Politics & Government

Democrats eye 2016 for tax extension vote

As Assemblywoman Joan Buchanan lobbied for a school bond near the end of this year’s legislative session, she was asked at a Senate committee hearing why the measure could not wait two years, for the November 2016 ballot.

The presidential race is almost certain to increase turnout among Democratic voters, resulting in a more bond-friendly electorate. But Buchanan, leaning into the podium, suggested Democratic lawmakers and their public school allies may have bigger plans for that election: extending temporary tax increases passed in 2012.

“I think one reason is because there’s questions as to whether or not there might be something on the ballot to extend the temporary revenues,” Buchanan, D-Alamo, said at the August hearing.

Her remarks added to a series of statements that began trickling out from the Capitol early this year and have intensified heading into the Nov. 4 elections. The issue, arising now in interviews, candidate questionnaires and debates, is likely to become a major point of controversy in Sacramento in the run-up to 2016.

Tom Torlakson, the state superintendent of public instruction, called for an extension of Proposition 30 as far back as January. State Sen. Mark Leno, chairman of the Joint Legislative Budget Committee, said last week he plans to begin discussing a potential ballot measure with interest groups by early next year to “see where they are with it and if I can be of any assistance.”

Proposition 30, which raised the state sales tax and income taxes on California’s highest earners, will begin to phase out in two years.

“I think this is so critically important to the future well-being of our state, and I’m speaking from a financial perspective – that means our investment in education, investment in our decimated court system, investment in our tattered social safety net – these are the things that are at risk if we don’t debate this and hopefully agree that this revenue is needed, in one form or another,” Leno said.

Eying Democratic turnout in 2016, Leno said: “We won’t have as potentially positive an opportunity until 2020,” the next presidential election year.

California’s financial condition has improved dramatically since 2012, when voters passed Proposition 30, in part because of the economic recovery and stock market gains, but also because of the tax-raising measure, which state officials estimate has generated more than $13 billion so far. The nonpartisan Legislative Analyst’s Office has predicted slowing revenue state growth in 2016 and beyond as portions of Proposition 30 begin to expire.

Gov. Jerry Brown, who championed Proposition 30 and is widely expected to win re-election in November, has given no indication that he would support an extension of the tax.

In May, the Democratic governor told reporters: “That’s a temporary tax and, to the extent that I have anything to do with it, will remain temporary.”

Republicans are leery, however. GOP lawmakers point to public remarks by Torlakson and Leno and to a recent interview in which Brown declined to say if he will maintain the pledge he made in 2010 not to raise taxes without a public vote.

“These guys (Torlakson and Leno) start talking about this barely a year after implementation, so you have to be concerned, when you couple that with the governor ” said Sen. Bob Huff, the Republican leader. “There’s always been a little background chatter about this. It was a giggle to say it was going to be temporary. And then the ink is barely dry, and they’re saying we’ve got to make it permanent.”

Like other critics of the tax measure, Huff said it worsened California’s business climate. The economy may have improved faster and generated more tax revenue, he said, unburdened by higher taxes.

When Proposition 30 passed in 2012, proponents of the initiative took the margin of victory – more than 10 percentage points – as a sign of an electorate more amenable to tax increases than previously evidenced. The measure was the first statewide tax initiative to succeed in California since 2004.

“I think Prop 30 and new revenues in the state budget was a good sized Band-Aid, tourniquet, what have you, but we need to do much, much more,” Kevin McCarty, a Sacramento city councilman and Assembly candidate, said in September. “So I think that’s the first step, is re-upping Prop 30 in a few years. I think there should be a case to make it permanent.”

The public’s appetite for an extension is uncertain. According to a PACE/USC Rossier School of Education poll last year, about half of California voters support extending both the income tax increase and sales tax increase portions of Proposition 30, or one or the other, while one-third of voters think lawmakers should let both tax increases expire.

“Extending a tax is always a little bit less painful for voters than supporting a new one, but this would be a steep hill to climb,” said Dan Schnur, who ran unsuccessfully for secretary of state this year and is director of the Jesse Unruh Institute of Politics at the University of Southern California. “Brown was smart enough in the Prop 30 campaign to emphasize the temporary nature of the tax. It would be very difficult for him to come back (to voters).”

Unlike in 2012, the state budget this year is in healthy enough condition that Brown is campaigning for a reserve account measure on the November ballot. The most recent budget he signed includes increased funding for schools and social services, as well as for the state’s controversial high-speed rail project.

Jon Coupal, president of the Howard Jarvis Taxpayers Association, which opposed Proposition 30 in 2012, said that with money flowing more freely in Sacramento, “We would have a lot of ammunition to counter anything on the ballot.”

“The urgency that existed a couple years ago with Prop 30 and the education (issue) isn’t there,” he said.

It is unclear if Democrats will be able to maintain the two-thirds supermajority they hold in the Assembly or regain the supermajority that evaporated in the Senate when three lawmakers were suspended in separate criminal cases this year.

But even if they do achieve supermajorities in both houses – a threshold sufficient to pass tax increases without Republican support – enough Democrats have said they would not vote for extending taxes without a public vote that a ballot measure is the likely path.

Leno said the tax extension is such a significant issue that the Legislature should “let the voters express an opinion on this.”

Buchanan said last week that she has not been involved in any discussions about extending Proposition 30, but that “within the education community, people are talking about it, and it’s something that I hear consistently.”

“There’s tremendous concern that when the temporary revenues expire, that we’re going to be right back to deep cuts in education,” she said.

Joshua Pechthalt, president of the California Federation of Teachers, said immediately after the Proposition 30 election that the tax measure was “only Step 1.”

The teachers union had merged its own tax campaign with Brown’s to pass Proposition 30. Last week, Pechthalt said his union will likely argue that a tax extension is a measure the Legislature and Brown should take on their own, without voter approval.

If that argument fails to persuade lawmakers, Pechthalt said, the union is “looking at various options for 2016.”

“I think right now it’s at the level of informal chatter,” he said. “It’s certainly on the minds of people in the classroom and people involved in public education.”