over $500,000
|
Over $1,000,000
|
Over $680,000
|
3%
|
Source:
|
Legislative Analyst's Office
|
Voting NO means that no new taxes will be
introduced. The following trigger cuts would go into effect. Schools and other programs would face billions in reduced funding as follows:
Schools and community colleges
|
$5.35 billion
|
University of California
|
$250 million
|
California State University
|
$250 million
|
Department of Developmental Services
|
$50 million
|
City police department grants
|
$20 million
|
CalFire
|
$10 million
|
DWR flood control programs
|
$7 million
|
Local water safety patrol grants
|
$5 million
|
Department of Fish and Game
|
$4 million
|
Department of Parks and Recreation
|
$2 million
|
DOJ law enforcement programs
|
$1 million
|
Source:
|
Legislative Analyst's Office
|
Prop 30 (Gov. Brown)
Who/What It Would Affect
Taxpayers: The first chart above shows how the personal income tax increase would affect those in each bracket.
Consumers: Everyone would pay an extra
quarter cent sales tax at the point of sale.
Public Schools: If the measure passes, schools
could see up to $6.6 billion in increased funding. If it fails, funding could
go down by as much as $5.4 billion.
State Government: If it passes, the state would
see an increase of billions of dollars to help cover education and balance the
budget. If not, it would face a serious shortfall and begin making a series of
trigger cuts to government programs to reduce overall spending.
Local Governments: Local governments, mainly
counties, have already been required to take on new responsibilities in public
safety, including supervising parolees and handling incarceration for some
adults. The state helped by providing funds for these programs last year, but
Prop 30 would ensure that these payments continue annually.
Prop 30 (Gov. Brown)
Who's Behind It
This is the tax increase Gov. Jerry Brown has been trying to get approved for more than a year, part of his strategy to close the budget gap. It has the support most notably of the League of Women Voters and the two major teachers unions. The teachers unions have together donated millions to the campaign. Key financial backers include:
This is the tax increase Gov. Jerry Brown has been trying to get approved for more than a year, part of his strategy to close the budget gap. It has the support most notably of the League of Women Voters and the two major teachers unions. The teachers unions have together donated millions to the campaign. Key financial backers include:
California Teachers Association
California Federation of Teachers
Service Employees International Union's Local 1000
Democratic State Central Committee
Prop 30 (Gov. Brown)
Who's Against It
So far only a small amount has been donated to the opposition campaign, with the largest contribution so far from the Small Business Action Committee. Joel Fox, the president of that group and editor of the political blog Fox&Hounds, is actively involved in the campaign to defeat Prop 30 and has put his name to the official arguments against that will appear on the ballot. So far the key financial contributors are:
So far only a small amount has been donated to the opposition campaign, with the largest contribution so far from the Small Business Action Committee. Joel Fox, the president of that group and editor of the political blog Fox&Hounds, is actively involved in the campaign to defeat Prop 30 and has put his name to the official arguments against that will appear on the ballot. So far the key financial contributors are:
Small Business Action Committee
Howard Jarvis Taxpayers Association
Arguments Being Made For
§ Prevents an
additional $6 billion in school cuts and provides new funding for education
this year.
§ Establishes a
guarantee for public safety funding in the state's constitution, where it can't
be changed without voter approval. "It keeps cops on the street."
§ Balances the budget
and pays down California's debt.
§ Only the highest
income earners pay more income tax. Couples earning below $500,000 a year will
pay no additional income taxes.
§ It's temporary. PIT
goes up for 7 years and quarter-cent sales tax for 4 Years.
§ The money goes into
a special account the legislature can't touch.
§ Mandatory,
independent audits will ensure funds are spent only for schools and public
safety.
Arguments Being Made Against
§ Legislature can
take existing money for schools and use it for other purposes, replacing it
with money from Prop 30, effectively resulting in no new money for education.
§ There are no
requirements or assurances that any more money actually goes to classrooms.
§ Prop 30 rewards the
dangerous behavior of spending more than the state has by giving politicians
billions of dollars more with no real reforms.
§ The governor,
politicians and special interests are threatening voters by saying, "vote
for our massive tax increase or we'll take it out on schools," but they
refuse to reform the education or pension systems to save money.
Source: Legislative Analyst's Office
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