Prop. 55 asks voters to extend governor’s income tax on wealthy
SACRAMENTO — When Californians were asked four years ago whether wealthy people in the state should pay higher income taxes to prevent deep cuts to education and other public programs, opponents built a substantial war chest to fight the measure.
More than $53 million poured in from businesses and wealthy donors to fight Proposition 30 or to support a competing ballot measure to raise taxes across the board, not just on the highest earners.
Still, voters approved Prop. 30, which Gov. Jerry Brown sold as a temporary fix to the state’s fiscal crisis. The measure raised sales taxes by one-quarter cent and increased the income tax on single earners making $250,000 or more and couples making $500,000 or more. The sales tax expires at the end of this year, and the income tax expires in 2018.
Now, a November ballot measure, Proposition 55, asks voters to extend part of Prop. 30 — the income tax on the wealthy — for 12 years. The sales tax would not be extended under the measure.
Brown has refused to take a public position on the measure, which was placed on the ballot by education unions and health care groups.
This time, if opponents are spending money to fight Prop. 55, it’s not much.
“They have bigger fish to fry,” said Steve Maviglio, a Democratic strategist who is not involved with Prop. 55. “They are focusing on legislative races.”
Not a dime has been reported to the secretary of state from opponents. Fundraising laws require spending to be reported to the state when it exceeds $2,000. Several Sacramento power players — including the California Chamber of Commerce and Howard Jarvis Taxpayers Association — oppose the tax extension, but aren’t raising money to defeat it.
Supporters, meanwhile, have raised $46 million, primarily from unions representing hospital and school employees. Among the supporters are the California Association of Hospitals and Health Systems, Service Employees International Union and California Teachers Association.
“It wasn’t too long ago that we lived through one of the greatest recessions since the Depression, and during that period the brunt of it was bore by schools,” said CTA President Eric Heins. “I think every community felt the impact of that. ... I don’t think anyone wants to go back to that period.”
The cuts to education forced districts to lay off teachers and counselors while the state slashed social services amid years of multibillion-dollar budget deficits. Since Prop. 30 was approved in 2012, the measure has generated $31.2 billion, according to the state Controller’s Office.
This year’s measure, Prop. 55, is expected to raise $4 billion to $9 billion each year for the state, with half going to K-12 schools and community colleges and the rest going to the state’s general fund, budget reserves, debt repayment and Medi-Cal.
The California Association of Hospitals and Health Systems has provided more than half of supporters’ campaign cash for a total of $25 million, while CTA has given almost $16 million.
For hospitals, the incentive to support the initiative is clear. Prop. 55 includes up to $2 billion a year for the state’s Medi-Cal program, which covers more than 13 million low-income people and their families across the state.
For districts, like Mount Diablo Unified School District in Concord, where almost a quarter of the district’s 32,000 students do not speak English as their first language, the loss of Prop. 30 would mean $40 million less a year of much-needed money beginning in 2018-19, said Superintendent Nellie Meyer.
That could mean cutting after-school and enrichment programs or laying off teachers, Meyer said.
“The money is so embedded in our budget that we would be looking at cuts,” she said.
At the same time the Prop. 30 money could go away, Meyer said, school districts will be required to pick up more of its teacher pension costs. Brown created a 30-year plan to shore up the state’s teacher retirement system in 2014, in part by requiring teachers and school districts to contribute more to the pension fund.
“If those converge, then it would be detrimental to our district programs,” Meyer said.
David Kersten, an adjunct professor at the University of San Francisco, said the tax extension would fund the increased costs to districts for teacher pensions and benefits, which he said runs counter to the message promoted by supporters of Prop. 55: that the money will go into classrooms.
“If we were able to tell the story of this being the case, people would vote it down,” said Kersten, founder of the Kersten Institute for Governance and Public Policy. “But on its face, people say: ‘More money for education? Sure, let’s go.’”
He said he formed a small volunteer-only campaign to help fight Prop. 55 when he realized no one else was taking the lead.
Kersten said he’s hoping to raise $30,000 to $50,000 to cover the basic expenses of an opposition campaign as the Nov. 8 election approaches.
“I’m reaching out to key donor lists to see if I can shake something free, and no luck yet,” he said.
Jon Coupal, president of the Howard Jarvis Taxpayers Association, said small business owners are still considering a late run at an opposition campaign in the remaining six weeks before the election. Coupal said his group, however, is holding on to its checkbook until the 2018 election, when it expects to fight an effort to overhaul the state’s property tax law known as Prop. 13.
“I’m not sure it will take a funded campaign to defeat Prop. 55,” Coupal said. Prop. 30 “was promised to be temporary during a financial emergency, and we are through the fiscal emergency.”
Melody Gutierrez is a San Francisco Chronicle staff writer. Prop. 55 asks voters to extend governor’s income tax on wealthy - San Francisco Chronicle:Email: mgutierrez@sfchronicle.comTwitter: @MelodyGutierrez
