LAO: Compromise Tax Plan Would Yield Less Revenue Than Projected
On Friday, the Legislative Analyst's Office estimated that a compromise tax hike initiative by Gov. Jerry Brown (D) and the California Federation of Teachers would generate $2.2 billion less next year than Brown previously projected, the Sacramento Bee's "Capitol Alert" reports.
Brown projected that the plan would raise about $9 billion in fiscal year 2012-2013. However, LAO reviewed the measure and estimated that it would generate $6.8 billion next year (Siders, "Capitol Alert," Sacramento Bee, 3/16).
Brown's initial plan -- which was endorsed by the California Medical Association -- would have raised income taxes on Californians earning at least $250,000 annually and have increased the sales tax by a half cent. The tax increase would have expired at the end of 2016.
The plan was a key part of Brown's $92.6 billion spending proposal forÂ fiscal yearÂ 2012-2013.
TheÂ Millionaires Tax -- backed by the California Nurses Association and other groupsÂ -- would have hiked taxes on Californians earning more than $1 million annually. Some of the revenue would haveÂ gone toward state health services.
The new compromised plan still faces competition from a third tax proposal filed by Molly Munger -- a wealthy civil rights attorney (California Healthline, 3/15).
Differences in Revenue Expectations
The LAO findings are similar to those from the agency's review of Brown's original tax plan, which also determined that revenues would be lower than Brown had estimated.
H.D. Palmer, a spokesperson for the state Department of Finance, said the difference in revenue expectations between Brown's administration and LAO likely is the result of different revenue forecasting methods, such as the administration anticipating higher revenue from capital gains ("Capitol Alert," Sacramento Bee, 3/16).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.