By Alex Emslie
A statewide special election aimed at fixing California’s broken budget will be held May 19. Several state programs, including funding for kindergarten through community college institutions, will be directly affected by the outcome of this special election.
The California Legislature and the governor passed an emergency tax increase package in February to balance the budgets for the fiscal years 2009 and 2010. Three separate taxes were increased in the measure.
Sales taxes were raised by one percent — from eight cents on the dollar to nine. Vehicle licensing fees were raised from 0.65 percent of the vehicle’s value to 1.15 percent. Both of these tax increases will remain in effect through the 2011 fiscal year, regardless of whether Proposition 1A passes.
Personal income taxes were also raised as part of the emergency tax measure by 0.25 percent for all income brackets. The amount of personal income taxes Californians are obligated to pay ranges from one to 10.3 percent depending on income. Those in higher income brackets paying a higher percentage. This measure affects the 2009 and 2010 income tax returns.
Proposition 1A would extend the measure through 2013, generating an estimated $16 billion for the state’s general fund, according to the Legislative Analyst’s Office. Jenifer Warren of The LA Times described the LAO as “a snoop paid by the Legislature to prowl the massive state budget and bureaucracy in search of waste, bad ideas, and dirty tricks.”
The measure would also require more money to be funneled into California’s Budget Stabilization — or “rainy day” — Fund. According to the language of Proposition 58, the California Balanced Budget Act, the fund can be raided by the governor or legislators for any purpose through the passage of law.
Proposition 1A would also limit the governor’s ability to cancel the transfer of money into the fund, which happened this year due to the budget deficit.
California voters passed Proposition 98 in 1988, mandating a minimum level of funding for K-14. The state uses one of three tests to determine the minimum amount paid to schools each year. If the state utilizes Test 3, which provides less money to schools, it is required to make up the difference in following years in the form of “maintenance payments.”
Proposition 1B would release $9.3 billion from the BSF over five or six years to close the funding gap that has accumulated between the amount of money required by Proposition 98 and the amount actually given to K-14 schools.
“Prop. 1B corrects the attempted unlawful manipulation of the state’s minimum school funding law and repays $9.3 billion that is owed to education,” according to the California Teachers Association’s endorsement of the measure.
Proposition 1A must pass in order for 1B to have any effect, but 1A does not require passage of 1B. The LA times endorses all ballot provisions except for 1B because it is an example of “ballot-box budgeting” that doesn’t add money to the general fund.
Current law dictates California Lottery profits go directly to educational institutions including K-14 as well as CSU and UC colleges. Proposition 1C would allow the state to borrow $5 billion in future lottery profits in order to balance the budget. The ballot measure dictates that Proposition 98 be expanded to make up for the loss of educational funding incurred through the passage of Proposition 1C.
In 1998 voters passed Proposition 10, the California Children and Families Act, allocating a “sin tax” of fifty cent increase per pack of cigarettes to First 5 California, a commission supporting early childhood education. The commission uses 20 percent of these funds to implement school readiness, health care access and programs for new parents.
The remaining 80 percent is distributed to 58 County Commissions throughout the state whose programs include family functioning, child development, and child health. Proposition 1D would reallocate a significant portion of the fifty cent cigarette tax directly into the state general fund, cutting $608 million from early child development programs in the 2009 – 10 fiscal year and $268 million in following years until 2014.
Proposition 63, the Mental Health Services Act, was passed in November 2004. Children and adults lacking private health insurance that covers mental illness can benefit from services under Proposition 63.
Under the act, five major programs are financially supported by a one percent personal income tax surcharge required from California residents earning $1 million or more taxable income. Revenues have varied annually from $900 million to $1.5 billion, according to the LAO.
The Early Periodic Screening, Diagnosis and Treatment program is a federally mandated mental health initiative which is only partially funded by the federal government. Proposition 1E would reallocate $226.7 million from the Proposition 63 fund to the EPSDT fund. This would offset costs that would otherwise be borne by the general fund, thus generating a savings of approximately $250 million for the state.
However, Proposition 1E would make less money available for mental health programs, which could cause the state to incur future fiscal problems due to increased homelessness and higher prison populations.
Legislators in California currently make approximately $116,000 per year, the governor makes $212,000. Most elected officials’ salaries are set by the California Citizens Compensation Commission, a board of seven members appointed by the governor. Proposition 1F would restrict the commission from raising salaries in projected deficit years. A recent poll by the Public Policy Institute of California shows a compelling majority in favor of Proposition 1F — 81 percent.