Next November, Californians may be faced with three different ballot measures attempting to raise revenue for our state. The California Budget Project has released some comparisons of the sources of the revenue and what they would go toward.
Their side-by-side comparison is located here (pdf) and a longer memo style description is here (also pdf).
The three proposals that may end up on the ballot are the Governor's proposal (a mix of sales tax and income tax on high income earners [>$500,000]); the California Federation of Teachers' proposal or "millionaire's tax" which would raise income taxes on earners over $1 million; and the "Munger proposal" also known as "Our Children, Our Future" which would increase income taxes for all California taxpayers.
Here's a look at some of the main points about each of these.
The Governor's proposal
The Governor's proposal increases the sales tax by one-half a cent and increases tax rates on those earning over $500,000. Revenue estimates range from $4.8-6.9 billion annually. Money from this proposal would be directed toward the general fund to pay for schools: 89 percent goes to K-12 and 11 percent to community colleges.
This money counts toward the Prop 98 guarantee, which is what funds our K-12 and community college system. The money does not represent new spending, but rather underwrites the current guaranteed spending where there is a revenue gap and has been for some time. The revenue would help address the budget hole and pay for what we currently fund.
The Millionaires' Tax
This tax adds two new income tax rates on earners from $1-2 million and over $2 million. Revenues are expected to be between $4-9.5 billion annually. Money would be divided between K-12, county programs for seniors, disabled people, public health, UC, CSU, community colleges, public safety, maintenance and administration.
This money is new spending which does NOT count toward the Prop 98 guarantee. In other words, the money that is currently "missing" from the budget via the general fund would still need to be funded. This tax could pass and cuts could still be required to fund the current required expenditures toward K-12 schools, Medi-Cal, child care, etc.
CBP states, "Thus, it appears that the state would still be obligated to increase school funding as required by language included in the budget agreement. The CFT measure would not directly help close the budget gap, leaving the state facing a $9.2 billion shortfall over the next 18 months and continued gaps thereafter."
The Munger proposal / Our Children, Our Future
This proposal would add 10 new personal income tax rates at all income levels. Revenues are expected to be between $5-11 billion. Money would be allocated to K-12, repayment of state bond debt, child care and preschool.
Like the Millionaire's Tax, this money represents new expenditures and does not count toward the Prop 98 guarantee. It will allow for funding of new education programs, but will not pay the costs of the current programs that exist in our schools.
---
So, each of these three proposals will generate a good amount of revenue for the state. The primary distinction between the governor's proposal and the other two is that the money for the governor's proposal will be used to fill the hole in the general fund that will pay for upcoming budgets, whereas the money the other two generate will be used to create new programs. Because they are not directed to the general fund, they cannot be used to fulfill the Prop 98 guarantee - the amount of money that must be used to support ongoing K-12 and community college programs in California. This money still must be generated, or alternatively, those programs, along with Medi-Cal, Healthy Families, child care, etc. will have to be cut.
Some background information if you would like to have it:
Prop 98
Budget information from the Department of Finance
Summary charts on state budget spending (pdf)
12:33 PM PT: Breaking news thanks to Senor Unoball: The governor and the CFT appear to have compromised meaning we may not have 3 after all.