The issue: Is Governor Brown's tax initiative the best solution for funding our schools?
Gov. Jerry Brown’s proposed tax increase would at best be a Band-Aid on a broken system. It is not the right solution for schools. In fact, it’s not about schools at all.
According the nonpartisan Legislative Analyst’s Office, California has had a budget deficit nine out of the past 10 years. Even when our economy was booming, California faced billion-dollar budget shortfalls. The state’s problem isn’t a lack of revenue, it’s spending.
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The root of California’s structural budget deficits stem from the years during the dot-com boom when one-time revenue increases were used to make new, permanent spending increases.
In just two years, from 1998 to 2000, spending jumped 23 percent. In 1999, the Legislature passed SB 400 that significantly increased public employee pensions and in the ensuing 10 years has led to a $500 billion unfunded liability for local and state governments.
The tax initiatives on the November ballot amount to an abdication of the Legislature’s responsibility to spend tax dollars wisely. The tax hikes simply continue a decades-long tradition of spending beyond our means. However, for the sake of argument, let’s examine the governor’s tax initiative and what it does for our schools.
Although the initiative states that it is “for schools,” it does nothing to improve the effectiveness or efficiency of California’s education system.
As a father of two children in local public schools, I care about our public schools and I want to see them improve. Unfortunately, the simple truth is that despite billions in new taxes, the governor’s initiative just continues the status quo.
A recent study by Pepperdine University’s Davenport Institute found that up to 50 percent of the money we spend on education in California never gets to the classroom, but is spent on administrative costs. Furthermore, the California School Boards Association states, “ the governor’s initiative does not provide new funding for schools.” That means Californians would be paying billions in new taxes for the exact same education system we have now.
While the tax initiative would have no lasting impact on our schools, it would have a big impact on hardworking taxpayers and California’s struggling economy.
California already has the highest sales tax in the nation, yet the governor is advocating raising the state sales tax from 7.25 percent to 7.5 percent. Add in local sales tax and the rate increases to nearly 10 percent in some communities. This billion-dollar tax increase will impact every family in California.
The bulk of the new tax revenue, however, would come from increases to income taxes on Californians. The so-called “Millionaire’s Tax” actually increases taxes on those making more than $250,000 per year, including many of the more than two million California small businesses that pay individual taxes on their earnings, not corporate taxes. These are mom and pop businesses like local restaurants, auto repair shops, wineries and other small businesses in our community.
California has the third highest unemployment rate and among the highest taxes in the nation. Increasing taxes could damage an already weak economic recovery, which would mean more deficits and less money for schools.
California is already spending 40 percent of its general fund budget on education and 30 percent on health and human services. We must demand that the politicians in Sacramento cut waste, improve efficiency and do more with less — just like so many families have had to do during these difficult times.
Ultimately, the $50 billion tax hike on Californians and our small businesses will not fix the perpetual billion dollar deficits or improve the quality of our schools. Instead, taxpayers will pay billions more for the status quo without any reforms or accountability.
John Allan Peschong served in President Reagan's administration and later as a senior strategist for the campaigns of President George W. Bush. He is a founding partner of Meridian Pacific Inc., a public relations and public affairs company, and is chairman of the San Luis Obispo County Republican Party.