CA Voters Face Tough Choice: Tax Increases or Ed Cuts

Although 80% of California residents oppose the trigger cuts that will strip their state’s education system of $5 billion in funding, the passage of the tax plan proposed by the governor Jerry Brown that would avoid these cuts is by no means guaranteed. A new poll of 2,000 likely voters released last week by the Public Policy Institute of California found that 54% are in favor of a plan that will raise income tax on the top earners as well as temporarily increase the sales tax.

Backers of the tax plan are expected to submit enough signatures to place the measure on the ballot this coming November, and hope that its passage will stop the automatic cuts to the school budget. According to Mark Baldassare, PPI’s president, the disconnect between the number of people who want to avoid the cuts and those who plan to vote for the tax increases could stem from the people supporting a general tax hike on high-income individuals while at the same time opposing an increase in sales taxes which tend to be regressive and disproportionately hit those with low income.

“While many Californians believe that the state’s budget situation is a big problem for public schools, few think that money alone is the answer,” Baldassare said. “Most continue to say that significant improvements in the quality of education will take place when we spend money more wisely.”

At the same time, a large percentage of Republicans, Independents and Democrats said they didn’t want to see more cuts to schools. It was the only issue addressed in the poll that showed strong agreement across party lines.

The poll results are also showing that many Californians are growing tired of the annual scramble to meet budget shortfalls with temporary tax increases in order to circumvent the state’s balanced budget.

Crystal Brown, who is the board president of Educate Our State and a San Fransisco parent, expressed this view as she railed against funding the “band-aids” to pay the education bills. However, despite the voter hesitation, in light of the PPI results, she expected the measure to pass come November.

She might not be so sure of the passage if she, and more Californians, were made aware that 100% of the tax increases earmarked for education will go not towards school improvements, teacher salaries, or academic materials, but to cover the shortfalls in the California State Teachers’ Retirement System. According to Bloomberg, all that money will be used for teacher pensions and there are signs that if voters found out about it, they might be less likely to vote to pass the measure come November.

After retirement, teachers are unconditionally guaranteed lifetime pensions by their school districts. Everything works out fine if Calstrs, as the retirement system is known, earns the investment returns it forecasts and from which upfront contributions are derived.

But if they fall short, school districts must make up the difference. Because of compounding, the failure to earn forecasted earnings translates into huge deficiencies down the road.

Unfortunately, “down the road” is where school districts are now. Because Calstrs has earned only 60 percent of its forecasted investment return since 1999, it needs school districts to boost contributions by more than $100 billion.

According to David Crane, the solution to the problem means higher taxes, higher teacher contributions to their pension and lower benefits for teachers currently working and those to be hired in the future.