Posts Tagged $3 Billion

Oh Molly… Why Californians Need To Reject 38 And Approve 30

We’ve got to hand it to Prop 38 backer Molly Munger, the multi-millionaire and her PR posse are pounding the airways with an avalanche of slick ads pushing her self-created tax plan. According to polls and questions we are getting here at PolitoMuse her money is yielding a strong return. Unfortunately, her ads are a bit loose with the truth.

“Prop 38 Doesn’t Restore Education Funding”

The Prop 38 folks just missed that one word we highlighted in making their ads. As we outline in our analysis of Prop 30 and Prop 38 only Proposition 30 restores the education funds removed in the last cost-cutting budget. Specifically:

  • Prop 38 restores exactly $0.00 of the funds cut from higher education – it will necessarily result in more increased tuition costs and reduced services to all community college, Cal State and U.C. students.
  • Prop 38 restores exactly $0.00 of the funds cut from Developmental Services (the folks that provide educational support for the disabled in California)
  • Prop 38 does not even “restore” the K-12 monies removed by the current budget. It provides different sums of money (resulting in a net reduction this year followed by a net gain in later years – more on that later) but then mandates that it be spent in a particular manner, including about $50 million (1%) to fund a new bureaucracy created by Prop 38 and some $750 million (12%) annually on computers and training whether schools need them or not.

By contrast, Proposition 30 does exactly what Proposition 38 falsely claims — it precisely “restores” the funds removed by the current budget cuts.  Cuts that were implemented with the intention of giving voters the choice posited by Proposition 30.

Prop 38 Doesn’t Keep Money Away From Bureaucrats

Molly and her PR folks missed that same important word on this claim too.  As we explain in our analysis, Prop 38 actually creates a massive bureaucracy; it just moves bureaucratic decisions from the legislature and local communities to the Superintendent of schools and a newly created non-legislative board (not exactly a “win” in our book).  It also imposes required spending on all schools throughout the state in a manner that will be good for some and bad for others.  For example, it will require spending on “technology” totaling nearly 750 million in year 2 and nearly $1 billion in years 5 through 12 – And like the rest of the initiative, that allocation cannot be changed absent passage of another state-wide proposition.  Finally, it does one of the biggest budgeting “no-no’s” one can do: It creates massive fluctuations in the income stream for both schools and the general fund. Here is how the estimated money flow looks just for K-12:

  • Year 1 = $3 Billion (a net $3 billion loss based on existing budget cuts)
  • Years 2-4 = a massive jump to about $6 billion
  • Years 5-12 = another jump (and a corresponding, inexplicable reduction in other expenditures) to over $8.5 billion.

The proponents of Prop 38 offer zero justification for the funding levels they selected, much less the rational for the sudden, massive, 50% increase between year one to two and the nearly 30% increase between years four and five.

Similar zigzagging of expenditures is found at the state general fund level which receives substantial funds to pay down debt for four years, followed by a sudden, unexplained, end to those payments (and no we will not come anywhere near paying off our debt after four years).

Prop 30 does the opposite.  It provides a steady, predictable, income stream at proven levels previously used by the State.

Voter Beware

As a matter of state law, Prop 30 and 38 can’t both be enacted. That means you have to pick one, the other, or neither. This is one of the many reasons proponents of Prop 30 begged Molly Munger to withdraw her well-intentioned, but poorly crafted, initiative. Because she refused, it means that those who support a modest tax increase to increase funding for education will be split between two competing statutes while those opposed will just vote against both. That is unfortunate for the reasons we set forth in our analyses. Our state desperately needs the funds targeted to the broad range of educational sources in Proposition 30. We hope voters will be savvy enough to wade through the confusion to vote in favor of 30 and against 38.

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