California governor takes risk with proposal to raise taxes

LOS ANGELES — There’s something cruel yet comical in the way that California voters continually elect Democrats and then forbid them from raising taxes.

The latest example of the California electorate’s twisted sense of humor could come with two Nov. 6 ballot measures that would attack the state’s financial crisis by hiking taxes that Gov. Jerry Brown, a Democrat, insists are needed to avoid deep cuts to public services, mainly education.

The latest Field Poll shows that one of the measures is sinking fast, but the second, known as Proposition 30, is hanging tough with 51 percent support, largely because of ardent lobbying from the state’s powerful public-sector unions and from Mr. Brown, who is staking his political reputation on the measure’s passage. Proposition 30 would raise an estimated $6 billion by increasing the state income tax for seven years by 1 percent to 3 percent on single filers earning $250,000 or more or couples filing joint returns making $500,000 or more. The measure also would raise the state sales tax, already the highest in the nation, from 7.25 percent to 7.50 percent for a four-year period.

“A lot of this depends on the credibility of Gov. Brown. He’s basically taken ownership of Proposition 30,” said Mark DiCamillo, director of the Field Poll in San Francisco. “Brown is viewed quite positively, which is what gives [Proposition 30] a chance and why it’s hanging in there.”

Mr. Brown last week launched a whistle-stop tour of college campuses aimed at bucking up the teetering ballot measure. In a speech at the University of California, Los Angeles, he told supporters that “a lot is riding on this election.”

“We’ve cut schools for too long,” Mr. Brown said. “Proposition 30 is an opportunity for the people themselves not only to fix California, but to send a message to the rest of the country that we, as a people, can invest together in our schools, community colleges and the great University of California.”

But the headwinds are strong in the state that basically launched the country’s grass-roots anti-tax voter movement with Howard Jarvis and the Proposition 13 vote of 1978. The governor has even enlisted his dog, a Pembroke Welsh corgi named Sutter, who is scheduled to make 30 campaign stops to greet volunteers.

Dire straits

Proponents insist the revenue projected from Proposition 30 is needed to help pull the state out of its dire fiscal straits by closing a $6 billion “budget gap.” A loss at the polls would trigger automatic cuts to education that Democrats say would result in a shorter K-12 school year and higher tuition for college students.

Overall, officials say, California has cut $2.5 billion in funding to higher education since 2008.

Critics aren’t buying it. They say Democrats are bluffing and that the “trigger cuts” amount to a scare tactic that lawmakers will never enforce, while Mr. Brown insists he will follow through with the reductions. The governor and the Democrat-controlled legislature, they warn, will face irresistible temptations to use the revenue from Proposition 30 for their pet projects, not for the state’s schools.

The smaller but scrappy “No on 30” campaign contends that the measure will strangle the state’s already weak economic recovery by speeding up the exodus of taxpayers and small businesses to lower-tax states. Leaning too heavily on top earners has contributed to the state’s boom-and-bust revenue cycle, critics say, because the taxpayer base is too narrow and therefore more volatile.

“The problem is not that working taxpayers aren’t paying enough, the problem is there aren’t enough working taxpayers,” California Republican Party Chairman Tom Del Beccaro said. “The private economy can’t afford to have more money taken out to give to the government.”

Persuading California voters to back higher taxes is always tough. Voters have rejected nine of the past 10 tax initiatives, including a measure in June that would have raised the tobacco tax by $1 per pack in order to fund cancer research.

Under California law, any tax increase must be approved by the voters, unless it can win a two-thirds vote of both legislative houses. Republicans have managed to capture just enough seats in the Assembly and Senate to block tax increases, forcing Democrats to take their proposals to the voters.

Fighting for attention

Another problem is that Proposition 30 is vying for attention with other ballot measures. Labor unions have been forced to divert funding from Proposition 30 to fight Proposition 32, a “paycheck protection” measure that would ban automatic payroll deductions for union fees.

The “Yes on 30” campaign also spent valuable time and money early to beat back Proposition 38, a competing tax-hike measure sponsored by lawyer Molly Munger, daughter of billionaire Berkshire Hathaway Inc. Vice President Charles Munger.

Led by the California Teachers Association, unions have been the biggest donors to the Proposition 30 campaign, which had raised $51.8 million as of Oct. 14. The opposing campaign had raised $30.8 million, mainly from Charles Munger Jr., a Stanford University scientist and son of the billionaire, who has sunk $21.9 million into defeating Propositions 30 and 32.

The biggest hurdle facing Proposition 30 may be electoral apathy. Given the state’s Democratic Party dominance, the presidential and Senate contests are all but decided, meaning that there is no high-profile race to draw voters to the polls.

“There’s not much going on in California. You wonder how many people are actually going to turn out, and Proposition 30 needs high turnout to win,” said Sacramento political analyst Tony Quinn. “People are in a negative mood in California — times are not great. There’s a lot of feeling that, ’I’m just going to vote no.’ “