Proposition 30 : 2012 Budget Agreement - Income and Sales Tax Increases

Official title : Temporary Taxes to Fund Education. Guaranteed Local Public Safety Funding. Initiative Constitutional Amendment.

State analysis    /    Money trail

Summary :

1. CA income tax increased for 7 years for  taxable income over $250k (approx 1% of taxpayers = 40% of CA income tax revenue)) from 2012 to 2018:
   1. single between $250k-$300k, up 1% (now 9.3%)
   2. joint  between $500k-$600k, up 1% (now 9.3%)
   3. HOH between $340k-$408k, up 1% (now 9.3%)
   4. single  between $300k-$500k, up 2% (now 9.3%)
   5. joint  between $600k-$1M, up 2% (now 9.3%)
   6. HOH  between $408k-$680k, up 2% (now 9.3%)
   7. single  over $500k up 3% (now 9.3%)
   8. joint  over $1M up 3% (now 9.3%)
   9. HOH over $680k up 3% (now 9.3%)
   10. single over $1M up 3% (now 10.3%)
   11. Increases sales and use tax by ¼ cent for 4 years, from 1/1/2013 through 12/31/2016.
   12. Allocates temporary tax revenues 89% to K–12 schools and 11% to community colleges.
   13. Permanently excludes the sales tax revenues redirected to local governments from the calculation of the minimum funding guarantee for schools and community colleges.
   14. Provisions concerning public safety services moved from state to local control in 2011 :
       1. Guarantees money to local government for public safety services moved from state to local control in 2011.
       2. Local governments would not be required to implement any future state laws that increase local costs to administer the program responsibilities transferred in 2011, unless the state provided additional money to pay for the increased costs. The measure requires the state to pay part of any new local costs that result from certain court actions and changes in federal statutes or regulations related to the transferred program responsibilities.
       3. Under the Constitution, the state must reimburse local governments when it imposes new responsibilities or “mandates” upon them. Under current law, the state could be required to provide local governments with additional funding (mandate reimbursements) to pay for some of the transferred program responsibilities. This measure specifies that the state would not be required to provide such mandate reimbursements.
       4. The Ralph M. Brown Act requires that all meetings of local legislative bodies be open and public. In the past, the state has reimbursed local governments for costs resulting from certain provisions of the Brown Act (such as the requirement to prepare and post agendas for public meetings). This measure specifies that the state would not be responsible for paying local agencies for the costs of following the open meeting procedures in the Brown Act.

Notes :

1. Expected to bring in $6 billion annually.
2. The 2012-2013 budget passed by the legislature assumes this will pass. If it doesn't, automatic spending cuts will happen to the tune of $6B.
3. Proposition 38 also deals with personal income tax increases. If both pass, the tax rate provisions of one with the higher number of votes would be implemented. If Prop 38 gets more votes and both pass, the trigger cuts of $6B would take place.
4. Trigger cut details:
   1. Schools and community colleges (K-14) - $5,354M
   2. University of California - $250M
   3. California State University - $250M
   4. Department of Developmental Services - $50M
   5. City police department grants - $20M
   6. CalFire - $10M
   7. DWR flood control programs - $7M
   8. Local water safety patrol grants - $5M
   9. Department of Fish and Game - $4M
   10. Department of Parks and Recreation - $2M
   11. DOJ law enforcement programs - $1M
   12. Public safety services that were transferred from state to local control in 2011 (roughly $6B):
       1. incarcerating certain adult offenders
       2. supervising parolees
       3. providing substance abuse treatment services