From health care to state and local public-employee retirement benefits,
Californians face as much as $500 billion in unfunded liabilities for pensions alone
. The state’s unfunded health-care liabilities top $62 billion. Brown’s new budget actually proposes a 7 percent increase
in spending, though it offers to cut some services
What the governor and his allies want more than anything is for voters to approve a constitutional amendment in November that would raise sales taxes by one quarter of a penny and hike income-tax rates on “millionaire” Californians—those earning more than $250,000 a year—by up to three percentage points, taking the top marginal rate from 10.3 percent to 13.3 percent. The increases would be “temporary”—the sales-tax increase would expire after five years, and the income-tax rate increase would sunset after seven. “There’s a lot of money sloshing around California, and there are a lot of people who are getting a share of it,” Brown said
at a Wall Street Journal
business forum last month. “I want to make sure all the different conditions work well, to the extent I can.”
Standing in strong opposition to the governor and his public-employee union allies are not Republicans—though they certainly dislike
Brown’s tax-and-spend scheme—but rather a surprising coterie of liberal Democratic interests led by Molly Munger, a prominent Los Angeles activist and civil rights attorney. Munger, daughter of Berkshire Hathaway vice chairman Charles Munger, has put $3.4 million of her own money into qualifying a competing ballot measure that would raise the income tax across the board by one percentage point. New revenues would be earmarked almost exclusively for education under Munger’s plan. She estimates her initiative would bring in $10 billion.
Neither measure has qualified yet for the November ballot. Both campaigns need to turn in their signatures by April 20 to give counties time to verify the petitions by a June 28 deadline. Brown’s constitutional amendment needs 807,615 valid voter signatures. Munger’s initiative statute needs 504,760 signatures—and her campaign is offering
new cars to its top signature gatherers to get the job done. Brown would prefer that Munger step aside to give voters one clear choice, just as the California Federation of Teachers last month agreed to forge a compromise with the governor that resulted in the tax plan he’s currently promoting. But Munger refuses to back down. “You sort of hope that the Democrats are the party that stand up for investment in children and in education,” she told
the Associated Press. “Those are two bedrock principles of the Democratic Party.”
The disagreement between the two camps boils down to whether the competing proposals to raise taxes in this heavily taxed state are “progressive” enough. Sales taxes like Brown’s are often considered regressive because they tend to affect lower-income people more than the rich. Soaking the rich, on the other hand, is arguably a third bedrock principle of the Democratic Party.