Brown, CFT cut deal for NovemberHigher income tax on rich, lower sales tax
Now there are two.
Gov. Jerry Brown is halfway to having only one tax initiative on the November ballot, now that a coalition led by the California Federation of Teachers has agreed to merge its proposed tax with Brown’s in a deal that will raise more money from the wealthiest 1 percent for a longer period – with a portion of the extra money likely going to the state’s community colleges and universities.
The agreement, announced Wednesday, leaves civil rights attorney Molly Munger’s $10 billion income tax initiative, devoted primarily to early childhood education and K-12 schools, as the remaining potential competitor on the ballot. A spokesman for Munger’s Our Children, Our Future initiative insisted that the effort to collect signatures to qualify for the ballot would continue, but there will be renewed pressure on her and her ally, the state PTA, to halt the campaign or on Brown to reach an accommodation with them. Key business groups – the California Chamber of Commerce and the Business Roundtable – have already come out in opposition to Our Children, Our Future, while not yet endorsing Brown’s plan. (Business will wait to see if the Legislature passes pension reform, its top priority.)
In grafting the CFT and the Courage Campaign’s Millionaire’s Tax of 2012 onto Brown’s Schools & Local Public Safety Act, the text of the governor’s initiative will remain the same; only four numbers will change. Brown agreed to:
- Halve the sales tax increase from ½ to ¼ percent, reducing a regressive tax on the poor and middle class. It will run four years, starting Jan. 1;
- Leave the income tax increase on joint filers earning $500,000 at 1 percent, but raise the tax on joint filers earning $600,000 by 2 percentage points instead of 1.5 percentage points, and the tax on millionaires by 3 percentage points instead of 2 percentage points;
- Extend the income tax to seven years, instead of only five years.
Brown had projected that his tax would raise as much as $6.9 billion per year, but the Legislative Analyst said that might be as much as $2 billion too high; the Department of Finance is saying the new initiative could raise between $7.1 billion and $9 billion, an additional $2 billion.
The CFT’s initiative had promised that 40 percent of its tax would be divided equally among community colleges, CSU, and UC, with 20 percent committed to K-12 schools and the rest toward social services and public safety. There’s no explicit commitment to higher education in the governor’s initiative, which would divert a portion of revenues from the sales tax and vehicle license fees to pay for public safety and some social services now the responsibility of counties and local communities. The rest would shore up the General Fund. But the CFT is expected to press for additional money for higher ed through the budget process – and call in its UOMEs.
It will take a massive effort to collect more than 1 million signatures by early May to qualify the revised initiative for the November ballot. For insurance, Brown will also continue collecting signatures for his current initiative, in case the new one comes up short.
CFT’s initiative had outpolled the governor’s initiative, with 63 percent support vs 58 percent, in a Field Poll last month; Munger’s got slightly under 50 percent. But the CFT, the smaller of the two teachers unions, didn’t have a lot of money to wage a protracted campaign, especially if business interests were to throw money to defeat it. It also didn’t want to be blamed if a confused electorate defeated all of the competing initiatives.
But Brown, too, had reason to compromise. In a Public Policy Institute of California poll this month, the governor’s initiative drew only 52 percent support, down from 68 and 62 percent support in two earlier polls.
Recently, there was an escalation of words between Brown and the CFT after the governor called for the union and Munger to abandon their initiatives.
“It’s not going to happen,” CFT President Joshua Pechthalt said at a news conference last week. He vowed that the union was poised to spend another $1 million for its signature drive.
Earlier this year, Brown had paid a personal visit to Pechthalt’s home in Los Angeles to try to persuade the union to give up. He told the Sacramento Bee editorial board that he lingered to help Pechthalt’s 12-year-old daughter with a school assignment.
In the long run, it worked – a reminder to Brown how important it is to do your homework – or at least someone else’s.