Chaos.
That’s the overlooked and underreported consequence of the “Our Children, Our Future” measure, also known as the Munger initiative.
Sponsored by philanthropist Molly Munger, the initiative would increase income taxes by more than $10 billion a year. It adds surcharges onto every tax bracket except the very lowest, and creates new high-income brackets, where most of the tax increases will fall.
Ms. Munger has already provided $900,000 to qualify the measure and shows no sign of buckling under to pressure from competing campaigns.
Revenues from the tax increases would be dedicated mostly to K-12 schools and early childhood education, except for the first four years, when the state General Fund would receive about $3 billion annually. In later years, if revenues outpace economic growth, that surplus would also be diverted to the General Fund.
The intent of the initiative’s drafters is that the new revenues be exempted from the inscrutable Proposition 98 formula, which mandates a hefty share of any new state revenues go to schools, even if the new revenues are raised for non-education purposes. In this case, Ms. Munger intends the new taxes supplement school programs, such as reducing class size, hiring more counselors and nurses, increasing the school year, and other educational program enhancements. She does not want the money to be plowed into the existing school formulas and merely backfill the cuts made to schools over the past four years.
These are wise sentiments from an individual that wants to move beyond the budget and school finance battles of the past. Except … her measure may not work – and it could blow a hole in the rest of the state budget.
Like any fix-it project, you’ve got to use the right tools for the job. Ms. Munger is using a statutory initiative to change the state Constitution. That’s like using a pipe wrench to install your home theater system.
The Proposition 98 requirements are found in several parts of the state Constitution, added first by an initiative constitutional amendment in 1988 and updated by a constitutional amendment placed on the ballot by the Legislature in 1990. You can’t change the constitution by adopting a simple statute – but that’s just what Ms. Munger is attempting to do.
Proponents of at least four successful tax increases recognized exactly this need to use the right tool for the job:
- Measures to raise the tobacco tax for various health and children’s programs, in 1988 and 1998, respectively, each amended the Constitution to exempt these taxes from the Proposition 98 formula.
- Governor Pete Wilson’s measure to devote a half-cent of the state sales tax to local law enforcement similarly amended the Constitution.
- Senator Darryl Steinberg’s measure to surtax millionaires for mental health programs was a statutory initiative. The resulting revenues are used to determine what is owed schools under Proposition 98.
The upshot of this could be a situation where school funding is increased by billions more than the income tax increase, while non-education programs are cut to finance this perversion. This circumstance could be avoided only by annually suspending the application of Proposition 98, which would require a two-thirds vote of the Legislature, returning the annual budget debate to a exercise in obtaining bipartisan consensus.
In honor of the 2010 measure that replaced the supermajority requirement to pass the state budget with a simple majority requirement, maybe we should rename this initiative the “Repeal Proposition 25” measure.
Follow Loren on Twitter: @KayeLoren