Prop 1A's Old Ball & Chain... Taxes

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A few weeks from now, once the voters have spoken, pundits will either be calling it the height of political genius... or a political blunder for the record books.

"It" is the multi-billion dollar tax increase that will only happen if voters approve Proposition 1A, the spending constraint/reserve fund measure that makes major changes in the annual budget process.

The tax increase and the rhetorical bombs being lobbied about those taxes are the focus of our second day of coverage of Prop 1A on The California Report.

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First, some broad perspective that's not been focused on so far. The budget deal struck in those wee hours of the morning in February was a multi-year proposal. Not only did it purport to resolve a budget deficit in the current budget year... not only did it purport to enact a balanced budget for the fiscal year beginning July 1... it also provided a mechanism for additional revenues through June 30, 2013.

And in most every budget year mentioned above, the deal included increased taxes. The nonpartisan Legislative Analyst's Office actually pegs the total tax increase package approved by legislators and Governor Schwarzenegger at $36 billion. That includes the 1% increase in the state portion of the sales tax, the surcharge on personal income taxes, and the increase in the vehicle license fee (VLF), the so-called "car tax."

But as much as $16 billion of that amount (less, perhaps, given the worsening economy since the deal was struck) will only be collected if Prop 1A takes effect. In essence, the Legislature and Schwarzenegger pulled the trigger on the first phase of those taxes... leaving phase two to voters and the May 19 ballot.

Not surprisingly, the tax increase has become a focal point of publicity... from protests to talk radio, blogs, and beyond. And that's forced the governor to spend more and more time defending those taxes in his campaign stops across the state.

"Those who say that we could have balanced the budget through spending cuts alone are guilty of political cynicism at its worst," said Schwarzenegger in an appearance at the Commonwealth Club last month. "Those are not serious people."

Of course, others disagree with that assessment. "It can be characterized as extortion for budget reform," says Jon Coupal of the Howard Jarvis Taxpayers Association on the Prop 1A trigger for extended tax hikes.

The tax increase proposal led to a large and angry anti-tax rally in Orange County last month, and continues to be villified by LA talk radio hosts John & Ken, whose website features a collage of lawmakers' heads on sticks... the guv's famous mug in the middle.

On the left, it's not so much the tax increase triggered by Prop 1A as it is the fact the tax increase is attached to a spending constraint that opponents say will hurt vital state services.

The governor, Democratic legislative leaders, and other allies remain undeterred. And Prop 1A remains a fascinating watch. Its combination of far-reaching policy changes along with shrewd political choices angering a wide array of interest groups makes it arguably the most important proposal on next month's ballot... and the one whose fate will set much of the course for what lies ahead at the state Capitol this summer.

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About John Myers

John Myers is senior editor of KQED's new California Politics & Government Desk. He has covered California politics for most of the past two decades, serving previously as Sacramento bureau chief for KQED News and most recently as political editor for KXTV News10 (ABC) in Sacramento. In 2014, he was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.

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