Prop. 30 approved, Prop. 38 rejected

Measure passes with 54 percent of votes

LOS ANGELES - California voters approved Proposition 30, a tax increase to bolster funding for education backed by Gov. Jerry Brown, while the rival measure Proposition 38 was resoundingly defeated.

Proposition 30 led Wednesday morning with 53 percent to 46 percent with vote-by-mail ballots and 99 percent of the state's precincts partially or fully counted, according to figures released early today by the Secretary of State's Office.

"We have a vote of the people -- I think the only place in America where a state actually said let's raise our taxes for our kids, for our schools, for our California dream," Brown told supporters in Sacramento.

Meanwhile, Proposition 38, conceived by civil rights attorney Molly Munger, was soundly rejected by voters.

"In the fight for Proposition 38, a powerful coalition has begun coming together and a strong movement has been formed," Munger said in downtown Los Angeles. "As we continue this fight, we can and will build on all the good work that has been done.

"Transformational change takes time and we are committed to staying the course until our state truly does tackle this school funding crisis.

"So the fight will continue. Whether we are back at the ballot, in Sacramento working on legislation or finding other new, innovative ways to tackle this incredibly important issue, you can count on us to be there."

Proposition 30 will increase the sales tax by a quarter-cent on the dollar for four years and raise the income tax on annual earnings over $250,000 for seven years.

The increased revenues from Proposition 30 will result in an increase to the minimum guarantee for schools and community colleges under terms of Proposition 98, approved by voters in 1988.

Revenue generated by Proposition 30 will be deposited into a newly created state account, the Education Protection Account. Of the funds in the account, 89 percent will be devoted to schools from kindergarten through 12th grade and the other 11 percent to community colleges.

Each school district will receive at least $200 per student in funds from the account and each community college district at least $100 per full-time student.

The additional funds cannot be used for administrative costs. School and community college boards will decide how the funds would be spent.

The additional tax revenues generated by Proposition 30 could also be used to fund other programs in the state budget.

The measure also places into the state constitution the shift of some sales tax funds to local governments related to the transfer of some public safety services from state to local governments.

Proposition 30 will generate an additional $6 billion in state tax revenues from the 2012-2013 through 2016-17 fiscal years, according to an estimate from the state's Legislative Analyst's Office and Director of Finance Ana J. Matosantos. Smaller amounts would be generated in the 2017-18 and 2018-19 fiscal years.

The state budget approved by the Legislature and Brown in June assumed that Proposition 30 will pass. If it had been rejected, cuts of $5.4 billion to kindergarten through community college education and $500 million to public universities would have gone into effect. Opponents of the measure claimed the cuts would have been changed if Proposition 30 was defeated.

During the campaign, Brown called Proposition 30 "modest, fair and temporary."

"I've cut welfare. I've cut the aged, the blind, the disabled, Medi-Cal, you name it," Brown said.

"We don't want to go any further. And that's why we qualified this measure with a million signatures to let people vote. That's the way it is. If people don't want to give us the money, we don't have the money, we cut.

"If people want to say, `No, those who have been most blessed should keep all they have and don't give any to the schools' then vote no, we suffer the consequences. I hope that's not the case."

Opponents of Proposition 30 said its passage would hurt small business and job creation, and the Legislature should first enact meaningful changes to the public employee pension systems and cut wasteful spending before raising taxes.

Aaron McLear, a senior adviser with the campaign against Proposition 30, told City News Service that "instead of asking voters for more money, the politicians should cut wasteful spending, pay raises, bloated pensions they refuse to reform and a train to nowhere that we can't afford."

Proposition 38 would have increased personal income tax rates for 12 years for annual earnings over $7,316 using a sliding scale from 0.4 percent for the lowest individual earners to 2.2 percent for individuals earning more than $2.5 million.

During its first four years, 60 percent of revenues generated from Proposition 38 would have gone to schools from kindergarten through 12th grade, 30 percent to repaying state debt and 10 percent to early childhood programs. Thereafter, 85 percent of revenues would go to schools from kindergarten through 12th grade and 15 percent to early childhood programs.

The increase would be roughly $5 billion in the 2012-13 fiscal year, $10 billion in the 2013-2014 fiscal year and tending to increase over time, according to an estimate from the Legislative Analyst's Office and Matosantos.

Opponents of Proposition 38 called it a "flawed, costly and misleading initiative" that would hurt small businesses, as many small business owners pay personal income taxes rather than corporate taxes.

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