California Anti-Tax Groups File Their Own Ballot Initiative To Curb Spending

As reported in last week’s edition, Governor Jerry Brown filed an initiative last week to raise taxes.

Following the Governor’s announcement, California anti-tax groups filed their own ballot measure to curb spending.  Their measure would lock in recession-era spending levels, with fiscal year 2010-11 as the base year.  Any revenues above that base, after being adjusted for inflation and population, would be used to pay off debt -- or, in flusher times, given to schools and returned to taxpayers.

Should both the spending measure and Brown's proposed half-cent sales tax hike and new taxes on the wealthy be approved by voters in November, much of the projected $7 billion in new revenue might never reach government coffers.

All the competing ballot measures aimed at solving California's budget problems are adding up to a potentially wild and confusing election for next November.  That may be precisely what the anti-tax groups are counting on, but Governor Brown indicated that he was working behind the scenes with the other groups to ensure there are not too many competing initiatives.

Among the tax initiatives already filed are the Governor's; a proposed progressive income-tax hike by wealthy civil rights attorney Molly Munger to raise $10 billion for schools; the Think Long Committee's measure, which also would raise $10 billion but largely by broadening the sales tax to include services; and a millionaires' tax measure backed by the California Federation of Teachers to raise $6 billion.

Spending-limit backers will need to collect 807,605 valid signatures for the constitutional amendment, which will cost about $2 million.  Under the proposed new spending limit, if the debt is more than 5 percent of the state's revenues, excess revenues would be spent to reduce the debt.  If it is less than 5 percent, money would be sent to schools and placed into a reserve up to $2 billion.  If the amount goes above $2 billion, the rest would go back to taxpayers.  The proposal would also close down loopholes in Proposition 26, passed by voters last year.  The law allows the Legislature to increase some taxes collected locally with a simple majority vote.  If the new spending-limit initiative passes, all tax hikes would require a two-thirds vote.

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