The bottom line: the news is not as grim as it was predicted to be a year ago just after the governor was inaugurated, but he’s betting the proverbial store on voters passing his five-year tax increase. He’s wrapped that proposal—which keeps his campaign promise to never raise taxes without asking the voters—in as much shiny ribbon as he can.
The $7 billion annual tax increase has two components: a five-year, half-cent increase in the sales tax and an income tax surcharge on people earning more than $250,000. The sales tax would return to the level that expired in 2011 when the governor was unable to persuade Republicans to even allow the public to vote on extending the sales tax that had been raised to deal with the recession three years previously.
The special tax revenues would be dedicated to schools and public safety—issues that pretty well cross the political spectrum.
The governor’s proposal hinges on the passage of the tax increase in November. Without it, the drastic cuts will take place mid-year, assuming the governor holds the Legislature to the same requirement he did in 2011—automatic trigger cuts if revenues do not materialize. It could amount to eliminating three weeks of the k-12 school year.
Only the Democrats will have to agree to pass the budget based upon cuts, the triggers and revenue assumptions because voters agreed to a simple majority budget in 2010. Of course, in that same election, we, the citizens, also mandated a two-thirds requirement for any revenue increases.
Thus, the governor’s plan to go directly to the people and avoid the Legislature and the two-thirds requirement. He instead will seek a simple majority in the November election. His self-interested allies—the state teachers’ union, the state employees’ unions and the public safety unions—will provide the cash to hire the signature-gatherers to qualify the measure for the ballot.
Incidentally, the Democrats in the last Legislative session, passed a law that required all initiatives only to appear in presidential elections—shifting all of the questions to November when President Obama will stand for re-election and turnout among tax-liking Democrats will be much higher than in the June primary.
Given California’s official jobless rate of 11 percent (it would be mid-double digits if it included those who have been dropped from the roles after their unemployment insurance ran out), it will be most interesting to see if his high-stakes gamble pays off.
California is a great dichotomy—we want all of the services (quality, low-cost higher education, locking up three-strikes criminals for life, lots of mass transit and freeways plus a social safety net), but we don’t want to pay more taxes and we love Proposition 13 that effectively freezes our property taxes.