Tax measures lined up for comparison, as each appears headed to ballot
Last week, proponents of the three major tax measures that appear headed for a collision on the November ballot gave little evidence that any of them would be backing down.
Josh Pechthalt, president of the California Federation of Teachers, the group behind the so-called Millionaire's Tax," told reporters on one press call that their measure is the best one for fulfilling the needs of the state.
Civil rights attorney Molly Munger, whose non-profit Advancement Project is behind a second initiative to raise income taxes on all but the state's poorest residents, said much the same thing on a Thursday media conference call to announce plan for signature gathering.
Meanwhile, Gov. Jerry Brown remained steadfast in his position that his proposed tax measure has the best chance of passing and putting the state back on track.
While the pundits continue to debate the politics of the coming election, a step by step comparison of the measures at this stage might provide new insight. What follows is a look at the similarities, differences and effects of the three multibillion-dollar tax proposals, based on review by the Legislative Analyst's Office.
Officially titled "Tax to Benefit Public Schools, Social Services, Public Safety and Road Maintenance," the Millionaire's Tax is sponsored by the California Federation of Teachers, which represents 120,000 educational employees statewide including much of the faculty of community colleges.
This measure would:
- Beginning with 2012, permanently raise the personal income tax rate by three percent on the portion of a taxpayer's income between $1 million and $2 million, and by five percent on any income above $2 million. The brackets would be the same for single, joint and head-of-household returns and would not be indexed for inflation.
- Deposit the revenue raised monthly into a new "California Funding Restoration Trust Fund," to be continuously appropriated as follows:
36 percent of total revenue to public school districts, county education offices, state special schools and direct-funded charter schools to be distributed on an equal per-pupil basis based on fall enrollment numbers.
8 percent each to the University of California, California State University and Community College systems.
25 percent to county programs for seniors, children, the disabled and public health.
10 percent to county public safety programs
4.9 percent to county road and bridge maintenance
0.1 percent for state administrative costs
- Legislative Analyst's Office forecasts 2012-13 revenues to be about $6 billion. Department of Finance estimates revenue from this measure to be about $9.5 billion.
In 2013-14, estimates are $4 billion and $6 billion, respectively, and increasing in later fiscal years.
Revenues are over and above Proposition 98 guarantee
Measure forbids K-12 and higher education entities from using funds for administrative costs or capital outlay. Legislature, governor and other state officials prohibited from telling school districts how to spend funds.
State Controller is responsible for administering and distributing funds as well as auditing. Misappropriation of these funds is a felony.
Our Children, Our Future
Officially titled "Tax for Education and Early Childhood Programs," this measure has as its major sponsor the Advancement Project, which is led by Molly Munger, daughter of Charles Munger, the longtime business partner of investor Warren Buffet. The California PTA is a major supporter of the measure. .
This measure would:
- Increase personal income tax on majority of Californians (all but lowest income bracket) starting in 2013 and continuing through 2024. Tax hike is based on income and increases as income increases, from 0.4 percent for singles making $17,346 and for couples or heads of households making $34,692, to 1.8 percent for singles making $250,000 and for couples making $500,000. Biggest increase is 2.2 percent for singles, couples or heads of household making more than $2.5 million, $5 million and $3.4 million, respectively.
- Important to note that above increases are based on 2011 tax brackets, and that taxable income amounts in each bracket will be K-12 education and early childhood education
- For first four years, 30 percent of revenue would be allocated for education bond debt-service relief; of remaining funds, 85 percent would be for K-12 education and 15 percent would go to early childhood education programs. Beginning in 2016-17, all revenues go to K-12 and early childhood education.
- Creates California Education Trust Fund, into which all revenues must be deposited. Funds then are allocated through three different grants to schools:
Educational program grants (70 percent of K-12 allocations) - distributed on a per-pupil basis with students in higher grades receiving more than students in lower grades.
Low-income per-pupil grants (18 percent) allocated based on number of low-income students (those eligible for free meals) enrolled at each school.
Training, technology and teaching materials grants (12 percent), provided on a per-pupil basis and can be used for professional development, new technology or teaching materials.
- If approved, tax provisions would take effect Jan. 1, 2013. LAO estimates revenues of $10 to $11 billion annually, increasing in subsequent years.
- Other aspects:
Funds are in addition to Proposition 98 funding.
Prohibits funds from being used for salary or benefit increases for personnel, unless increases are provided to other like employees that are funded with non-trust fund monies.
Requires every district or office of education to create and publish an online budget for each school within its jurisdiction.
Local educational agencies must also seek public input on how to spend funds, and must explain how expenditures will improve educational outcomes and how outcomes will be measured.
Proponents say savings to general fund (due to debt-service payoff) would be $1.5 billion in 2012-13 and $3 billion in 2013-14, with increasing savings through 2016-17.
Measure cannot be amended by the Legislature; only by majority vote in statewide election.
Gov. Jerry Brown's proposal
Officially titled "Temporary Taxes to Fund Education, Guaranteed Local Public Safety Funding, Brown's measure has at least tacit support from the state's Democratic Party as well as from legislative leaders and the powerful California Teachers Association.
This measure would:
- Temporarily increases state sales tax by half a percent, to 8.6 percent, in years 2013 through 2016. Also temporarily raises income tax on residents making more than $250,000 per year.
10.3 percent tax rate on income between $250,000 and $300,000 for individuals; $340,000 and $408,000 for heads of household; and $500,000 and $600,000 for joint filers.
10.8 percent on income between $300,000 and $500,000 for individuals; $408,000 and $680,000 for heads of household; and in excess of $1 million for joint filers.
11.3 percent on incomes in excess of $500,000, $680,000 and $1 million, respectively.
- Measure amends the constitution to permanently dedicate sales tax and vehicle license fee revenues to local governments to pay for programs realigned to local control in 2011: court security, adult offenders and parolees, public safety grants, mental health services, substance abuse treatment, child welfare programs and adult protective services.
- Revenue estimates are $5.5 billion to $6.9 billion annually, with 40 percent to 50 percent going to K-12 schools and community colleges. Would eliminate nearly $2 billion a year for schools by shifting sales taxes to counties for realignment.
Amends constitution to explicitly exclude the 1.0625 cent sales tax revenues directed to realignment programs from the Proposition 98 guarantee.
Creates Education Protection Fund in which revenues would be deposited and dispersed. Appropriations from the account could be used for any educational purpose and would count toward the state meeting its Proposition 98 minimum guarantee.
Of the funds in the account, 89 percent would go to K-12 education and 11 percent to community colleges.
Funds for schools would be distributed the same way as existing general purpose per-pupil funding, except that no school district would receive less than $200 per pupil.
By excluding sales tax revenue for realignment from the Prop. 98 calculations beginning in 2011-12, the state no longer would have a 2011-12 settle-up obligation to pay current deferrals.