Characterizing passage of Proposition 30 as “a reinvestment in the broader common good,” California Health and Human Services Secretary Diana Dooley said voters’ willingness to tax themselves may signal a move away from “fee-for-service government.”
Prop. 30 proponents say the initiative’s approval may indicate California’s taxing pendulum has reached the other side of the arc started by Prop. 13 in 1978. That landmark property tax rollback pulled away much of the funding for the state education system and increased pressure on other parts of state government, including health care.
“After Prop. 13, everyone ran completely away from any kind of asking the people to reinvest,” Dooley said. The state balanced budgets through targeted borrowing and by passing measures and legislation to pay for specific purposes, Dooley said.
“One of the fallouts from Prop. 13 was we trended toward fee-for-service government,” Dooley said. “This [passage of Prop. 30] is a reinvestment in the state as a whole.”
Democrat Jerry Brown, governor in 1978 when Prop. 13 passed and governor again when Prop. 30 passed, deserves much of the credit for Prop. 30’s passage, according to Dooley.
“The governor was spectacular from the beginning all the way up to the last two weeks of barnstorming,” Dooley said. “I think his dedication to California came through so clearly to people. I think he got them to understand the value of their government and the importance of investing in it.”
Prop. 30 Called Key to Fiscal Foundation
Prop. 30 will generate about $6 billion a year by raising the state sales tax one-quarter of a cent for four years and by increasing income taxes for seven years for those with annual incomes higher than $250,000.
The new revenue will mostly be used for education but will be a boon to the entire state government, including health care.
“From day one in this administration, the highest priority was to get a firm fiscal foundation,” Dooley said. “Although it didn’t relate directly to health care, it was made clear that it (passage of Prop. 30) was essential to the foundational work we had to do. You can’t build what we’re talking about building on an unstable foundation,” Dooley said.
Dooley said passage of Prop. 30 and re-election of President Obama were good news for California’s health care system, but she was quick to point out that building a statewide insurance exchange and expanding Medi-Cal, the state’s Medicaid program, will require toil and sweat.
“We still have very, very hard work to do implementing the Affordable Care Act, but it’s significantly less hard today than it might have been,” Dooley said.
Another Post-Prop. 13 Milestone Possible
In addition to reducing property taxes, Prop. 13 creates a new, higher threshold for the Legislature to raise or create taxes of any kind. Starting in 1978, new taxes needed approval from two-thirds of both houses of the Legislature, a level rarely reached over the past 34 years.
The bar does not seem so out-of-reach this week after Democrats apparently won a supermajority in both houses of the Legislature.
Although a few races are close and outcomes still in question, it appears Democrats will have 54 of the 80 Assembly seats and 27 of the 40 seats in the Senate. It will be the first time in almost 80 years that one party has controlled two-thirds of both houses in California.
“With a supermajority, budget battles theoretically shouldn’t be as intense as they have been the past several years,” said Betsy Imholz, director of special projects for Consumers Union.
“But this is still California,” she added. “There’s no place as big and complicated as California. The tasks we have in front of us are intense and the time is short.”
Imholz said next month’s special health care session of the Legislature will help set the course and pace of health system reform in California.
“Once the governor calls the special session, there will be two big issues — Medi-Cal expansion and individual market reforms. The legislative staffs did a huge amount of work already and one would hope all that time, effort and compromise hammered out will not have been wasted,” Imholz said.
The Legislature approved a bill this fall designed to bring California’s individual health insurance market in line with the ACA. Brown vetoed the bill, AB 1461 by Assembly member Bill Monning (D-Carmel), saying it left California vulnerable if ACA funding were withdrawn. Obama’s re-election erased that possibility.
Income, Sales OK, But Don’t Tax Our Soda
Voters statewide are willing to take on new taxes for education but in the East Bay and San Gabriel Valley, they aren’t willing to tax sugary beverages.
By wide margins — about 77% in the city of El Monte near Los Angeles and about 67% in Richmond — voters rejected proposals to tax businesses one cent for every ounce of sugary beverages they sell.
Opponents of the proposals said voters don’t like the idea of changing behaviors — even unhealthy behavior — by taxation. The American Beverage Association reportedly spent $2.5 million to fight Measure N in Richmond and about $1.3 million against Measure H in El Monte.
Proponents, who spent considerably less, said taxing potentially harmful substances is good policy and the idea will surface again. Health care advocates, who say taxing sugary beverages is a good tool against the rise in obesity and related health problems, predict the issue will resurface in local and statewide measures.
Last year, a statewide beverage tax bill (AB 669) was shelved before it reached a floor vote.
Medical Marijuana Measures Defeated
Voters in five California cities said no to medical marijuana dispensaries in Tuesday’s election.
In San Diego County, voters in Del Mar, Imperial Beach, Lemon Grove and Solana Beach rejected proposals for medical marijuana.
And in the city of Palo Alto in Santa Clara County, voters rejected medical marijuana dispensaries by a wide margin — 62% opposed and 38% in favor.