Gov. Brown reaches California tax deal with group

By Robert Jablon

Associated Press

Published: Wednesday, March 14 2012 12:00 a.m. MDT

California Gov. Jerry Brown answers reporters' questions about a possible deal with the group led by the California Teachers Association that has been pushing for the so-called “millionaire’s tax," following a tour of a flight test version of the Boeing 787 Dreamliner as it makes a tour stop at the Boeing plant in Long Beach, Calif., Wednesday, March 14, 2012.

Reed Saxon, Associated Press

SACRAMENTO, Calif. — The decisions California voters are likely to face this fall came into sharper focus Wednesday as Gov. Jerry Brown, legislative leaders and a coalition with which he had been at odds announced a deal for a proposed ballot measure to temporarily raise the state's sales and income taxes.

The budding compromise is a fallout from California's ongoing budget deficits and a result of the governor's failure last year to get Republican support in the Legislature for an extension of tax hikes that have since expired.

If passed by voters in November, the tax hikes would raise anywhere from $7.1 billion to $9 billion a year at their height, according to the state Department of Finance.

Californians also are likely to confront a competing ballot initiative that would raise income taxes for nearly all wage-earners to help fund schools. That proposal is backed by wealthy Los Angeles attorney Molly Munger, who so far has refused to back away from her putting her initiative on the fall ballot.

The Democratic governor announced the deal with proponents of a ballot initiative that would have raised incomes taxes on millionaires. Democratic-leaning interest groups moved quickly to align behind the single, high-stakes budget proposition.

"It's the tax program that balances the budget, and that's the key," Brown told The Associated Press after a news conference at a Boeing Co. facility in Long Beach. "Joining the forces creates a higher probability of victory, and that's good for school kids, it's good for public safety."

Brown said working together provides a greater chance of success in November.

Joshua Pechthalt, president of the California Federation of Teachers, the chief financial backer of the millionaire's tax, said his group always sought to collaborate with the governor. He said it became clear to Brown and other powerful Democrats within the last couple of weeks that the teachers union was unlikely to simply drop its ballot proposal.

"I think No. 1, the governor and the legislative leaders saw that we were committed to this, we were not backing down, and last week we published some recent polling we did, which continued to show our measure polling very, very strong," Pechthalt said.

The millionaires' tax had continued to fare better in public polling than the governor's more nuanced approach, which called for a four-year, half-cent increase in the sales taxes and a five-year sliding scale income tax hike starting with people who make $250,000 or more a year.

A Public Policy Institute of California poll last week found Brown's measure with just 52 percent, far lower than initiative supporters like to see so early in an election cycle.

None of the tax proposals has yet qualified for the ballot. The compromise struck by Brown and the groups backing the millionaires' tax will require them to start a new effort to gather petition signatures.

The compromise proposal would reduce the four-year sales tax hike to a quarter-cent instead of a half-cent and increase the income tax rates on high-income earners by 1 percentage point to 3 percentage points, depending on income. The income tax also would last seven years rather than the five years as Brown had proposed.

Rick Jacobs, chairman of the Courage Campaign, another sponsor of the millionaires' tax called the deal "a victory for progressives and everybody who believes that the state of California needs to re-fund itself."

He acknowledged that backers now face a short deadline to qualify the measure and collect the 807,615 signatures needed to place it on the ballot. Signatures that Brown and the millionaires' tax supporters had already gathered will not count toward the new initiative, meaning they will have to spend millions of dollars more.

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