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Second In Series: November 6 State Ballot Propositions

Second In Series By The Long Beach Business Journal

On November 6, registered voters have an opportunity to weigh in on 11 statewide ballot propositions and two Long Beach initiatives. Business Journal writers are examining each of the measures. The August 28 edition of the Business Journal looked at six of the state propositions. This edition examines the other five.

By Joshua H. Silavent - Staff Writer

September 11, 2012 – Two competing proposals to raise taxes in California will appear on the ballot this November, but whether voters approve either might just depend on how much of their own paycheck they are willing to sacrifice to fund public education. If both measures pass, that which receives the most number of ‘yes’ votes will be enacted, in accordance with state law.

Long Beach Balloting

Propositions 30 and 38 - Competing tax increase measures

To cover funding shortfalls for K-12 and community college education, Gov. Jerry Brown wants to raise taxes on personal income over $250,000 for seven years and increase sales taxes for a four-year period.

The Golden State’s current maximum personal income tax rate is 9.3 percent. Proposition 30 would raise that to between 10.3 and 12.3 percent for top earners. The sales tax would increase to a minimum 7.5 percent.

Estimates vary on the amount of revenue that will be generated if Proposition 30 comes to fruition, ranging from $6.8 to $9 billion in fiscal year 2013 and $5.4 to $7.6 billion over the next five years. Diminishing returns would follow.

About 89 percent of the temporary tax increases would support K-12 education, while the remainder would fund community colleges across the state.

Proposition 30 bars the use of these funds for administrative costs, but does give local school boards discretion on how to spend the new revenues.

Brown has said that massive cuts to education spending will result without increased tax revenues. Opponents counter that this is simply a rouse.

Meanwhile, another proposal seeks a tax hike on nearly all income levels, but scraps the sales tax increase under Brown’s plan.

Proposition 38 seeks a 12-year, sliding-scale tax increase on annual personal income above $7,316, with a .4 percent hike for the lowest earners and 2.2 percent increase for those individuals earning more than $2.5 million annually.

About 60 percent of this new revenue would be applied to K-12 education in the first four years, while 30 percent would be used to re-pay billions of dollars in state debt and 10 percent allocated for early childhood programs.

The final eight years would see about 85 percent of the new revenue applied to K-12 education, while the remaining 15 percent would go toward early childhood programs. It prohibits the state from usurping the new revenue or directing how the money is spent.

Without additional funding, and left to the whims of future budget cuts, the Long Beach Unified School District (LBUSD) Board of Education reports that 20 days of school could be cut from the calendar, some high school sports programs could be eliminated and class sizes would almost certainly increase, among other things.

“There are no more easy cuts to be made,” Chris Eftychiou, LBUSD public information officer, told the Business Journal. “We are at a breaking point.”

The LBUSD already has slashed $300 million and 1,000 jobs since 2008, but the worst might be yet to come.

“We’ve been fortunate in that we’ve continued to see steady gains in academic achievement,” Eftychiou said, “but our fear is that we will soon see those trends reversed if we continue to cut billions of dollars from public education statewide, as we’ve done in recent years.” Though a best-case scenario still includes up to $20 million in cuts for the current school year, it could balloon to as much as $29 million if neither Proposition 30 nor 38 pass. The LBUSD board voted to support both propositions on September 4.

Meanwhile, funding for two-year community colleges remains a key difference between the competing tax proposals.

More than $800 million has been cut from the community college system budget since 2008. As a result, enrollment has taken a 17 percent dive and more than 470,000 students were on course waiting lists at the start of the 2012 fall semester.

Brown has said the system faces another $338 million in reductions if Proposition 30 does not pass.

Supporters of both propositions have raised millions of dollars to see that each passes, but because state law – and language in each initiative – prohibits two simultaneous tax increases on personal income, the campaign has turned bedfellows into enemies.

Were Proposition 30 not on the ballot, supporters would likely throw their weight behind Proposition 38 – and vice versa. But that’s not happening.

For example, in August U.S. senators Dianne Feinstein and Barbara Boxer sent a letter to the California State Parent Teacher Association, a chief sponsor of Proposition 38, to ask that negative attack ads aimed at defeating Proposition 30 be stopped. No dice, though. The battle for your tax dollars rages on.

Propositions 31 - Two-year budget cycle

It might seem like a game of Pick Your Poison, but when California voters head to the polls this November, they will decide whether to keep the state’s annual budget cycle intact or move to a two-year process.

Proponents argue that a change could bring needed stability to a time-consuming, politically fraught process. Opponents, however, contend that annual budgeting makes more sense given the dramatic economic swings of the past few years.

Of course, there is more to Proposition 31 than first meets the eye.

If it passes, this ballot initiative also will give local governments more control and responsibility for implementing and budgeting programs. Moreover, it would give counties and municipalities greater leeway to coordinate services, develop their own regulations and allocate property tax revenues.

But if a shift to more local oversight and control sounds appealing, consider that Proposition 31 also extends the reach of executive power.

Whenever a fiscal emergency is declared, the governor will have the authority to unilaterally cut the budget if the state Legislature fails to do so.

Finally, this initiative seeks to institute a pay-as-you-go and performance-based budgeting model, with regular reviews of all state programs. It also requires all bills to be made public three days prior to a vote. Perhaps this is why the state Republican Party supports the measure.

By Tiffany Rider
Senior Writer

Proposition 32 - Ban on corporate and union contributions to state and local candidates

In an effort to address how union dues are used in politics, another “Paycheck Protection” state statute goes before the voters.

This latest initiative, Proposition 32, is different from past “Paycheck Protection” legislation. Proposition 226 appeared on California’s 1998 ballot and would have mandated that each individual union member provide explicit consent for the use of their union dues in political campaigns. While the initiative initially looked like it would pass, a massive effort by union groups brought out a strong enough ‘no’ vote to keep the law as it stands.

After three revisions, the Sacramento Superior Court approved the final version of the ballot label, title and summary of Proposition 32 on August 13. If passed, it would ban public and private sector labor unions from using payroll-deducted funds to support state and local political campaigns.

The legislation protects the ability of unions and corporations to spend money on independent expenditures, but would restrict both from making political contributions to candidates directly or to committees that directly contribute to candidates. Government contractors, including public sector unions, would be banned from making contributions to elected officials who play a role in awarding their contracts.

Proposition 32 would also be applied to corporations and government contractors that implement payroll deductions. The use of corporate expenditures – not derived from payroll deductions – would remain unrestricted, and the law would not affect campaign spending for federal offices. Current law allows both corporations and union organizations to donate funding to political initiative and candidate campaigns.

To date, there are about 2.5 million workers in California represented by a union. Unionized workers are represented in the collective bargaining process by union representatives to negotiate terms and conditions of employment. To pay for the services of the union, members are charged dues. Many unions use revenue from dues to support activities outside of collective bargaining, such as political action via direct contributions or independent expenditures.

Unions argue that the proposed initiative would not prevent corporations from paying their employees less in order to have excess cash in their coffers that could be used for political purposes. Union leaders say member dues are used for political purposes to further advocate for unionized workers’ rights. On July 6, Service Employees International Union (SEIU) Local 1000, based in Sacramento, contributed $500,000 to the No on 32 campaign.

Some other organizations that have donated to the opposition include the Los Angeles Police Protective League’s Public Safety First Political Action Committee and the International Association of Fire Fighters Opposed to the Special Exemptions Act. The Alliance For a Better California has collected $7.6 million in contributions for the No on Paycheck Deception campaign from the first of the year through the end of June.

The Yes on 32 campaign has collected $1.7 million from January 1 to June 30. Some supporters of “Paycheck Protection” include the California Republican Party; Jon Coupal, president of the Howard Jarvis Taxpayers Association; and John Kabatech, executive director of the California chapter of the National Federation of Independent Business (NFIB).

According to a NFIB statement on its support of Proposition 32, “Big corporations and big unions control your representatives with their big money, money ordinary voters can’t hope to match. . . . Corporations and unions alike blanket the legislature with campaign contributions, ensuring they find or open doors and open ears. Too often a law is passed not for the good of California, but because it will benefit one well-heeled campaign contributor or another.”

Proposition 37 - Mandatory labeling of genetically engineered food

Known as the “California Right to Know Genetically Engineered Food Act,” Proposition 37 has the potential of impacting the entire agriculture industry in terms of food-labeling requirements. The initiative, if passed, would require companies to label all food products that contain or are made with genetically engineered (GE) materials and prevent manufacturers from labeling GE food items as “natural.”

Primary responsibility for compliance lies with the retailers of food products. If a product is not labeled GE, the retailer must provide either a sworn statement from the producer that the food was not intentionally or knowingly engineered or get independent certification on the product itself.

Animal products, such as poultry or beef, would be exempt from the label requirement if not genetically engineered – even if the animal had been fed or injected with GE material. Other exemptions include alcoholic beverages, organic foods, restaurant meals and prepared food for immediate consumption.

The issue at hand, to label or not label, has become a fight between those who think GE crops cause health and environmental problems, and those who see bioengineering as a means of protecting crops from environmental hazards and maintaining food production for our growing population.

GE crops were developed in an effort to fight disease and require fewer pesticides and herbicides. The United States is one of the largest consumers of GE products. To get a sense of how significant the permeation of GE crops is in today’s agriculture, the title and summary of Proposition 37 includes the following statement:

“In 2011, 88 percent of all corn and 94 percent of all soybeans produced in the U.S. were grown from GE seeds. Other common GE crops include alfalfa, canola, cotton, papaya, sugar beets, and zucchini. In addition, GE crops are used to make food ingredients (such as high fructose corn syrup) that are often included in processed foods (meaning foods that are not raw agriculture crops). According to some estimates, 40 percent to 70 percent of food products sold in grocery stores in California contain some GE ingredients.”

Organizations and individuals that think genetically engineering crops pose a health risk say Bt-toxin, one form of bacteria that grows in these types of crops, acts like a pesticide. While most health concerns caused by Bt-toxin were on laboratory animals in testing, people who live near GE crop farms or consume GE crops have complained of respiratory problems, allergies, skin conditions and other potential reactions. However, none of these cases have been proven. In addition, there is concern that Bt-toxin from GE crops could result in gene transfer to non-targeted crops and reduce the effectiveness of pesticides.

The U.S. Department of Agriculture has placed some restrictions on GE crops that have been shown to cause harm to other plants, but no full and separate regulation of GE and non-GE crops currently exists. Approximately 50 countries across the globe – Germany, China, Japan, Australia, Brazil, France, Mexico and Spain, to name a few – have either banned or imposed significant restrictions on GE crops and materials.

Monsanto, the leading producer of GE seeds on the market today, is also the largest contributor to the No on 37 campaign at $4.2 million, followed by DuPont at just over $4 million. Some other major companies involved in donating to the opposition campaign include PepsiCo, Nestle, Kellogg, Coca Cola and ConAgra Foods.

The opposition argues that implementing Proposition 37 would be both impractical and costly due to the need to establish a completely separate grain handling system in addition to the existing system. The current system, which is comparable to streams feeding into a river, may allow for GE and non-GE grains to intermix.

Between January 1 and June 30, the Yes on 37 Right to Know campaign received more than $2 million in contributions from individuals, businesses and health organizations. The Organic Consumer Organization’s Committee for the Right to Know about GMOs received more than $560,000 over the same period. Supporters of GE crop labeling include the Institute for Responsible Technology, the California Democratic Party and Consumer Watchdog President Jamie Court.

Labeling would be regulated by the California Department of Public Health. Estimates on the cost for state administrative regulators range from a couple hundred thousands dollars to $1 million annually. Other estimated costs for implementation would be related to potential legal cases filed with the state courts, since Individuals would be granted the right to sue food manufacturers that break the rules on GE labeling.