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:
1. PERSONAL INCOME TAX:
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.
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