Governor Jerry Brown kicked off his campaign to pass Proposition 30 on August 15, showcasing what Dan Schnur, Director of the USC Jesse Unruh Institute of Politics called “the most expensive ransom note in California political history” – pass the tax increase or the schools get it. The problem is that this tax increase proposal comes with no reforms for school funding, let alone other big-ticket items like pensions, and is likely a band-aid that would lead to more taxes in the future.
The schools get no guaranteed new money from Prop 30. That’s not me saying so, that’s a comment from the California School Boards Association quoted in a Sacramento Bee article. “Despite endorsing Brown’s measure, (California School Boards Association) leaders said they ‘want to make it clear to the public that the governor’s initiative does not provide new funding for schools. Instead, it bolsters the General Fund with new revenue.’”
A Wall Street Journal editorial stated that, “The dirty little secret is that the new revenues are needed to backfill the insolvent teachers pension fund.”
Note that the School Boards Association pointed out that the new funding “bolsters the General Fund.” The association is not the only observer to recognize that this tax increase is about the General Fund. The Legislative Analyst Office’s report on Prop 30 stated: “The new tax revenues would be available to fund programs in the state budget.”
But, the bigger issue is that Proposition 30 is not going to solve California’s long running fiscal problems. Stanford economists Michael Boskin and John Cogan addressed the crux of the problem presented by Proposition 30’s tax increase without reforms:
Absent real reform, there is little likelihood the long-run budget will be balanced, and a high likelihood the “temporary” tax hikes will not only become permanent but form the new base from which even higher taxes are demanded.
Proposition 30 is not about schools. It is about continuing California’s fiscal woes.
(Joel Fox is the Editor of Fox & Hounds and President of the Small Business Action Committee. Originally posted on Fox & Hounds.)