Proposition 30 Talking Points

How does Proposition 30 the Governors temporary tax initiative affect K-12 schools? Prop 30 would avert a fiscal catastrophe for public schools. As the Legislative Analyst notes in his analysis, If this measure fails, the state would not receive the additional revenues generated by the propositions tax increases. Almost all the reductions are to education programs $5.4 billion to K-14 education and $500 million to public universities. This includes $457 per-student cuts to K-12 education that would take effect this year if Proposition 30 is defeated, plus it will cause an increase in state credit card debt to schools of more than $2 billion. Prop 30 also prevents more than a billion dollars annually in additional cuts to Californias public colleges and universities ($250 million UC, $250 million to CSU, and $550 million to community colleges). Proposition 30 pays down $5.8 billion of state debt to K-12 schools in its first year, 2012-13. As the non-partisan Legislative Analyst notes in his analysis of Prop 30, This (tax revenue) helps explain the large increase in funding for schools and community colleges in 2012-13 a $6.6 billion increase (14 percent) over 2011-12. By paying down debt in this manner, Prop 30 allows K-12 school funding to benefit from the economic growth of the state in subsequent years and restore recent funding cuts according to the constitutional guarantee. This is estimated to produce an increase in per-student program funding of $2,600 per student about $75,000 per classroom by 2015-16. It is important to put Proposition 30 in perspective. Since 2008-09, general purpose funding for K-12 schools (revenue limits) have been cut by 12% and funding for earmarked purposes (textbooks, career technical education, for example) have suffered reductions of nearly 20%. Thus, this ballot measure comes after districts have already sustained long-term cuts that remain in place. An additional midyear cut averaging 8.5% of revenue limits will occur if Proposition 30, the Governors tax measure, fails.

How does Proposition 30 affect California Taxpayers? Eighty percent of the temporary tax revenues raised by Proposition 30 are paid on incomes earned above $250,000 for single payers and $500,000 for joint filers. This includes only about 1% of the states tax filers. The remaining twenty percent of the tax revenue would come from a temporary (four-year) cent sales tax increase.

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PROPOSITION 30 QUESTIONS & ANSWERS

Q: Ive heard that education funding doesnt increase under Proposition 30. Is this true? No. As the Legislative Analyst points out, A large share of the revenues generated by this measure [Prop 30] is spent on schools and community colleges. This helps explain the large increase in funding for schools and community colleges in 2012-13 a $6.6 billion increase (14 percent) over 2011-12. Most of this money initially goes to avoid deeper cuts and pay down state debt to public schools. As every family knows, paying off credit card debts allows increased spending in subsequent years. In the same way, paying down debt allows for school funding to benefit from natural economic growth. Best estimates peg this program funding increase at $2,600 annually per student, or about $75,000 per classroom, by 2015-16. On the other hand, without Proposition 30, schools will suffer deep cuts immediately and in years to come. As the Legislative Analyst notes, If voters reject this measure, state sales tax and PIT [personal income tax] rates would not increase. Because funds from these tax measures would not be available to help fund the states 2012-13 budget plan, state spending in 2012-13 would be reduced by about $6 billion, with almost all the reduction related to education. Q: Ive heard that Proposition 30 imposes a permanent reduction in Prop 98 funding levels. Is this true? Again, no. The basic long-term funding promise within Prop 98 is Test Two, which is adjusted annually by the number of students and Californians personal income. Proposition 30 does not affect this constitutional calculation. Some have confused the issue because of adjustments in state General Fund revenues, which do affect the Test One calculation for Proposition 98. This occurs because Prop 30 does provide funding for realignment of state services (mostly criminal justice) to local government upon approval by the electorate, with an equivalent shift in tax revenues which does have an effect on Test One. However the additional revenue that Proposition 30 generates and funnels into the General Fund more than compensates for this realignment, generating an ongoing increase in the Prop 98 guarantee of 14% in 2012-13 alone. In short, Proposition 30 raises the school funding guarantee to a higher level, and that level is protected by the core Test Two calculation. Q: Some are claiming that Proposition 38 is better for schools than Proposition 30. Is that true? First of all, its important to note that both initiatives cannot take affect its one or the other, or neither.

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Second, it is important to recognize that both Propositions 30 and 38 would enact temporary taxes. Regarding funding levels to K-12 schools, projections show that Prop 30 provides more K-12 School revenues for the first five years. For the following several years, it appears that Prop 38 provides more, primarily because the temporary tax increases are slightly higher and in effect longer. Regarding the rest of the state budget, notably including higher education, Proposition 30 provides funding while Prop 38 does not. Public higher education, for example will be cut more than $1 billion in the first year if Prop. 30 fails. What is indisputable is that if neither initiative passes, schools will be facing almost incomprehensible cuts. Up to this point, Prop 30 has received substantially higher levels of voter support in independent statewide polls, while attracting a broader and more diverse coalition of support, than Prop 38.

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