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Our Sunday best — Tax talk: A clear and detailed explanation of the upcoming ballot measures

By From page A1 | October 14, 2012

Proponents of Measure E promoted their cause during President Bill Clinton's rally at UC Davis on Tuesday. Sue Cockrell/Enterprise file photo

Proponents of Measure E promoted their cause during President Bill Clinton's rally at UC Davis on Tuesday. Sue Cockrell/Enterprise file photo

Davis voters face decisions on local, statewide proposals that would fund schools

Should people pay higher taxes in order to provide more funding to the public schools, which have taken hit after hit financially during the long-running state budget crisis?

Davis-area voters will face three different ballot measures that would impose taxes to support the schools when they cast their ballots in the Nov. 6 general election. Here’s a look at what each of those three measures would do if approved by voters.

Measure E

Measure E is a local school parcel-tax measure — a flat-fee property tax, of the sort that Davis-area voters have approved multiple times over the years since 1984. (That first local school parcel tax was aimed at restoring funds lost by local schools after California voters approved 1978’s Proposition 13, limiting property taxes.)

If approved, Measure E will impose what could be a two-part charge.

First, homeowners would pay $204 per house per year, over a four-year period. Supporters describe Measure E as a continuation or renewal of Measure A, a two-year “emergency” parcel tax approved by local voters in May 2011. Measure A is currently generating about $3.2 million annually to support the local schools; the $204 raised under Measure E would generate a like amount.

Measure A expires in June 2013. Measure E, if approved, would start in July 2013. Homeowners would see their first bill under Measure E in the fall of 2013, when Yolo County mails out property tax forms. Measure E would expire in June 2017.

Under Measure E, owners of apartments, duplexes, condos and other multi-unit dwellings are charged $20 per unit per year, for the same four-year period.

The second aspect of Measure E kicks in only if California voters reject statewide Proposition 30. If Prop. 30 fails, the Davis school district would be hit with an immediate mid-year budget cut of $3.5 million — equal to about $440 per student per year in state funding. If Measure E is approved by local voters, and Proposition 30 is rejected by California voters, Measure E authorizes the Davis school board to charge up to an additional $242 per single-family home per year, which would bring in roughly $3.5 million to the Davis school district’s budget — essentially replacing the amount that would be cut if Prop. 30 fails.

(However, it should be noted that the $3.5 million in cuts that would occur if Prop. 30 fails would happen right away. The $3.5 million in revenue that would be provided under Measure E if Prop. 30 fails would not be collected until late fall 2013, and would not reach the Davis school district until December 2013. Therefore, the Davis school district could face immediate budgetary challenges if Prop. 30 fails and Measure E is approved. The Davis Board of Education is already discussing its options in the event that this scenario plays out on Election Day.)

Measure E includes an exemption for seniors and those living on Supplemental Security Income, who live in the home for which they are applying for a Measure E exemption.

The funds generated under Measure E would go toward the same things that are currently funded under soon-to-expire Measure A: a small reduction in class size; availability of classes in core subjects like science and history, world language and certain other electives; funding to support reading and math specialists to work with students who are struggling to perform at grade level; and funding for school site safety.

In order to be approved, Measure E requires a supermajority — two-thirds of votes cast. This is a threshold that local school parcel tax measures have reached multiple times in the past. Davis area voters approved local school parcel tax measures by more than a two-thirds majority in 2007, 2008, 2011 and 2012 — each designed to stave off state budget cuts, as California’s budget crisis has dragged on longer than the trustees on the Davis school board thought was possible.

But a two-thirds majority is always a tall mountain to climb, for any ballot measure. Measure E’s supporters worry it will be the next-to-last item on a long ballot, and may suffer from “voter weariness” as a result. Also, if Prop. 30 fails, Measure E would charge up to $446 per year per single family home — a larger amount than Davis voters have been asked to consider in past school parcel tax campaigns. No one, including Measure E’s proponents, is taking the outcome for granted.

Proposition 30

Proposed by Gov. Jerry Brown and supported by the state’s two biggest teacher unions, Proposition 30 would increase income taxes on those with taxable incomes above $250,000 — extending over a seven-year period (2012 through 2018). Additionally, Prop. 30 would impose a quarter-cent increase in the state sales tax for four years (2013 through 2016).

Estimates vary on how much revenue Prop. 30 would generate. The state’s Department of Finance estimates $8.5 billion in 2012-13; the state’s Legislative Analyst’s Office estimates $7.7 billion. Funds raised under Prop. 30 would be deposited into a newly created Education Protection Account within the state’s general fund, and from there to individual school districts. Prop. 30 also would place the state-to-county shift of dedicated revenues in the state constitution, ensuring that counties will receive ongoing funding to pay for the realignment of public safety, and health and human services programs.

California’s current state budget was built on the premise that voters would approve Prop. 30 in the Nov. 6 election. If rejected, there would be immediate consequences for schools — a cut of about $3.5 million in ongoing funding (roughly $440 per pupil per year), over and above the approximately $1,000 per student per year in cuts that has occurred over the past four years).

Prop. 30 requires a simple majority for passage.

Proposition 38

Proposed by the California State PTA and Southern California lawyer/activist Molly Munger, Proposition 38 would increase income taxes by various amounts, over a 12-year period (2013 through 2024). Unlike Prop. 30, Prop. 38 does not include a sales tax increase. Funds generated under Prop. 38 would go into a newly created California education trust fund, which would be outside the state’s general fund. The state Legislative Analyst’s Office estimates that Prop. 38 would generate $5.6 billion in 2012-13.

From 2013-14 through 2016-17, some 60 percent of funds generated by Prop. 38 would go to K-12 schools, with another 30 percent going to repayment of state debt, and an additional 10 percent going to child care and preschool programs.

From 2016-17 until 2024, those allocation ratios would change, with 85 percent of funds generated by Prop. 38 going to K-12 schools, and 15 percent going to child care and preschool programs.

Passage of Prop. 38 would not allow the state to avoid the round of automatic mid-year spending reductions that would occur if Prop. 30 fails. So the Davis school district could be looking at an immediate budget problem for the current budget year if Prop. 38 passes and Prop. 30 fails — regardless of what happens with Measure E.

Proposition 38 requires a simple majority for passage.

What if Prop. 30, Prop. 38 and Measure E all pass?

According to the state Legislative Analyst’s Office, “If provisions of two measures approved on the same statewide ballot conflict, the (state) Constitution specifies that the provisions of the measure receiving more ‘yes’ votes prevail. Proposition 30 and Proposition 38 on this statewide ballot both increase personal income tax rates and, as such, could be viewed as conflicting.”

The LAO added that “Proposition 30 and Proposition 38 both contain sections intended to clarify which provisions are to become effective if both measures pass:

* “If Proposition 30 Receives More Yes Votes. Proposition 30 contains a section indicating that its provisions would prevail in their entirety and none of the provisions of any other measure increasing PIT rates — in this case Proposition 38 — would go into effect.

* “If Proposition 38 Receives More Yes Votes. Proposition 38 contains a section indicating that its provisions would prevail and the tax-rate provisions of any other measure affecting sales or PIT rates — in this case Proposition 30 — would not go into effect. Under this scenario, the spending reductions known as the ‘trigger cuts’ would take effect as a result of Proposition 30’s tax increases not going into effect.”

If Prop. 30 passes, local Measure E will charge $204 per single family home per year, and $20 per unit per year for multi-unit dwellings.

What if all Measure E, Prop. 30 and Prop 38 all fail?

For the Davis school district, the failure of all three measures would mean:

* An immediate reduction of $3.5 million in the form of “trigger cuts” that would go into effect if Prop. 30 fails. This would translate into a reduction of the equivalent of 67 full-time positions across the school district.

* Another cut of $3.2 million in the 2013-14 budget, as local funding currently generated under Measure A expires and is not replaced. The $3.2 million cut would translate into a reduction of the equivalent of approximately 58 full-time positions across the school district.

Other options discussed at the Oct. 4 meeting of the Davis school board included school closure. The Davis district could realize long-term savings of about $300,000 if an elementary school is closed, or a savings of $500,000 to $600,000 if a junior high school is closed. Closing a school would involve redrawing attendance boundaries for the schools that remain open, and changing attendance boundaries has proven to be a complex and sometimes rancorous prospect in the past.

Another option would be shortening the school year and/or reducing staff salaries. Each instructional day in the school year costs about $225,000 in salaries and other expenses. Alternately, a one-percent reduction in salaries across the district would save about $450,000.

The Davis school board is scheduled to hold another discussion of the district’s budget alternatives when it meets on Thursday at 7 p.m. in the Community Chambers in Davis City Hall, 23 Russell Blvd. Staff presentations are expected to include some details about the fiscal and programmatic impact of possible school closures, a possible reduction of instructional days and possible salary givebacks.

— Reach Jeff Hudson at [email protected] or 530-747-8055.

Jeff Hudson

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