KQED News and The California Report
Governor Jerry Brown's Tax Increases for Education and Public Safety
At a Glance
- Proposition 30 raises personal income tax rate on individuals making more than $250,000 a year and couples making more than $500,000 a year for the next seven years.
- It raises state sales tax by a quarter of a cent for four years.
- Those additional tax dollars would go to K-12 schools and community colleges.
- The measure also guarantees local governments will receive a basic level of funding each year to implement realignment.
- Revenue from Prop. 30 is built into this year's budget. If it fails, education and public safety programs would lose $5.9 billion between now and next July.
- Budget Impact: The Legislative Analyst's Office estimates the tax increases would bring in an estimated $6 billion annually for seven years.
After the Legislature defeated Governor Jerry Brown's plan to increase income taxes he pledged to take the decision to the voters — Proposition 30 is the result. This year's state budget counts on the money from this proposition.
What Prop. 30 Changes
- Schools — Establishes a new fund: the Education Protection Account. While the fund is technically part of the general fund, the money there can only be spent on K-12 schools and community colleges.
- Public Safety — Guarantees local governments will have funding each year for public safety services realignment, which is the process of transferring inmates from state prisons to local jails. It does so by enshrining public safety funds in the California constitution.
The Tax Hikes
Raises the income tax rate on individuals who earn more than $250,000 a year and couples who earn more than $500,000 a year. The income tax rate will go up on a sliding scale, from a one percent increase at the low end to a three percent hike for the highest earners. The tax lasts seven years. The measure also raises the state sales tax by a quarter of a cent for four years.
Where the Money Goes
It's estimated the taxes would bring in $6 billion for this year's budget. The money flows into the Education Protection Account, in the general fund. That additional money helps the state meet its education funding requirement, under Proposition 98 — that sends about 39 percent of general fund money to K-12 schools and community colleges. The California Department of Finance estimates the measure would yield an additional $2.9 billion for education next year.
What Happens if Prop. 30 Fails
This year's state budget includes "trigger cuts" if the measure fails. K-12 schools and community colleges would lose $5.35 billion. The University of California and California State University systems would each lose $250 million. City police departments, CalFire, the park system, flood control programs and others would also lose several million dollars each.
What Happens if Props 30 and 38 Both Pass
The state constitution says that when income tax measures conflict, the one with the most votes prevails. So if Prop. 38 passes with more votes, income tax rates would increase according to Prop. 38 and trigger Prop. 30's cuts. The Franchise Tax Board or the courts would have to step in to determine whether Prop. 30's sales tax increase or guarantee of realignment funding would still be enacted.
Arguments For and Against:
Californians who have prospered should give more to sustain public schools. They also say the measure establishes the first guarantee for public safety funding in the California Constitution.
Governor Brown, the League of Women Voters, the California Teachers Association, the California Federation of Teachers, SEIU Local 1000 and the Democratic State Central Committee support the measure.
the measure is a large tax increase, hurts small business and doesn't guarantee new money for education beyond existing general fund spending.
Main opponents are the Howard Jarvis Taxpayers Association and Joel Fox, president of the Small Business Action Committee and author of political blog Fox&Hounds.