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Fingerpointing – to the Left

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The following article, by Loren Kaye, President of the California Foundation for Commerce and Education, was posted on on October 12th. Kaye states that if Governor Brown’s Proposition 30 loses at the ballot in 25 days, the fingers will be pointing to the left, which would be an odd circumstance in a state with such a long history of anti-tax activism from the right. But, Kaye states, the main headaches for the Governor have been caused by his co-partisans. The official "No on 30" campaign has benefited from liberal in-fighting and mistakes.

Proposition 30 still leads in the polls, and very well may prevail, although it leads by just over 50 percent in some polls and by a plurality in others. The first blow to the Governor was in December of 2011, when a coalition of union and liberal organizations, under the leadership of the California Federation of Teachers, filed an initiative tax measure knowing it would be competitive with the Governor’s. It would have added a permanent three percentage point surcharge on incomes of millionaires, and a five percentage point surcharge on incomes in excess of $2 million.

At the time, the Governor’s tax measure was more broadly-based, with a half-cent sales tax and smaller increases on upper income taxpayers. The temporary taxes would have expired after five years.

But the CFT measure attracted strong support from liberal activists and polled better than the Governor’s (because fewer voters would have been affected). By late March of this year, the Governor cut a deal with the CFT, agreeing to reduce the size of his proposed sales tax hike, bump up the income tax hikes on the wealthy, and increase the term of the income tax hikes to seven years.

The effect of these concessions was to get the left off the Governor’s back, but also make the initiative even harder to swallow from the perspective of businesses and high net worth individuals, and inducing some of the latter to open their checkbooks for the opposition campaign.

Then came Molly Munger and round two – which the Governor’s team is still fighting. Ms. Munger is a civil rights attorney and education advocate who has invested tens of millions of dollars qualifying and campaigning for Proposition 38, which increases income taxes for 12 years on all but the lowest income taxpayers, and dedicates the money exclusively to education, except for a substantial portion committed to the state General Fund for the first four years.

Ms. Munger is now engaged in what could well be "mutually assured destruction" as each campaign takes aim at the other. Campaigns are fought to win, but usually the fights cross ideological or partisan lines.

Proposition 30 has been hampered by other missteps, also largely from within the Democratic ranks, including pay raises granted to legislative employees by the Legislature’s top Democrats and an embarrassing revelation of fiscal mismanagement from within Brown’s own Parks Department.

Proposition 30 proponents would argue that this ballot measure, and the attendant controversies, would be unnecessary had legislative Republicans agreed to a special election in 2011. But even there Democrats share fault since they were unwilling at the time to bargain on a comprehensive budget solution with Republicans – likely because their union allies would not support trading away budget reforms for a chance to throw the dice on a special election.

The last word, of course, is with the voters. Most will likely cast their votes by balancing the needs of the state and schools compared to the increased hit on their wallets. However, Kaye notes, the hardball tactics within the left-of-center coalition that dominates California today demonstrate that the obstacles to progress are not necessarily partisan or ideological.

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