Tuesday, March 20, 2012

The New Tax Initiative and UC Funding

There have been a few big changes on the tax initiative front the last few days. As many of you might know, a deal has been made to combine the Millionaire’s Tax and the Governor’s tax initiative. I will list the details of the new initiative below, and in many ways, it is an improvement over the governor's initial proposal, but unlike the Millionaire's Tax, it does not dedicate revenue for higher education. So we are currently meeting with legislators to put new language into the state budget to dedicate funds to higher ed. It is important to stress that we were told by legislators that even if the Millionaire's Tax provided money for higher ed, the legislature would still have to reduce higher ed funding to balance the budget, so we think the new initiative might turn out to be better for the UC system. We will now have to work together to push the legislature and the governor to re-fund higher ed.

We met with the governor’s budget people and several legislators on March 19th to push for budget language that would increase transparency and funding for the UC system. If all goes well, tuition will be frozen for three years, and the state will increase its contribution to the UC system by at least 4% each year.

Here’s a description of the new initiative:

a. 1% increase on incomes of $250,000 ($500,000 for couples). No change from Governor’s initiative.
b. 2% increase on incomes of $300,000 ($600,000 for couples). Governor’s initiative was 1.5%.
c. 3% increase on incomes of $500,000 ($1 million for couples). Governor’s initiative was 2%.
d. These tax increases remain in place for 7 years. Governor’s initiative was 5 years.
2. SALES TAX: increase ¼ cent (Governor’s was ½ cent). Same expiration as the Governor’s.
3. STRUCTURE: The measure will be based on the Governor’s initiative structure, with the changes noted in #1 and #2 above.
4. REVENUES (NOTE: THESE ESTIMATES ARE PRELIMINARY): This new measure will generate about $9 billion for the 2012-13 budget (up from the $6.9 billion in the Governor’s initiative).

Also, there will be additional comments in statements from the principals about re-investing in higher education as a priority. (Not to mention the fact that the new measure will generate higher revenues.)

We need to pressure the legislature and governor to dedicate funds to higher education in the May Revise budget.


  1. Cynthia Tuell at UCRMarch 20, 2012 at 10:28 AM

    Thanks for the info. Can you tell me the name of this initiative so I can find a signature gatherer outside of a grocery store who has it and wants me to sign it? Those signature gatherers are often ignorant about all those petitions they hold in their hands. "The governor's tax initiative?" the young man asks, bewildered. "Who does it tax?" he asks. I think this is no way to run a state.

    Can you or the CFT send out an urgent memo to members to sign the petitions? With info on where to find them?


  2. It is called: "TEMPORARY TAXES TO FUND EDUCATION. GUARANTEED LOCAL PUBLIC SAFETY FUNDING. INITIATIVE CONSTITUTIONAL AMENDMENT." Ouch! They are collecting signatures now. You can tell the new one by the petition date of March 16. This is far from a perfect process.

  3. Bob, a tuition freeze plus 4% a year, given how far down we are, is a recipe for ongoing structural shortfalls in UC's budget.

  4. Chris, I agree with you, so we have to push for more revenue.

  5. What about the oil severance tax? Why does everybody keep insisting it's off the table? It wouldn't even have to Alaska-style at 25%. I would settle for Texas.

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