Labor Backed Prop. 30 Extension Represents CA Taxpayer-Funded Bailout
Perhaps the best decision California voters can make at the polls this November is to vote “NO” on the initiative extending the Prop. 30 temporary tax increases that expire in 2018.
Why? The short answer is that extending the Prop. 30 tax extensions effectively bails out California State Democrat politicians for their inability to take any steps to curb spending and prepare for the expiration of the Prop. 30 tax increases.
On the contrary, the California Democrat Legislature has taken it upon itself to break all the significant promises it made to sell Prop. 30 to voters in 2012, and now most Democrat politicians want voters to approve another 12-year extension to cover huge program expansions and out of control government spending.
Not to mention, the initiative comes with a price tax of nearly $10 billion in increased taxes ($1.5 billion from the ¼ cent sales tax increase, and $6 to $8 billion in income taxes through three new tax brackets).
Governor Jerry Brown (D) has done the right thing so far by refusing to endorse the initiative that would extend the Prop. 30 tax extensions, saying that the tax increases were intended to be “temporary.” But I have not heard any other Democrat politician come out against the Prop. 30 extensions, far from it, nearly all California State Democrat politicians want the measure to pass, according to inside sources.
In 2012, the whole argument in support of Prop. 30 was based on a “don’t close the Washington monument” strategy by proponents who said that the “temporary” measure was needed to prevent deep budget cuts to schools and public safety.
Gov. Jerry Brown openly stated at a Sacramento News Conference, “I said that’s a temporary tax,” when asked if he would push to extend Prop.30.
But once the Prop. 30 tax revenues came flooding in California Democrat Legislators have done nothing but spend and expand permanent government programs without regard for the stated “temporary” nature of the tax increases.
A few sets of numbers tell the whole story. Prop. 98 education spending has jumped from $47.3 billion in 2011-12 to $71.9 billion in 2016-17—a 52% increase in education spending on only five years despite very nominal public school enrollment growth.
In 2011-12, total State of California spending was $129 billion, with $86 billion of that money being General Fund spending.
By 2016-17 total State of California spending had climbed to $173 billion—an increase of 34% since 2011-12—while California General Fund spending increased to $122.1 billion in 2016-17—an increase of 42%, according to the Governor’s proposed May Revise (Note: assumes final 2016-17 budget will spend roughly what the Governor has proposed).
California General Fund reserves have increased from $543 million in 2011-12 to a proposed $6.7 billion in 2016-17 under the Governor’s May Revise.
The Governor’s May Revise attributes the steep spending increases in recent years to a massive expansion of the welfare state, particularly Medi-Cal, and outlines $19.5 billion in increased state spending that has been spent since 2012 to dramatically expand the welfare state.
California State spending has skyrocketed since 2012 by more than 40-50% on education, public safety and other state programs, and now the California Democrat Legislature believes we need to make the tax increase permanent to pay for all the new spending.
Don’t believe this “false narrative,” California has a “spending problem,” not a “revenue problem.”
To recap, in 2011-12 the State Legislature only had $87 billion in General Fund resources available to spend, by 2016-17 that figure had jumped to $125 billion—that’s an increase of $38 billion annually or a 44% increase in money available to spend in just five years.
The Prop. 30 tax extensions only brought in about $8 billion annually—leaving about $30 billion in annual money available in 2016-17, compared to 2011-12, that the California Democrat-controlled Legislature should have managed more responsibly to prepare for the expiration of the Prop. 30 tax increases.
Voting to extend the tax increases only serves to reward California Democrat politicians for “broken promises” and a refusal to properly manage the taxpayer dollars which have flooded into Sacramento since 2012.
About the Author: David Kersten is an expert in public policy research and analysis, particularly budget, tax, labor, and fiscal issues. He currently serves as the president of the Kersten Institute for Governance and Public Policy – a moderate non-partisan policy think tank and public policy consulting organization. The institute specializes in providing knowledge, evidence, and training to public agencies, elected officials, policy advocates, organization, and citizens who desire to enact public policy change.