Friday, November 09, 2012

PROP 30 TAX BILLS TO COME SOON: Income tax increases passed by voters on Tuesday will be retroactive to the beginning of 2012. Schools are already making plans.

By Sharon Bernstein., KNBC=TV |  | NBC Southern California

Prop 30 Tax Bills to Come Soon

Jodi Hernandez | Protesters at UC Berkeley make a sign in the wake of the Prop. 30 passage in the hopes of getting rollback tuition rates.

Thursday, Nov 8, 2012  |  Updated 4:10 PM PST  ::  The tax-raising ballot initiative that voters approved on Election Day has just been passed, but some Californians will feel its impact right away.

In hastily called meetings on Wednesday and Thursday, school district officials throughout the state tried to figure out whether they would still need to cut their budgets this year, and bureaucrats re-worked government budgeting scenarios.

At a more personal level, high-earning Californians prepared to shell out up to 3 percent more in income taxes than in previous years.

Under the new law, called Proposition 30 on the state's recent ballot, individuals making more than $250,000 in taxable income after their deductions will pay an extra percentage point in taxes, as will couples who make more than $500,000 together.

Those making more than $300,000 as individuals or $600,000 as a couple will pay an extra 2 percent, and those making more than $500,000 alone or $1,000,000 as a couple will pay an extra 3 percent.

The new assessments will be retroactive to the beginning of 2012.

Consumers, meanwhile, can expect to start paying an extra quarter of a penny on every dollar that they spend in the state starting January 1, when the new sales tax that was part of the measure goes into effect.

Public schools throughout California would receive $14 billion more from the state over the next four years than they would have had the measure failed, according to the Department of Finance. State beaches will be allocated enough money to keep their lifeguards.

“This stops the downward spiral,” said Jonathan Kaplan, an analyst with the non-profit California Budget Project, which endorsed Prop 30.”It creates a foundation on which to build going forward.”

In Southern California, the Los Angeles Unified School District immediately scrapped plans to shut down for an extra 15 days later this year, and even began discussing whether previously approved furloughs for teachers could be rescinded, spokesman Thomas Waldman said Thursday.

Officials at the district that runs Anaheim’s elementary schools were meeting Thursday to re-think millions in cuts, said spokesman Tim McGillivray.

The new law is expected to bring in enough money to stave off deep cuts of up to $6 billion that had been planned for state expenditures, including education. But it will not raise enough money to fully lift California out of its budget hole – or to fully fund education.

Anaheim is still expecting to have to make cuts for the 2013-2014 school year, though they will not be as steep as they might have been had Prop 30 not passed, McGillivray said.

But experts and state officials caution that the new revenues won’t be enough to restore spending in the Golden State to anything close to what it was before the economy crashed in 2008.

For that, the state needs more economic growth – and more jobs.

“This stanches the bleeding,” said Kaplan. “It allows us to have a floor. But it doesn’t solve all of the problems that have been created over the last several years of cuts.”

The state still anticipates a gap between how much it needs to spend during this fiscal year and how much it will take in, said H.D. Palmer, a spokesman for the California Department of Finance.

But, he said, that gap will be considerably smaller now than it would have been. The state’s independent Legislative Analyst’s Office is crunching those numbers now, and is expected to release a report on the state’s fiscal condition next week.

The sales tax will remain in effect for four years, and the income tax for seven years.

No comments: