Thursday, November 08, 2012

PROP 30 PASSES: What’s next? A retroactive tax? Where’s the money? CSU students get $249 refund

A series of articles from KPCC/ 89.3 – Southern California Public Radio

Prop. 30 winning; what's next for schools, taxes?

By Tami Abdollah | Represent blog |

November 7th, 2012, 1:21am  ::  Prop. 30, a measure to increase taxes and stave off nearly $6 billion in education cuts, appeared to be headed for passage as election results trickled in early Wednesday.

The measure received support from 53 percent of voters with 72 percent of statewide precincts reporting and less than half of L.A. County's votes counted.  The passage marked the end of a last minute frenzy by Gov. Jerry Brown and supporters to reverse dropping poll numbers.

Prop. 30 will increase personal income tax for seven years on Californians earning more than $250,000. It would be implemented retroactively, starting Jan. 1, 2012. Those earning between $250,000 and $300,000 will pay 1 percent more. People making between $300,000 and $500,000 will pay 2 percent more and people making more than $500,000 will pay 3 percent more in taxes.

Sales tax will rise by 1/4 of a cent for four years starting in 2013. That's roughly one cent on a $4 latte or 25 cents on $100.

This was the first time since 2004 that California voters approved a tax increase on a statewide proposition. The last increase passed by voters was Prop. 63: Income Tax Increase for Mental Services, which created a 1 percent tax increase on people earning above $1 million annually to fund mental health services.

Prop. 30 returns showed Californians on the coast and especially in the Bay Area voting in favor of the measure. In Southern California, L.A. County was isolated in its support for the measure, with all the surrounding counties voting against the tax increase.

Voter turnout numbers aren't out yet, but this was the first year Californians could register online and Prop. 30 supporters held multiple campaigns to increase registration and turnout among young people.

The California State Student Assn. said it was able to register more than 31,000 new voters as part of a voter registration drive.

For many, the impact of Prop. 30 not passing, and the possibility of roughly $6 billion in cuts, would have hit them directly. UC and CSU warned of tuition hikes; California Community Colleges have already cut course offerings and enrollment. K-12 officials said they could lose up to three weeks of school if the measure didn't pass; districts across the state prepared contingency plans.

Orange County, traditionally a primarily Republican, anti-tax area, had 61 percent of its votes against Prop. 30. But Marin County, one of the wealthiest in the state, supported Prop. 30 with a 68 percent yes vote.

Some worried that Prop. 30 would not pass because of a dueling ballot measure, Prop. 38, supported by civil rights attorney Molly Munger. She poured tens of millions of dollars into the campaign, at one point funding an anti-Prop. 30 ad. Her measure, however, failed with roughly 75 percent voting against it.

Educators say Prop. 30's passage doesn't mean schools won't experience tight budgets this year or avoid cuts, but it should provide growing revenue — roughly $8.5 billion in its first year, and about $6 billion in the following years — to fund schools, pay down IOUs to districts, and help balance the state budget.


Prop. 30 has passed, but how do you pay retroactive taxes?

By Tami Abdollah |

Tax Preparers Help Last-Minute Filers As Tax Deadline Looms

Justin Sullivan/Getty Images

November 7th, 2012, 3:46pm  ::  Prop. 30 has passed, and if you make more than $250,000 your income tax will go up - we explain how that's paid. Sales tax will also rise in January.

Now that Prop. 30 has passed, here are some nuts and bolts you need to know about how your income taxes may change this year.

Prop. 30 will increase personal income tax for seven years on Californians earning more than $250,000. It will be implemented retroactively, starting Jan. 1, 2012. Those earning between $250,000 and $300,000 will pay 1 percent more. People making between $300,000 and $500,000 will pay 2 percent more, and people making more than $500,000 will pay 3 percent more in taxes.

But how do you pay retroactive taxes?

I spoke with Jay Chamberlain, chief of financial research at the California Department of Finance. He said that taxpayers, and particularly high-income earners, pay four estimated payments for each tax year. The next estimated payment is due on Jan. 15 for the 2012 tax year.

But the law also says that when there's a law change that affects taxes that year, the additional money that would go into that estimated payment can be waived without a penalty, Chamberlain said. Instead, people can just include the extra taxes in their final payment on April 15, he said.

"They could send us a check today if they wanted," Chamberlain said. "But there's nothing compelling them. There's no penalty if they just want to wait until April 15, which we think most taxpayers will do."

The income tax is expected to generate about $6 billion this year; it will remain in place for seven years. Starting in January 2013, state sales tax will rise by 1/4 of a cent for four years. That's roughly one cent on a $4 latte or 25 cents on a $100 purchase.

Prop 30 passed - so now where's the money?

By Vanessa Romo |

Gov. Jerry Brown

Sharon McNary/KPCC

November 7th, 2012, 8:06pm  ::  California Gov. Jerry Brown speaks in support of Prop. 30 at a rally of UCLA students on campus, Oct. 16, 2012

California’s voters avoided massive cuts to public education that would have gone into effect in January by approving Proposition 30, Governor Jerry Brown’s tax measure. Now the question is: when will the money show up?

The short answer is the income tax revenue on anyone who earns more than a $250 thousand dollars a year, plus the additional quarter-cent sales tax, will have a ripple effect on the different systems of public education.

For K-12 schools, not much may change in the short term because most districts assembled their budgets assuming that Prop 30 would pass.
But State Superintendent Tom Torlakson said the ability to maintain the status quo will stem “the chaos of waves of pink slips, of disruption, just demoralization of the teaching work force.”

A billion dollars in state funding would have disappeared from the budget as early of December, he said.

“Now that Prop 30’s passed, we can stabilize the budget,” Torlkason said.

The extra cash infusion expected next fiscal year – about $5 billion in 2012-13 and an estimated $10 billion in 2013-14 - means students won’t lose any more instructional time and teachers won’t have to take off more unpaid furlough days.

“The only way we would have been able to balance the budget would be to end the school year a month early,” said Torlakson. The state's school chief said now the public schools can start bringing back some of the programs that were cut over the years.

At the higher eduaction level, California State University students will feel the effect right away. Fulltime students will get a check in the mail for $249. That’s a refund on the most recent round of tuition increases.

Mike Uhlenkamp, a spokesman for the Cal State system, said there’s no direct funding going toward CSU’s budget this year, but for the 2012-13 school year the state will add $125 million in supplemental funding to the CSU budget.

In the meantime, the passage of Prop 30 allows CSU to avoid a $250 million cut.

"We’re not going to have make staff or faculty cuts," said Uhlenkamp. "We’ll keep about 5,500 courses from being eliminated, and we’ll actually see our enrollment grow by about 10 or 15,000 students in the next academic year.”
But major problems dating from the 1980s still affect the way California funds public education, said Arcadia Unified School superintendent Joel Shawn.

“The way we fund education – Prop 98 – is seriously flawed,” said Shawn.

Proposition 98 requires California to spend a minimum percentage of the state budget on K-12 education. Shawn said that formula just isn’t working anymore.
“We need to look hard at rethinking what we spend people’s money on," he said.

Education activist Molly Munger believes so strongly in the need for funding reform that she ponied up more than $44 million of her own money to launch Prop 38 – an alternate approach to raising education money that failed at the ballot box. 

Speaking with KPCC's Alex Cohen on Take Two, Munger said Prop 30 is not the solution to California’s education budget crisis. “It will only prevent further deterioration in an already dismal situation,” she said.

Munger said she expects a long, hard battle to pay for public education after so many years of budget-gutting.

“This was just the opening round," she said. "This is not the end. This was the beginning.”

Cal State students in line for tuition refunds after Prop. 30 passes

By Tami Abdollah |

Adolfo Guzman-Lopez/KPCC

November 7th, 2012, 10:59am  ::  Cal State students woke up Wednesday to news that they'd get refunds on their fees because voters approved Prop. 30 at the polls.

Instead of tuition hikes, Cal State University students woke up to news that they'd receive refunds on their fees because voters approved Prop. 30 at the polls Tuesday, the California State Student Association said in a statement.

Prop. 30 passed with 54 percent of the vote. If it had not, the Cal State system would have been hit with a $250 million trigger cut and students would have experienced a $300 per year tuition increase, the loss of 5,500 course sections and limited fall 2013 enrollment, the student group said.

Instead, Cal State students will receive an "immediate tuition refund of $249" to maintain tuition at $5,472 a year, the student association said.

The California State Student Association - CSSA - amped up voter registration efforts this summer. It registered 31,372 new student voters on 23 campuses for this election. The organization also sponsored rallies, information sessions and debates.

“The passage of Proposition 30 shows us two things: that Californians value public education and that young people truly can make a difference in an election," said Pedro Ramirez, CSSA vice president for Legislative Affairs and a student at Cal State Long Beach.


2cents smf


A blackguard whose faulty vision sees things as they are, not as they ought to be. - The Devils Dictionary, Ambrose Bierce

smf: Excuse my cynicism, but didn’t the state budget require state agencies, school districts and presumably the CSU system to create their 2012-13 budgets on the assumption that Prop 30 would pass?

How was CSU able to over collect $249 per student in tuition? 

And how many tax increases would pass at the ballot box if some of the electorate know they would get a refund for voting the right way? 

As to the retroactivity of the tax, the courts have ruled in the past that the constitutional prohibition against ex post facto laws applies to criminal and not civil or tax law – though in the case of wholly new taxes this is not absolutely settled.  see: The Likelihood and Enforceability of a Retroactive Tax

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