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Governor and CFT join initiative efforts 

Analysis from CSBA’s Governmental Relations Department

Last week Gov. Jerry Brown and the California Federation of Teachers merged their competing tax measures. The new measure was submitted to the Attorney General’s Office as an amendment to the governor’s initiative and has already been approved to collect signatures. Even though the new measure has a signature submission deadline of Aug. 13, the governor and his supporters will step up their campaign to ensure that they submit signatures by mid-May to ensure placement on the November ballot.

Efforts by the governor to clear the field of another measure, one sponsored by Southern California attorney Molly Munger, have not been successful. Ms. Munger has continued to say publicly that she is continuing her grassroots signature campaign with the goal that her measure will also appear on the November ballot.

In merging with the governor, the CFT is dropping its own measure, nicknamed “the millionaires tax,” which included an ongoing increase on taxable annual incomes above $1 million.

The new initiative retains the same wording as the governor’s original measure, proposing to amend the state constitution to approve a realignment of state services and a corresponding shift of a portion of sales tax revenues to local government. The measure backdates realignment to the 2011-12 fiscal year. Also the same in the new measure is language that would make open meeting requirements under the Ralph M. Brown Act a non-reimbursable state mandate.

In addition, the measure calls for a quarter-cent sales tax hike instead of the original half-cent hike and a slightly higher income tax increase than the governor’s original initiative. Taxable incomes between $250,000 and $300,000 for single filers would see a tax increase from the current top rate of 9.3 percent to 10.3 percent; filers earning between $300,000 and $500,000 would see a new rate of 11.3 percent , and filers above $500,000 would see their rate increase to 12.3 percent.

The sales tax increase sunset date of Jan.1, 2017, is the same as the previous proposal, but the income tax sunset is two years longer in the new measure: Jan. 1, 2019.

According to the Legislative Analyst’s Office, the new version would raise between $6.8 billion and $9 billion in 2012-13 and between $5.4 billion and $7.6 billion thereafter through 2015-16, with lesser amounts after that because of the sunset of the sales tax increase and the income tax increase sunsetting in the middle of fiscal year 2018-19. The analyst does not specify the impact on Proposition 98 because of variables in calculating the education funding guarantee each year. But assuming that K-14 schools would receive roughly 40 percent of the new revenue, that could be between $2.7 billion and $3.6 billion in 2012-13 and between $2.1 billion and $3 billion after that through 2015-16, with lesser amounts in 2016-17 through 2018-19.

Gov. Brown is scheduled to address CSBA’s Board of Directors this weekend to discuss the merits of his initiative. The board heard from Ms. Munger in January.