November 08, 2012

By HANNAH DREIER and

JULIET WILLIAMS

Associated Press

 

California Gov. Jerry Brown took a big step toward delivering on a campaign promise he made two years ago to fix the state’s perpetual budget deficits and to raise taxes to do it only if voters agreed.

Brown said voters put their trust in his plan during the November 6 election by approving Proposition 30, which raises the statewide sales tax and boosts income taxes on the wealthy.

The changes will provide $6 billion to balance the state budget.

Brown, a Democrat, said Wednesday that Proposition 30 will put California on a course to fiscal stability after five years of battering by the recession. He characterized his victory as “a vote of confidence with some reservations.”

Now, he said, he must retain voters’ trust by avoiding spending binges.

“There are two things that I’m very skeptical about. One is mandates and the other is legacies,” he said. “So I'm just going to carry on.”

With Democrats poised to secure a two-thirds supermajority in both houses of the state Legislature, Brown should have an easier time pursuing his broader agenda.

That makeup would allow Democrats to pass budgets and make other spending decisions without any Republican support.

Observers have said Brown’s desire for a lasting gubernatorial legacy was one of the chief reasons he sought the job again in 2010 after first serving as governor from 1975 to 1983, before voters approved term limits.

He has said he wanted to return to the governor’s office after nearly three decades to “get stuff done,” explaining he would lay out his best ideas and leave the choices to voters.

His broader agenda includes building a $68 billion high-speed rail line, streamlining the state’s environmental regulations, and building two giant underground tunnels to funnel water from the Sacramento-San Joaquin Delta, the heart of the state’s water system.

Brown has strong support from labor unions that also were victorious Tuesday in fending off an initiative challenge to their political clout.

Proposition 30, which raises the statewide sales tax for four years and income taxes for seven years on those who make more than $250,000 a year, got an immediate nod of approval from the credit rating agency Standard & Poor’s. It called the measure “the linchpin to the governor’s broader, multiyear strategy for reversing the state’s negative budget position.”

Revenue from the initiative will help the state avoid deep cuts to public schools and more tuition hikes at California’s colleges.

Business groups that had feared a downward slide if the measure failed and forced huge education cuts, also cheered the win, despite higher tax bills for some Californians.

Brown had “done the near impossible” and given California “the temporary breathing room it needs to continue getting its fiscal house in order, restore our economy to health and avoid additional massive cuts to education and vital local public services,” Jim Wunderman, president and chief executive officer of the Bay Area Council, which represents businesses in the San Francisco Bay area, said in a statement.

In winning passage of his initiative, Brown overcame strong voter distrust of state government fueled by a stream of negative publicity over the summer.

Brown was aware of the challenges and did his best to tie the tax initiative to education funding, noted Mark Baldassare, president and CEO of the Public Policy Institute of California.

“All of this just reinforces just how knowledgeable the governor is about the political process as well as the policy process to make this happen, because it’s not easy,” Baldassare said.

School districts that were prepared to lay off teachers and cut as many as three weeks of classes were jubilant, as were leaders of the state’s university and college systems. The California State University system, which faced a $250 million mid-year budget cut if the initiative failed, was set to hand out $249 per-student tuition refunds for the current semester.

Exit polls showed Brown’s initiative did well with minority and younger voters, and that the poorest voters were the most likely to support it. A coalition of community groups that initially backed a separate millionaire's tax claimed credit for turning out some of the new and infrequent voters who they said helped push Brown’s initiative over the threshold.

“This coalition of community, interfaith and labor came together because we knew passing Prop 30 would be tough, and believed that a focus on turning out our base voters could be decisive,” said Anthony Thigpenn, chairman of a group California Calls.

Category: Business

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