Multiple Tax Initiatives Vying for November 2012 Ballot; Governor's Proposal Polls Well

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December 13, 2011 In light of California's continued fiscal problems, multiple initiatives designed to raise additional revenues for schools and other state programs have been filed for the November 2012 ballot. There are dozens of initiatives in circulation (each initiative must get over 500,000 signatures to qualify for the November 2012 ballot, and constitutional amendments need over 800,000 signatures) dealing with myriad of issues, and there are several high-profile measures that we anticipate playing a big role in the November 2012 elections. While it is possible that some of these measures may not qualify, or their sponsor may choose not to move forward with the initiative at this point in time, education stakeholders should look closely at the following proposals:

The Schools and Public Safety Protection Act of 2012
(Sponsor: Governor Brown)

  • Read Governor Brown's open letter to Californians
  • Temporarily raises the income tax on individuals making over $250,000 by 1%, a 1.5% increase for income of $250,000 - $500,000, and a 2% increase on income above $500,000
  • Temporarily raises sales tax by half a cent
  • The expected $7 billion in new revenue would be used for education (kindergarten - community colleges) and public safety realignment costs
  • Recent polling by the Public Policy Institute of California shows 60% of likely voters favor this proposal

Our Children, Our Future: Local Schools & Early Education Investment Act
(Sponsor: the Advancement Project)

  • Increases income tax brackets by an average of 1% for each rate, resulting in a 20% increase in income tax revenue
  • The resulting $10 billion goes to education (15% to early childhood, 85% to K-12), and the new money is not part of Proposition 98
  • Includes requirements such as transparency in expenditure reporting, and site-based per student funding grants; only the local education agency's governing board has authority over the expenditure of the new funds

A Blueprint to Renew California
(Sponsor: Think Long Committee for California)

  • Reduces income tax brackets to two: 2% income tax for those making $95,000 or less, and 7.5% for those making above that amount
  • Expands sales tax to include services (such as accounting and legal services)
  • Other tax changes include an increase to $27,000 of the standard personal deduction and a new corporate tax rate of 7% (lower than current rate)
  • The new K-12 money, expected to be $5 billion annually to K-12 and community colleges, will not be part of Proposition 98, and includes weighted student formula funding; eliminates the need for the state to repay the $14 billion maintenance factor
  • Provides financial incentives for the growth of the highest-performing charter schools that serve the most disadvantaged students (i.e., enterprise zones for education)

We will continue to keep you updated on these and other proposals as they move forward.