Interesting reading the California State Association of Counties (CSAC) put forth as one of its committees decides on whether to support the governor’s tax initiative today. The committee will send its recommendation to the full board for final approval later in the year. The analysis, which encourages the committee to support the governor’s plan, pointed out while revenues raised by the measure were deposited in a fund created for schools, the idea is “first to fill the bucket of the state’s annual Proposition 98 calculation, thus saving the state about half that amount which can then be used for other state General Fund purposes.”
The bold letters are not mine. They were in the report. I’m sure Molly Munger is paying attention. She’s made that argument all along.
The chief consideration for the counties is that the governor’s realignment program is paid for and the report notes that the realignment fund guarantee is not tied to the temporary tax increases but to current sales and vehicle taxes.
According to the report, the governor projects that the economy will come back over the course of the seven years of temporary tax and there will be no budget hole when the taxes end.
But what if it doesn’t?
The report took pains to explain what happened during the temporary tax increase of the 1990s. Despite a temporary sales tax and income tax increase, the state still found holes in the budget. The state diverted billions in local property taxes under ERAF or the Education Revenue Augmentation Fund to cover K-12 obligations. And, the sales tax, which was supposed to terminate, ended up on a statewide ballot to be continued permanently for local public safety needs.
What are the chances the temporary taxes of this era will have a similar fate? With no reforms, spending demands might force consideration to continue the taxes as happened in the past.
Local government funds could also be put in jeopardy in some way similar to the ERAF shift to protect state obligations at the expense of locals. The history is in the analysis and worth considering by the CSAC committee.
Also, interesting in the report is the argument that the governor’s campaign is building a network of support with labor, business, and education groups. Seems pretty formidable – but how realistic? The groups listed giving financial support consisted mostly of public employee unions.
Citing fairly recent polls, the report paints a picture of an initiative in good shape. Touting the positive polls that have said there is support for the governor’s initiative ignores the fact that no opposition campaign has begun attacking the measure. When that happens, the numbers are bound to change.
You could see that in the recent USC/LA Times poll (which was not included in the report summary). Opposition statements brought approval ratings down near the break-even point, a dangerous place for a ballot measure to be at this early juncture of the campaign.
Given CSAC’s relationship in the governmental structure it is hard to imagine that the organization would buck the governor and he undoubtedly will get the organization’s endorsement.
The voters may not be so easy to convince.