Jerry Brown, who has publicly described himself as "tight with a buck," shunned the governor's mansion in Carmichael and lived in a pad on N Street during his first go-round as governor. Now, after pushing through $47 billion in new taxes for public safety and education, he has a new task: Convincing the public that he and his fellow Democrats who have supermajorities in both houses of the Legislature aren't going to go on any spending binges.
From Bloomberg's Michael Marois: "Proposition 30, the first voter-approved state tax increase in eight years, gives Brown a chance to mend the tattered finances of the world’s ninth-largest economy. He has the opportunity to restore California’s reputation for world-class universities, schools and infrastructure built under his father, Governor Edmund G. “Pat” Brown in the 1960s."
"His plan, which passed with 54 percent of the vote, increases the statewide sales levy to 7.5 percent from 7.25 percent, and boosts tax rates on income starting at $250,000. Those making $1 million or more will pay 13.3 percent, the most of any state. The measures will raise an estimated $8 billion this year and $6 billion annually before expiring by 2018."
"The taxes are part of a broader plan Brown brought to office in January 2011 to forestall further deficits after the state suffered through more than $213 billion in combined shortfalls in the past 12 years. The budget gaps were papered over with internal loans and fund shifts under Democratic Governor Gray Davis and Republican Governor Arnold Schwarzenegger, building what Brown calls a “wall of debt.”
One of the big reasons that Brown's tax initiative was approved was the support it received from younger voters, who when it comes to collge costs are even cheaper than Brown.
From the AP's Juiliet Williams: "Faced with the prospect of more tuition hikes, students rallied for Proposition 30 on social networking sites and breathed new life into the Democratic governor's plan to stabilize state finances."
"Exit polls conducted for The Associated Press and a consortium of television networks showed 28 percent of those who cast ballots on Proposition 30 were between the ages of 18 and 29, a demographic that supported Brown's initiative by an overwhelming two-thirds. It also was a higher percentage of young voters than the pre-election polls used to show the measure faltering among likely voters."
"Every poll was assuming that young voters were going to be less engaged than they were going to be in each of the last four presidential elections," said Scott Lay, president and chief executive of the Community College League of California, who also runs a data-driven political blog."
That $11 million infusion of cash from the "shadowy" Arizona nonprofit may have hurt the Republicans in their efforts to defeat Prop. 30 and approve Prop. 32.
From the LAT's Chris Megerian: ""Some people behind the conservative campaigns now have second thoughts about the money's effect."
"At the end of the day, it was a significant distraction that took us off our campaign message," said Beth Miller, a spokeswoman for the Small Business Action Committee, which received the controversial $11 million."
"Brown attacked the donation during many of his stump speeches, accusing "shadowy forces" of trying to undermine California's schools. If his tax plan failed, nearly $6 billion would have been cut from the budget, mostly from public schools."
Meanwhile, the passage of new taxes appears to have improved the schools' credit worthiness on Wall Street.
From the Bee's Kevin Yamamura: "After previously threatening downgrades if Proposition 30 had failed, Moody's Investors Servicesaid Thursday that voter approval of the tax initiative positively impacted the credit ratings of California's K-12 districts and colleges."
"Passage of this proposition is credit positive for the state's K-12 school districts, community college districts and university systems because it averts the state executing a $6 billion, mid-year cut to education funding," Moody's wrote in its Thursday report."
"Moody's observed that K-12 funding for the current school year will now remain about the same as last year. The ratings agency embraced Brown's plan to use extra cash to begin reversing delayed payments, which had forced districts to borrow to pay their bills on an annual basis."
Somewhat overshadowed by the high--cost, high-visibility battles over Propositions 30 and 32 was Proposition 39, which closed a $1 billion corporate tax loophole engineered three years ago by former Gov,. Arnold Schwarzengger and lawmakers. Nevertheless, Proposition 39 was a major measure.
From the LAT's Marc Lifsher: "It is a tax increase of modest proportions compared with most in California, but experts say it highlighted the politics of taxation and how some business levies engender strong passion whereas others draw little public attention or electoral opposition..."
"The initiative passed overwhelmingly with 60.1% of the vote. It put California's corporate income tax on multistate businesses in line with that of in-state businesses and most other states. Proposition 39 drew almost no public opposition — even though some of the largest multistate corporate giants, including General Motors Co., Kimberly Clark and Procter & Gamble, soon will be hit with an annual increase in state income taxes of more than $1 billion."
"A campaign to support it was financed almost single-handedly with $29.6 million from hedge fund billionaire Thomas F. Steyer, founder of San Francisco-based Farallon Capital. Steyer said he wanted to ensure that companies that sell billions of dollars' worth of cars, tissue, soaps and other consumer products pay taxes here that are calculated the same way as those on such California-based companies as Apple Inc., Google Inc. and Intel Corp."
