More Information

  • Slideshow: Election 2012: California propositions
  • Ad watch: Prop. 38 ad distorts lawmakers' ability to take school funds
    What it would do:

    • Raises income taxes on most Californians for 12 years.
    • Allocates increased revenue to public schools, child care and preschool programs, and state debt payments.
    • According to the Legislative Analyst's Office, schools would receive about $6 billion annually, or $1,000 per student, from the measure.
    What it would cost:
    • According to the Legislative Analyst's Office, the measure would increase income taxes on all but the lowest income bracket for 12 years, raising roughly $10 billion annually in initial years and likely growing over time.
    • Allocates roughly 60 percent of revenue to schools, 30 percent to state debt payments and 10 percent to early child care and education programs, with the share for schools increasing to roughly 85 percent in later years.
    What it would do:

    • Raises the statewide sales tax rate by a quarter percentage point for four years and impose income tax increases for seven years on Californians earning more than $250,000 a year.
    • Prevents about $5.4 billion in cuts to schools and community colleges included in the state budget.
    • Guarantees tax revenue to local governments to fund public safety responsibilities shifted to them from the state last year.
    What it would cost:
    • According to the Legislative Analyst's Office, the measure would increase state tax revenue by about $6 billion annually over the next few years.
    • Revenue from increased taxes would be available to increase school funding and to help balance the state budget.

Gov. Jerry Brown's budget plans threatened by a determined Molly Munger

Published: Friday, Oct. 12, 2012 - 12:00 am | Page 1A
Last Modified: Friday, Feb. 15, 2013 - 12:20 pm

Gov. Jerry Brown hoped a mix of politicking and good fortune would deter negative ads against his tax initiative in the campaign's final weeks.

His luck expired in the last few days.

Not one, but two, campaigns took aim at the governor's Proposition 30 on airwaves across the state, funded separately by two children of billionaire investor Charles Munger.

The Democratic governor now faces a serious threat to the linchpin of his longer-term budget plan. Brown has been particularly frustrated by attorney Molly Munger's ad, which calls his campaign "misleading" and uses an animated sequence to depict politicians taking money from a schoolhouse.

Her rival measure, Proposition 38, would hike taxes on all but the poorest income earners to help schools and initially the state budget. Though hers has lagged Brown's initiative in polls throughout the year, Munger still believes she will win come Election Day.

"This is an absolutely unprecedented situation in California politics," said Dan Schnur, director of the Jesse Unruh Institute of Politics at the University of Southern California. "The approach that Molly Munger is taking is very similar to what a candidate would do who's down in the polls weeks before an election."

As counties issued mail ballots this week, the Munger ads sent chills through education circles. School districts have placed big bets that Brown's initiative would pass in November, planning to eliminate school days and cut programs if voters reject Proposition 30.

Emails and conversations within the education community suggested the possibility of "murder-suicide," a scenario in which Munger's ads lead both multibillion-dollar tax initiatives to defeat.

Many school advocates are frustrated because they feel Munger's measure has no chance of winning because it would raise income taxes on many more Californians, while Brown's could survive absent the attack ads now on the air.

The No on 30 campaign, meanwhile, launched ads last week asserting that Brown's initiative would not help schools. Those ads are fueled by $5.9 million in contributions from a small-business committee principally funded by Molly Munger's brother, Republican activist Charles Munger Jr. The Mungers' father is the right-hand man to Berkshire Hathaway's Warren Buffett.

"This has not been a good week for the governor, and I'm sure he's upset," said Bob Stern, a political analyst who helped craft the state's Political Reform Act. "The more opposition you have and more confusion you have, the more likely both propositions go down."

The governor's coalition has struggled to find an effective way to respond.

The Yes on 30 campaign has portrayed Munger and her brother as wealthy heirs using their fortune to harm schools and avoid higher taxes. Grass-roots leaders rallied Thursday in Los Angeles, calling on Molly Munger to pull her ads. State Superintendent of Public Instruction Tom Torlakson asked for a cease-fire in a statement released by the campaign.

But Brown has not answered with negative ads, which could undercut his own campaign.

"If he beats up on her, he risks looking like a bully," said Bill Whalen, a Hoover Institution fellow and former speechwriter for Gov. Pete Wilson. "There's a limited amount of time between now and Election Day, and time spent criticizing her is a wasted day."

This week's collision course was months in the making. Brown foresaw the danger of competing tax initiatives last winter and lobbied his rivals to back away. He persuaded the California Federation of Teachers and Courage Campaign to merge their "Millionaire's Tax" with his own initiative.

But he could never sway Molly Munger.

Molly Munger, 64, is a Pasadena attorney and Harvard Law School graduate. She worked in private practice and as a federal prosecutor before focusing on civil rights work.

Brown and Munger spoke by phone earlier this year, but did not meet in person. Brown's wife, Anne Gust Brown, also lobbied Munger in conversations so intense they remain a sore point.

"There's something called free will," Brown said in September when asked why he couldn't persuade her to step down. "Even God can't stop somebody from sinning if that's their free will."

Failing to discourage Munger from the race, Brown enlisted the help of U.S. Sens. Dianne Feinstein and Barbara Boxer, as well as state legislative leaders, to keep the peace. The leading Democrats in August called for a campaign truce in which both campaigns would "refrain from directly attacking or referring to the other." Munger's coalition declined the request, pointing to Brown allies who formed a committee opposed to her measure.

The governor himself has been quiet this week, and he has not held any public campaign events. Munger said he had not reached out to her since the ad launched Tuesday.

In an interview, Munger described her long-standing skepticism about Brown's proposal, which she felt would never raise much new money for K-12 schools. Her primary criticism is that it locks in a $5 billion to $6 billion annual shift of sales taxes to local governments for housing prisoners and other public safety responsibilities.

That shift, she said, effectively took more than $2 billion away from K-12 schools and community colleges last year and would continue in the future. That amount, she says, should be subtracted from the funds Brown says he would send to schools.

Munger said she was prompted to launch her negative ad when Brown's campaign aired a misleading commercial claiming that "Sacramento politicians can't touch the money" in Proposition 30.

"It was deceptive because it was so at odds with the truth of their initiative," Munger said.

Munger has spent $34 million already on her campaign, and she said she intends to continue funding Proposition 38 up to Election Day. Despite calls to take down her ad, Munger said she is not backing down.

Brown's campaign has already said Munger will bear responsibility if Proposition 30 fails.

"If her false attacks do succeed she will effectively have stripped billions of dollars from schools, raised tuition and forced schools to close an extra couple of weeks," said Yes on 30 spokesman Dan Newman. "The stakes are high."

Whalen said that if Proposition 30 is defeated, blame should be assigned to everyone involved, including lawmakers and voters. He said it would raise questions about the initiative process and the role of money.

"This is part of our tradition and why we have democracy in this state," he said. "But in this case, the governor happened to draw a very bad card – an independent-minded person from Southern California who wouldn't back down."

© Copyright The Sacramento Bee. All rights reserved.

Read more articles by Kevin Yamamura

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