CSBA considers initiative funding measures
Analysis from CSBA’s Governmental Relations Department
Published: February 28, 2012
Never mind the fact that some 67 initiatives have been cleared to collect signatures and another five are waiting for title and summary at the Attorney General’s Office, or that three have already qualified for the November 2012 ballot. There are three measures dealing with school funding that have serious, committed backing and so require serious consideration by public school advocates throughout California.
Gov. Jerry Brown’s initiative and one sponsored by civil rights attorney Molly Munger are well-known to most people in education. But a third measure that some had written off a month ago has also emerged as a serious contender—one sponsored by the California Federation of Teachers. All three are in the beginning stages of signature collection and have until late June or early July to complete the task in time to qualify for the November ballot.
CSBA’s officers already talked to Gov. Brown about his measure in January, and he is scheduled to meet with the entire Board of Directors at its March 24-25 meeting, when CFT representatives are also expected to make their case; Ms. Munger met with the board in January. The board is looking at the financial aspects as well as the political aspects of each measure, including prospects for making it onto the November ballot, prospects for passage by the voters, and survivability—that is, each measure’s ability to withstand manipulation by the state Legislature in future budgets.
Brown
As part of his January budget proposal for the 2012-13 fiscal year, the governor is sponsoring “The Schools and Local Public Safety Protection Act of 2012.” The measure would amend the state constitution to guarantee a shift in state sales tax revenue to cities and counties as part of the public safety realignment statute that was included in the current-year budget agreement.
The measure proposes to increase the personal income tax rate on individuals who earn more than $250,000 annually and to increase the state sales and use tax by a half-cent. Both taxes would be temporary with the income tax sunsetting in five years and the sales tax sunsetting in four years.
The governor’s Department of Finance and the Legislative Analyst’s Office differ on how much revenue the measure would produce; DOF estimates that a full year of revenue would generate $6.9 billion, while the LAO estimates total revenues to be in the $4.8 billion to $5.5 billion range.
The bottom line for public schools: Since the revenue would flow into the state general fund, K-14 schools would get about 40 percent, which would translate to $1.7 billion to $2.4 billion for K-12 annually and $211 million to $300 million for community colleges.
Munger
Munger’s approach, “Our Children, Our Future: Local Schools and Early Education Investment and Bond Debt Reduction Act,” proposes a progressive increase in the personal income tax, beginning with a 0.4 percent bump on single filers earning $7,316 and topping out at 2.2 percent on incomes above $2.5 million. The new revenue would sunset in 12 years.
According to initiative supporters, the measure would raise $10 billion annually. For the first four years, $3 billion would be used annually to pay down state debt; of the remaining $7 billion, 85 percent would be allocated to K-12 schools and 15 percent to early childhood education. In the fifth year, the debt service contribution would end and all of the revenue raised would be allocated to K-12 and early childhood education according to the 85/15 split.
The measure would require all of the K-12 education money to be spent at local schools with local governing board approval, and the amount that could be spent on administrative costs would be limited to 1 percent. None of the initiative’s revenue could be used to pay salaries of existing employees—only for new employees. Revenue raised by the measure would be kept outside the state general fund and distributed independent of the state budget process.
CFT
The “Millionaires Tax to Restore Funding for Education and Essential Services Act of 2012” proposes adding 3 percent to the tax rate on incomes between $1 million and $2 million and 5 percent on incomes above $2 million. These revenues would not sunset. The measure would raise an estimated $6 billion annually and steer the money away from the state general fund into a handful of trust funds designated for specific purposes: public safety, road and bridge maintenance, child and senior services, and public schools (K-16 and above). The K-12 allocation would be about $2.2 billion annually (about $365 per ADA), distributed on a per-enrollment basis. Funds could not be spent on administrative costs.
Who’s on first?
Backers of the measures are courting CSBA and other interest groups from across the spectrum. Currently, the governor’s initiative claims the support of the California Teachers Association and several business interests. The Munger initiative has the support of the California State PTA. The CFT measure has the support of the California Nurses Association and several smaller statewide and local interests.
All three measures have enough support to fund a viable petition signature effort. Whether each one will have the momentum and support to create a successful campaign for the November ballot remains to be seen. Once qualified, each of the measures’ backers will make another decision on whether or not to proceed to the November ballot. Those decisions will be made in late May and early June.
Survey says?
Useful polling data on the measures is sketchy at the present time, but most observers agree that all three have a steep hill to climb because they would all raise taxes. Supporters of each measure all claim polling numbers that edge out the other two. The governor’s measure calls for a sales tax increase, which likely voters typically frown on. The Munger measure would increase income taxes on almost every taxpayer, which runs counter to the commonly held belief that California voters like taxing other people but not themselves. The CFT measure would tax “the other guy” by focusing on millionaires. On the plus side, all three can claim truthfully that they would help schools. Support for additional money to schools is generally accepted by voters.
A recent Field Poll shows the CFT measure with 63 percent support, the governor’s measure with 58 percent, and the Munger initiative with 45 percent.
Political opinions vary over what happens if more than one of the competing measures makes it to the ballot. That question has not been polled publicly, but private polls so far show serious trouble if voters are presented with multiple choices; voters could either vote no on them all or choose the one they like best, which could split supporters and deprive any of the proposals a majority vote and victory.
How many can pass?
With the measures’ sponsors all collecting signatures and not backing down, the November ballot could contain all three measures. What happens in the unlikely event that more than one passes? A rule of thumb when competing measures are approved by voters is that where they differ, the provisions of each would go into effect, and where they overlap, the one with more votes goes into effect.
A court may need to decide the issue. In the most extreme case—if all three pass—the Munger income tax would take effect on incomes up to $250,000, the governor’s income tax would take effect on incomes between $250,000 and $1 million, and the CFT income tax would take effect on incomes above $1 million—oh, and the governor’s sales tax hike would also take effect.
Confused? Just imagine what the voters will think when faced with all three choices. Will they just say no?
Over the next few months, these three measures will likely be the focus of considerable attention. Just as CSBA’s Board of Directors is listening to all the sponsors and then looking at each measure on its merits, local school boards will need to conduct their own due diligence as employee groups and others begin applying pressure on them to support one or more of these proposals.
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