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Initiative Update:
Governor and Molly Munger Complete Signature-Gathering for Tax Measures

Proponents of two initiatives aimed at raising taxes in California have finished gathering signatures.

Billionaire civil rights attorney Molly Munger announced that her group, "Our Children, Our Future," began submitting signatures May 2. Governor Jerry Brown also announced this week that he has finished gathering signatures and will submit them soon. The governor needs 807,615 signatures to qualify his initiative, while Ms. Munger needs only 504,000, because her measure would not amend the state constitution.

Both proponents expressed confidence that they have enough valid signatures to qualify their measures for the November ballot.

While both of the initiatives would increase personal income taxes, the key differences between the governor's initiative and Ms. Munger's are that the governor's plan includes a sales tax hike as well as an income tax increase, and Ms. Munger proposes to increase personal income taxes for 12 years on almost all taxpayers, while the governor is proposing a seven-year tax increase on those with taxable income over $250,000.

The key provisions of the measures:


Initiative

Key Provisions

Governor Jerry Brown's Temporary Sales and Income Tax Increase
(12-0009)

Personal Income Tax Increase. Increases the personal income tax rate 1 percent for individual filers with taxable income above $250,000 ($340,000 for HOH); 2 percent for taxable income above $300,000 ($408,000 for HOH); and 3 percent for taxable income above $500,000 ($680,000 for HOH). Amounts for joint filers would be double the amounts for single filers. Takes effect for the 2012 tax year and expires after seven years.

Sales and Use Tax Increase.
Increases the state sales and use tax rate by 0.25 percentage points from January 1, 2013 through January 1, 2017.

Molly Munger's Income Tax Increase
(11-0100)

Personal Income Tax Increase. Adds a graduated income tax surcharge on top of the existing PIT and the 1 percent "millionaire's tax." A single filer would pay 0.4 percent on income between $7,316 and $17,346; $368 plus 1.6 percent for income between $48,029 and $100,000; $18,649 plus 2.1 percent for income between $1 million and $2.5 million; and $50,149 plus 2.2 percent for income above $2.5 million.

Money for Schools. Revenue would be earmarked for various education-related spending, and the revenue would be exempted from the state constitution's appropriations limit, and from the Proposition 98 formula for establishing minimum general fund spending for schools.

Sunset Provision. The taxes would expire December 31, 2024, unless voters approve an extension.

 

The California Republican Party and the Howard Jarvis Taxpayers Association kicked off a campaign May 3 to oppose the governor's tax increase. (Sources: The Sacramento Bee, May 2; KCRA-TV, May 3; and the San Jose Mercury News, May 3.)

In other initiative news:

California Forward Completes Signature-Gathering, as Unions Announce Strong Opposition. California Forward announced this week that it has completed gathering signatures for an initiative that would effectively ban tax reductions in this state. As the group made its announcement, California's major public employee labor unions sent a letter urging the organization to halt efforts on the initiative, and there is significant pressure on the group not to submit the signatures.

CalTax opposes the initiative because of the provision that would prohibit the Legislature from reducing taxes or increasing spending by $25 million or more unless an offsetting revenue increase or spending reduction was made. The labor unions' opposition is based on other provisions of the wide-ranging measure.

In their letter, the unions stated:

"We have pointed out numerous substantive and drafting flaws in the measure, an analysis that many Board members share. At a time when we should be focused on recovery, locking in these flawed provision through Constitutional Amendments or a 2/3rds vote requirement in order to amend other provisions would permanently scar California.

"Allowing this initiative to continue will force our organizations into forging an opposition campaign. We would have no choice. We cannot stand idly by and allow this measure to threaten subsistence programs for the poor, workers' rights, clean air and water, or the future of California."

The letter was signed by the California Teachers Association, California Nurses Association, California Labor Federation, California Federation of Teachers, California Faculty Association, California Professional Firefighters, California Tax Reform Association, Service Employees International Union, and many others.

The unions also released a draft flyer stating: "A proposed ballot initiative drafted by former politicians and funded by an out-of-state billionaire says it's about 'reform' but it's really a stealth attack on working people's priorities." The flyer concluded: "Don't Take California Backward. Vote NO … !"

California Forward spokesman Roger Salazar issued a statement May 3 saying supporters have collected enough signatures to qualify the measure for the November ballot, and will begin turning them in on a staggered schedule "to allow the maximum time for negotiations in hopes that a full deal can be reached."

"We recognize the concerns raised by some parties and interests and have worked in earnest to reach a possible compromise," the statement said. "While a workable framework is on the table, an agreement has not yet been realized." If a compromise requires a new initiative, the measure could not be qualified in time for the November ballot. A legislative compromise could be enacted in less time, but it is not clear what provisions of the California Forward plan have enough support to win the Legislature's approval.

Union-Affiliated Group Reports on Concerns With Proposition 29. The union-affiliated California Budget Project released a report this week expressing reservations with Proposition 29, the tobacco tax increase initiative on the June ballot. While the group said it does not oppose or support the measure, its report noted that "increasing the cigarette tax would have a disproportionate impact on low-income Californians because they spend a larger share of their incomes on tobacco products," and that the revenue would be used to fund the same types of research that already receive billions of dollars a year in federal funding. "Given this significant federal investment, voters must consider whether substantially increasing state funding for cancer research is an appropriate use of scarce state resources, particularly in light of the deep cuts to state spending for basic services that policymakers have made in recent years."
The report also expresses concern that if Proposition 29 is approved, lawmakers and voters "may feel less inclined to subsequently approve additional revenues regardless of the purpose."

The Legislature held an informational hearing on Proposition 29 on May 1, with supporters and opponents testifying before a joint meeting of the Assembly Health Committee and the Assembly Revenue and Taxation Committee. Former Senator Don Perata, the main proponent of Proposition 29, was in the audience but did not speak on behalf of his initiative.

During the hearing, Assemblywoman Susan Bonilla noted that the initiative would not provide any funding for treatment of cancer patients, and indicated that cancer treatment for uninsured and low-income Californians would be a better use of the tax revenue than the new bureaucracy that would receive funding under Proposition 29.

Signatures Submitted to Qualify Genetically Modified Foods Initiative. Proponents of an initiative (11-0099) that would require manufacturers and retailers to identify food that has been genetically modified submitted 971,126 signatures May 2. Proponents believe that even after some signatures are thrown out during the state's verification process, there still will be far more than the 550,000 valid signatures required to qualify for the November ballot.

A spokeswoman for the California Right to Know campaign said: "Right now, we're polling at over 90 percent positive feedback. People are for this bill in the state."

The initiative would require manufacturers to label most products that contain genetically engineered ingredients. Many common household foods contain such ingredients. Food served at restaurants, alcohol, and food fed to animals would be exempt. Another component of the initiative would give consumers the ability to sue a food manufacturer or retailer if they believe a product is mislabeled.

Bill Dombrowski, president of the California Retailers Association, said: "This measure is not about the 'right to know,' it's about the right to sue. It creates a whole new category of lawsuits that will allow lawyers to get rich by suing small family farmers, grocers, retailers and other businesses."

Opponents of the measure include the California Farm Bureau, the Grocery Manufacturers Association, CalChamber, the California Retailers Association and the California League of Food Processors. (Source: Long Beach Press-Telegram, May 3.)

 

May 4, 2012
2012 California Taxpayers Association. All Rights Reserved.