California Proposition 38, State Income Tax Increase to Support Education (2012)
Two versions of the initiative were submitted, and they differ in some respects. However, in general, if enacted, the initiative will:
- Increase state income tax rates for most Californians, resulting in increased revenues to the state of about $10 billion a year.
- The state income tax increase would end after 12 years, unless voters reauthorize it.
- Earmark most of the new revenue of $10 billion for public school districts and early childhood development programs.
Molly Munger is the primary advocate behind the proposed initiative. Munger has indicated that she is willing to fund the approximately $2 million cost of gathering the signatures to qualify the measure for the ballot. As of late March 2012, she had donated $3.4 million to the campaign.
Competing tax initiatives
The Munger tax increase initiative is one of several competing tax increase measures headed for the November 6, 2012 ballot. Others include:
- Gov. Jerry Brown's Tax Increase Initiative, which has now merged with the "Millionaire's Tax" into the Sales and Income Tax Increase Initiative.
- A Tax on Oil Initiative
- An effort to collect more Income Taxes from Out-of-State Businesses.
Supporters of the Munger proposal and supporters of the Jerry Brown/Millionaire's Tax Merger Initiative are viewed by many pundits and political operatives in California as competing with each other. Why? Because it is conventional wisdom, buoyed by polls done in the spring of 2012, that if more than one tax increase initiative is on the November 2012 ballot, they collectively have a greater chance of losing than if just one tax hike proposition adorns that ballot.
- Steve Glazer, who is working for the Jerry Brown tax hike: "When voters are offered choices among competing [tax] measures, it depresses the support for each of them. The likely result will be all of them failing."
- Darrell Steinberg, the President Pro Tem of the California State Senate: "The real problem is that if you have multiple measures on the ballot, you dramatically increase the likelihood that they will all fail. That’s not an acceptable outcome."
- Harold Meyerson, an op-ed columnist for the Washington Post, says, "...a look back at state history reveals numerous episodes in which Californians essentially championing the same cause have put rival measures on the same ballot, only to create a sea of voter confusion that doomed the proposals on election day."
Munger has come under fierce pressure to withdraw her initiative. Joe Mathews of Prop Zero describes the pressure thusly: "if she doesn't drop her measure, she'll find herself on the business end of an unrelenting campaign of personal attack."
As of early April, Munger, an experienced litigator and political activist, shows no tendency to budge. She says, "Under our proposal, virtually all the cuts that the schools have suffered in the last four years would all be restored—and under the governor's initiative, virtually none would be."
- "Increases personal income tax rates for annual earnings over $7,316 using sliding scale from .4% for lowest individual earners to 2.2% for individuals earning over $2.5 million, ending after twelve years. During first four years, 60% of revenues go to K-12 schools, 30% to repaying state debt, and 10% to early childhood programs. Thereafter, allocates 85% of revenues to K-12 schools, 15% to early childhood programs. Provides K-12 funds on schoolspecific, per-pupil basis, subject to local control, audits, and public input. Prohibits state from directing or using new funds."
Fiscal impact estimate:
- "Increased state personal income tax revenues beginning in 2013 and ending in 2024. Estimates of the revenue increases vary from $10 billion to $11 billion per fiscal year beginning in 2013-14, tending to increase over time. The 2012-13 revenue increase would be about half this amount. Until the end of 2016-17, 60 percent of revenues would be dedicated to K-12 education and 10 percent would be provided to early care and education programs. These allocations would supplement existing funding for these programs. In 2017-18 and subsequent years, 85 percent would be provided to K-12 education and 15 percent to early care and education. General Fund savings on debt-service costs of about $1.5 billion in 2012-13 and $3 billion in 2013-14, with savings tending to grow thereafter until the end of 2016-17. In 2015-16 and subsequent years with stronger growth in state personal income tax revenues, some of the revenues raised by this measure—several hundred million dollars per year— would be used for debt-service costs, resulting in state savings."
- "Increases personal income tax rates for annual earnings over $7,316 with a sliding scale that increases the tax rate from .4% for lowest individual earners to 2.2% for individuals earning over $2.5 million. Tax increase ends after twelve years. Allocates new revenues 85% to K-12 schools and 15% to preschools and child care. Provides K-12 funds on school-specific, per-pupil basis, subject to local control. Requires local education budgeting to be school-specific. Requires oversight, audits, and public input. Prohibits state from directing or using new funds."
Fiscal impact estimate:
- "Increased state personal income tax revenues beginning in 2013 and ending in 2024. Estimates of the revenue increases vary from $10 billion to $11 billion per year initially, tending to increase over time. The revenues would be dedicated to K-12 education (85 percent of the funds) and early care and education programs (15 percent) and would supplement existing funding for these programs. In years with stronger growth in state personal income tax revenues, some of the revenues raised by this measure—several hundred million dollars per year—would be used to pay education debt service costs, resulting in state savings."
- Molly Munger is the initiative's main financial backer. According to Munger, "We're going to get this on the ballot and we're going to win." In response to comparisons between her measure and the Jerry Brown Tax Increase Initiative, Munger said, "I don't think we'd have a very good functioning democracy if we always just did what one person at the top wanted. In fact, one of the reasons we have democracy is because that old method, which is to just do what the king says, led to some very bad decisions over time."
- The California State PTA supports the proposition.
Munger's proposal is opposed by supporters of Jerry Brown's tax hike proposal. Steve Glazer, an adviser to the governor, tweeted on February 5, "When u have competing tax measures on the ballot, voters make choice. Likely result- all lose and children u claim to be protecting lose."
David Kieffer of the SEIU said in late February 2012 that although he is sympathetic to the aims of the Munger proposal, its supporters should withdraw it from contention in favor of the Jerry Brown Tax Hike Initiative. Keiffer said, "From a public policy point of view, we're going to end up with a big mess, where three competing tax initiatives will collide at the ballot box and we won't get any of them passed."
Gov. Jerry Brown sat down with the editorial board of the San Francisco Chronicle in early March 2012 and argued that because the Munger Tax earmarks the money it would raise for education, it will do nothing to alleviate California's overall multibillion-dollar budget deficit.
The California Business Roundtable announced on March 8 that it opposes the measure. Jerry Carnahan of the group said, "We are aggressively moving forward to raise money and oppose these initiatives. We will ensure by the November election that the voters of California will understand their real impacts on our economy and jobs."
- See also: Polls, 2012 ballot measures
A Field Poll in February 2012 showed that a majority of likely voters oppose the measure. An internal poll paid for by backers of the Jerry Brown Tax Hike Initiative indicated that the Munger proposal had the least public support of the three tax hike measures that are headed for the November 6, 2012 ballot. That internal poll also suggested that if all three are on the ballot, none of them will win.,
|Date of Poll||Pollster||In favor||Opposed||Undecided||Number polled|
|February 14-18, 2012||Field||45%||48%||7%||344|
|March 14-19, 2012||By GQR & AV for USC Dornsife/LAT||32%||64%||4%||1,500|
|May 21-29, 2012||Field Poll||42%||43%||15%||710|
|June 21-July 2, 2012||Field Poll||46%||46%||8%||997|
|August 3-7, 2012||PACE/USC Rossier School of Education||40%||49%||11%||1,041|
|September 9-16, 2012||PPIC||45%||45%||11%||2,003|
|September 6-18, 2012||Field Poll||41%||44%||15%||902|
|September 17-23, 2012||USC Dornsife/Los Angeles Times||34%||52%||14%||1,504|
|October 7-10, 2012||California Business Roundtable||41.9%||45.9%||12.2%||830|
|October 11-15, 2012||Reason-Rupe||42%||52%||6%||696|
|October 14-21, 2012||PPIC||39%||53%||8%||2,006|
|October 21-28, 2012||California Business Roundtable||33.0%||54.1%||12.8%||2,115|
|October 17-30, 2012||Field Poll||34%||49%||17%||1,912|
Apart from polling that is specific to the language of the filed ballot initiative, other polling has been done to assess the attitude of Californians to paying higher taxes to support public education. In November 2011, a USC Dornsife/Los Angeles Times poll asked if likely voters favored increasing funding for schools even if that meant raising taxes. This poll found that 64% of state voters were in favor of increased taxes for higher education funding.
Path to the ballot
- See also: California signature requirements
- Roberta B. Johansen, James C. Harrison and Molly Munger submitted a letter requesting a ballot title for Version #11-0088 on November 30, 2011 and for Version #11-0100 on December 12.
- The ballot title and ballot summary for Version #11-0088 was issued by the Attorney General of California's office on February 13, 2012.
- The ballot title and ballot summary for Version #11-0100 was issued by the Attorney General of California's office on February 17, 2012.
- For either version, 504,760 valid signatures are required for qualification purposes.
- The 150-day circulation deadline for #11-0088 is July 12, 2012.
- The 150-day circulation deadline for #11-0100 is July 16, 2012.
- However, to qualify for the November 6, 2012 ballot, signatures must be submitted earlier than the 150-day deadlines. If the number of signatures submitted is such that the full-check verification method must be deployed, the signatures would have had to be turned in by March 2, 2012. For the random sampling method, signatures would have to be submitted by late April.
- Letter requesting a ballot title for Version #11-0088
- Letter requesting a ballot title for Version #11-0100
- Capitol Alert, "Molly Munger pledges to put her money into qualifying tax hike", February 6, 2012
- Sacramento Bee, "Molly Munger changes tax initiative to address budget deficit", December 23, 2011
- The Republic, "Passion for civil rights, desire to improve schools motivate Jerry Brown's rival for tax hikes", March 27, 2012
- Business Week, "Brown Reaches Deal With Union on Tax-Increase Compromise", March 15, 2012
- San Francisco Examiner, "Tax tussles heading to ballot box", February 16, 2012
- Los Angeles Times, "California Senate leader calls for paring tax proposals on ballot", February 16, 2012
- Los Angeles Times, "California's glut of tax-hike initiatives", December 12, 2011
- Prop Zero, "The Munger Games", March 17, 2012
- Wall Street Journal, "California Democrats Duel Over Taxes, Budget", April 1, 2012
- San Francisco Chronicle, "Tax measures to compete with Gov. Brown's plan", February 7, 2012
- EdSource, "California Teachers Association endorses Brown tax initiative", January 29, 2012
- Sacramento Bee, "SEIU director tells Jerry Brown's tax-plan rivals to step aside", February 29, 2012
- San Francisco Chronicle, "Jerry Brown pushes his tax proposal", March 7, 2012
- Los Angeles Times, "Poll: Millionaires tax stands best chance of approval in November", March 8, 2012
- Field Poll, "Both Millionaire's and Governor's Tax Initiatives favored by Majorities. Less Support for Munger Tax Plan", February 24, 2012
- Los Angeles Times, "Poll: Jerry Brown's tax can pass, but not with rivals on ballot", February 22, 2012
- February 20, 2012 memo from pollster Jim Moore to Jerry Brown
- Fox 40, "Strong majority backs Jerry Brown's tax-hike initiative", March 25, 2012
- Los Angeles Times, "California's glut of tax-hike initiatives", December 12, 2011