Four years ago, California was still caught in the undertow of the Great Recession, struggling to maintain services and programs amid depleted tax revenues. At the time, Gov. Jerry Brown hammered out a deal to go to voters with Proposition 30, which called for a quarter-cent sales tax increase along with higher income taxes for the wealthiest Californians. The goal was to give the state a temporary bailout.
“Proposition 30 is imperfect. But it will keep the state’s budget situation — and the state of our education system — from reaching abysmal levels,” we wrote at the time. Based on the promise that this was just a temporary fix, voters approved it by more than 10 percentage points. Sonoma County voters went along by a 2-1 margin.
And it worked. California got through this dry spell without deeper cuts.
But now as the time draws near for the tax to expire, groups such as the California Teachers Association, the California Faculty Association and others want to keep it going — only with one key part missing. This time, the measure, Proposition 55, does not include the sales tax increase, the one part that voters are least likely to extend. It would only continue the taxes on single Californians with incomes in excess of $250,000 and couples earning more than $500,000. Proposition 30 would raise between $4 billion and $9 billion annually for the state general fund, a large portion of which goes to K-12 schools and community colleges, until 2030.
But here’s the problem. First, it’s disingenuous. The governor sold Proposition 30 as a temporary tax package in order to get fiscal moderates to go along with the idea. Now Brown is sitting on the sidelines as special interests push to extend the tax without the sales tax component and without his support or opposition.
Second, while a good argument could be made to extend all of the Proposition 30 taxes as a way to maintain and possibly elevate the quality of California schools — especially with the possible approval of the Proposition 51 school bonds — that’s not what this is about. Furthermore, there’s evidence that the state can get by without the funds. Since 2010, the state has gone from a $16 billion deficit to a $2.7 billion surplus, and millions have been put away in the state’s “rainy day” fund. As a result, the state Department of Finance analysts had predicted California would get by without Proposition 30 revenues when the taxes expire at the end of 2018.
Although in May, the forecast changed and the governor warned that the “surging tide of revenue is starting to turn, as it always does,” the state controller reported Wednesday that total revenues outpaced expectations for the second month in September after four months of shortfalls.
Finally, while most lawmakers agree that California’s tax system needs an overhaul, this would make the problem worse, not better. It merely compounds the state’s dependence on capital gains and personal income, making education all the more vulnerable to major shifts in funding during the next downturn.
California needs tax reform, and it needs to keep its promises. It does not need Proposition 55. The Press Democrat encourages a no vote.