Proposition
30:
Options
and
Consequences
Proposition
30
(Prop.
30)
would
raise
approximately
$6
billion
in
annual
revenue
by
implementing
temporary
increases
in
sales
taxes
for
all
taxpayers
in
California
and
in
marginal
personal
income
tax
rates
for
high‐income
earners.
This
piece
outlines
the
elements
of
Prop.
30
and
discusses
the
consequences
for
taxpayers
and
public
programs
if
it
passes,
as
well
as
the
impact
of
its
failure.
The
2012‐2013
budget
for
the
State
of
California,
which
the
California
Legislature
passed
and
Governor
Brown
signed,
assumes
passage
of
Prop.
30
in
the
November
2012
General
Election.
The
Governor
and
his
coalition
of
supporters
gathered
the
required
number
of
signatures
to
place
the
measure
on
the
ballot
for
voters’
approval.
If
the
ballot
measure
fails,
the
budget
would
require
$6
billion
in
budget
cuts,
or
“trigger
cuts,”
to
education,
health,
social
services,
and
corrections.
Prop.
30
also
defines
the
rules
for
the
recent
realignment
of
certain
public
services
(incarceration
of
non‐violent,
non‐sexual,
non‐serious
adult
offenders;
supervising
parolees;
providing
mental
health
and
substance
abuse
treatment
services;
and
foster
care
and
child
welfare
services)
from
the
state
to
the
counties.1
Taken
together,
the
effects
this
ballot
measure
will
meaningfully
affect
many
Californians
regardless
of
whether
it
passes
or
fails.
Taxes
The
measure
would
raise
the
sales
tax
by
one‐quarter
cent
per
dollar,
from
7.25%
to
7.5%,
from
2013
to
2016,
and
it
would
raise
the
personal
income
tax
rates
of
families
earning
$500,000
or
more
(or
$250,000
or
more
for
individuals)
an
additional
1%‐3%,
depending
on
their
income,
from
2012
through
2018.2
The
increased
income
tax
rates
would
affect
approximately
1%
of
California
personal
income
tax
filers.3
The
tax
increases
would
raise
approximately
$6
billion
in
revenue
from
2012‐2013
through
2016‐2017,
while
it
would
raise
smaller
revenues
thereafter
through
2018‐2019.
However,
estimating
revenues
from
the
personal
income
taxes
of
high
earners
is
difficult
given
the
fact
that
a
larger
share
of
their
income
is
investment
and
business
income,
which
tends
to
be
more
variable
than
salaries
and
wages.4
Programs
If
voters
approve
Proposition
30,
revenues
from
the
measure
would
be
devoted
to
the
General
Fund,
the
state’s
main
operating
account,
which
supports
public
schools,
public
universities,
health
programs,
social
services,
and
corrections.
Since
Proposition
98
requires
a
certain
amount
of
state
spending
to
be
devoted
to
education,
a
large
share
of
the
revenue
generated
from
Prop.
30
would
be
allocated
to
these
programs.
Prop.
30
revenues
for
education
would
be
deposited
1
Legislative
Analyst’s
Office.
Available
at:
http://www.lao.ca.gov/reports/2011/stadm/realignment/realignment_081911.aspx
2
Taxpayers
filing
jointly
who
earn
between
$500,000
and
$600,000
would
pay
an
addition
1%,
raising
their
marginal
state
income
tax
rate
from
9.3%
to
10.3%;
those
earning
between
$600,000
and
$1
million
would
see
an
increase
of
2%
in
their
marginal
rate,
bringing
it
to
11.3%,
and
those
earning
more
than
$1
million
would
experience
a
3%
increase,
yielding
a
marginal
rate
of
12.3%.
3
Legislative
Analyst’s
Office.
Available
at:
http://www.lao.ca.gov/ballot/2012/30_11_2012.aspx
4
Ibid.
into
a
newly
established
Education
Protection
Account,
of
which
89%
of
funds
are
dedicated
to
public
schools
and
11%
to
community
colleges.5
“Trigger”
Spending
Cuts
If
Prop.
30
fails
to
pass,
the
2012‐2013
budget
requires
state
spending
reductions
of
$6
billion.
The
vast
majority
of
these
cuts,
roughly
$5.4
billion
would
be
to
K‐12
education
and
community
colleges,
which
is
the
funding
decrease
equivalent
of
three
weeks
of
instruction
in
K‐12
schools.6
Without
these
cuts,
the
state
already
had
one
of
the
lowest
public
education
expenditures
in
the
US.
In
2010‐11,
California
ranked
46th
out
of
the
50
states
in
K‐12
spending
per
student,
and
would
have
to
spend
an
additional
$17.3
billion
on
education
to
reach
the
national
average.7
Additionally,
California
ranked
50th
for
student
to
teacher
ratios
at
20.5
students
per
teacher;
the
national
average
was
13.8.8
Another
$500
million
will
be
cut
from
higher
education,
$250
million
from
both
the
University
of
California
(UC)
and
California
State
University
systems,
if
voters
reject
the
ballot
measure.9
The
UC
Board
of
Regents,
which
oversees
the
UC
system,
has
warned
that
it
may
raise
tuition
as
much
as
20%
if
Prop.
30
fails;10
undergraduate
resident
tuition
has
already
more
than
doubled
between
2004‐05
and
2011‐12,
from
$6,573
to
$13,910.
(See
appendix
with
chart
displaying
trends
in
UCLA
tuition
from
2004‐2005
to
2011‐2012.)
Other
programs
that
would
see
cuts
include
the
Department
of
Developmental
Services
($50m),
city
police
department
grants
($20m),
CalFire
($10m),
Department
of
Water
Resources
flood
control
programs
($7m),
local
water
safety
patrol
grants
($5m),
Department
of
Fish
and
Game
($4m),
Department
of
Parks
and
Recreation
($2m),
and
DOJ
law
enforcement
programs
($1m).11
Rules
for
Realignment
Financing
In
2011,
the
state
transferred
responsibility
for
a
variety
of
public
services
from
the
state
to
county
governments,
also
known
as
the
2011
Realignment.
These
services
include
incarceration
of
non‐violent,
non‐sexual,
non‐serious
adult
offenders;
supervising
parolees;
providing
mental
health
and
substance
abuse
treatment
service;
and
child
welfare
and
foster
care
services.
To
fund
the
local
administration
of
these
services,
the
state
transferred
approximately
$6
billion
in
state
tax
dollars
annually
to
county
and
local
governments.
Most
of
these
funds
would
be
from
sales
tax
revenues.12
Prop.
30
also
establishes
the
following
rules
regarding
Realignment
funds
and
relations
between
state
and
local
governments:
5
Ibid.
Enacted
state
budget.
Available
at:
http://www.ebudget.ca.gov/pdf/Enacted/BudgetSummary/Kthru12Education.pdf)
7
http://cbp.org/pdfs/2011/111012_Decade_of_Disinvestment_%20SFF.pdf
8
Ibid.
9
Legislative
Analyst’s
Office.
Available
at:
http://www.lao.ca.gov/ballot/2012/30_11_2012.aspx
10
LA
Times.
Available
at:
http://www.latimes.com/news/local/la‐me‐0719‐uc‐regents‐
20120719,0,5296805.story
11
Ibid.
12
Ibid.
6
•
Requires
the
state
to
continue
providing
the
funds
it
redirected
to
local
governments
in
the
realignment
of
services
in
2011.
•
Precludes
funds
that
are
redirected
from
the
state
to
local
governments
for
Realignment
programs
from
being
included
in
the
pool
of
state
funds
used
to
calculate
the
minimum
state
level
of
spending
on
education.
•
Prohibits
counties
from
being
required
to
implement
any
future
state
laws
that
increase
the
local
cost
of
administering
program
responsibilities
transferred
in
2011
without
receiving
adequate
additional
funding
from
the
state.
•
Requires
the
state
to
pay
a
share
of
any
increase
in
the
cost
of
administering
transferred
program
responsibilities
that
result
from
federal
court
actions
or
federal
regulations.
•
Prevents
the
state
from
being
required,
under
current
law
regarding
state
mandates
on
local
governments,
to
provide
additional
reimbursement
funding
for
the
2011
realignment.
•
Ends
state
reimbursement
of
local
costs
incurred
in
complying
with
the
Ralph
M.
Brown
Act,
which
established
open
meeting
rules
for
local
legislative
bodies.
It
remains
unclear
what
overall
effect
these
changes
will
have
on
both
state
and
local
finances
because
some
of
these
actions
will
serve
to
shift
costs
from
local
governments
to
the
state,
and
others
do
the
opposite.
Proposition
38
Proposition
38
is
another
measure
that
will
appear
on
the
ballot
with
Prop.
30
in
November
2012.
Prop.
38
would
also
raise
marginal
personal
income
tax
rates
to
pay
for
education
programs,
and
to
make
payments
on
the
state
debt.
Prominently,
this
measure
raises
marginal
personal
income
taxes
for
all
filers
except
for
those
in
the
lowest
tax
bracket
(at
or
below
$7,316
for
an
individual
or
$14,632
for
families),
with
increases
ranging
from
0.4%
to
2.2%
as
family
income
increases
from
$14,632
($7,316
for
individuals)
to
above
$5
million
($2.5
million
for
individuals).
Therefore,
this
measure
would
affect
far
more
people,
including
those
with
lower
and
moderate
incomes.
Prop.
38
raises
marginal
personal
income
tax
rates
for
a
period
of
12
years.
Pursuant
to
California
law,
if
a
majority
of
voters
approve
both
Prop.
38
and
Prop.
30,
whichever
measure
gets
more
“yes”
votes
will
prevail
and
be
implemented.
Consequently,
if
Prop.
38
receives
more
“yes”
votes
than
Prop.
30,
the
budget
cuts
“triggered”
by
the
failure
of
Prop.
30
will
still
go
into
effect
in
accordance
with
the
2012‐2013
budget,
despite
the
revenues
that
would
be
raised
through
Prop.
38.
However,
the
Legislature
and
Governor
could
revise
the
budget
to
adjust
for
these
new
revenues.
Given
this
confusing
combination
of
outcomes,
Californians
should
be
aware
of
the
effects
of
their
votes,
namely
that
a
“yes”
vote
for
the
tax
increases
in
Prop.
38
will
not
prevent
the
automatic
budget
cuts
that
will
occur
if
Prop.
30
fails.
Further,
while
voting
“no”
on
both
measures
would
be
a
vote
to
both
prevent
all
of
the
proposed
tax
increases
and
enact
the
“trigger”
budget
cuts.
Voters
should
understand
that
voting
“yes”
on
both
Prop.
30
and
Prop.
38
is
not
a
vote
to
enact
both
measures,
because
only
the
measure
that
receives
more
“yes”
votes
will
be
enacted
if
they
both
receive
majority
support.
So,
a
vote
in
favor
of
both
items
would
imply
indifference
about
which
of
the
two
is
enacted,
despite
the
substantially
different
effects
of
those
two
outcomes.
Summary
Proposition
30
would
add
an
estimated
$6
billion
in
annual
revenue
to
the
General
Fund
over
the
next
several
years,
alleviating
considerable
pressure
on
the
state
budget,
which
has
persistently
run
deficits
in
recent
years.
Moreover,
the
Governor
and
Legislature
have
raised
the
stakes
of
this
referendum
by
including
automatic
budget
cuts
equal
to
the
amount
revenue
the
measure
is
estimated
to
raise
if
it
passes.
If
Prop.
30
fails,
education
programs
will
see
particularly
substantial
cuts,
potentially
placing
great
strain
on
local
school
districts’
budgets.
These
drastic
cuts
may
affect
the
services
that
California
public
school
children
receive,
as
well
as
cause
tuition
to
rise
for
many
college
students
at
California’s
public
universities.
The
ballot
measure
also
guarantees
a
funding
stream
for
local
governments
to
support
programs
that
have
been
shifted
from
the
state
to
counties
as
a
result
of
the
2011
realignment.
The
elements
related
to
Realignment
are
of
great
importance
to
county
governments
as
they
strive
to
effectively
deliver
realigned
services,
while
also
struggling
with
their
own
budget
pressures.
Appendix
UCLA
Tuition
Increases
in
Recent
Years13
$16,000.00
160.0%
139.0%
$14,000.00
120.0%
103.9%
$12,000.00
100.0%
67.3%
$10,000.00
80.0%
60.0%
42.8%
$8,000.00
$6,000.00
140.0%
13.0%
21.4%
22.7%
32.5%
40.0%
20.0%
$4,000.00
0.0%
2004-05
2005-06
2006-07
2007-08
Undergraduate Tuition (Residents)
2008-09
2009-10
2010-11
2011-12
% Cumulative Tuition Increase
13
All
UC
campuses
have
the
same
undergraduate
tuition
with
minor
variations
in
campus
fees.
Available
at:
http://www.registrar.ucla.edu/archive/