Ramsey Ugarte: Spending problems limit effectivness of tax initatives

This November, California voters will be faced with at least two tax initiatives geared at tackling the state’s crumbling public education at various levels.

But let me be clear: this left-right paradigm, tax or no tax debating, is detrimental to every party. Both propositions obscure systemic problems and unfairly burden California citizens with the bailout of a state government failing to meet its people’s needs.

It is no exaggeration to say that California will continue to see the flight of its middle class and the broadening of the income gap between the poorest and wealthiest individuals.

Frankly, our state government has not proven able to handle itself and whom it serves remains to be seen. The idea that in a few months, the California state cash deficit jumped from the anticipated $9.2 billion to $22.3 billion boggles my mind.

From where I stand, it appears California doesn’t have a revenue problem. We have a spending problem.

Rather than turning to these propositions, trimming the bureaucratic overhead on many of California’s institutions, such as the penitentiary system, and limiting already enormous liabilities can provide solutions to free up misspent revenue.

The tax proposals make up the ultimate guilt trip ““ a situation that will put Californians at fault for allowing their public schools to take the fall when funds given to the state have been mishandled at all levels.

Tax increases are, to use a common adage, a bandage solution.

Gov. Jerry Brown’s plan, supported by the UC Board of Regents and UCLA’s Undergraduate Students Association Council, would levy a graded three percent increase in personal income tax for those who make more than $250,000 a year, coupled with a temporary increase in California sales tax, the highest in the nation. Revenue will be placed in the general fund.

But don’t forget, if Brown’s initiative fails ““ all the more likely with two big-ticket initiatives on one ballot ­”“ the UC will be faced with a $250 million cut that would likely result in another sizable fee increase.

If it passes, the UC will still face an uncomfortable gap left open in its budget, unable to be filled immediately by the $125 million promised in 2013 if Brown’s tax passes.

The second tax on the November ballot is a bit more interesting.

Authored by Molly Munger, daughter of Warren Buffett’s famous second-in-command, investment guru Charles Munger, the measure would appropriate funds only to K-12 and early childhood education, completely omitting the state’s higher education crisis.

But that’s not to say the state’s K-12 shortfalls aren’t an adequate mission in and of itself.

The bottom line ““ the UC’s future has been placed in the hands of the common California voter, whose priorities and understanding of the initiatives are uncertain.

California’s politicians appear to have resigned themselves to a game of budgetary Russian Roulette.

Brown has made certain necessary cuts across the board to the California state budget, and it is important to continue this trend. These tax hikes are seen as short-term necessary solutions. But the solvency of California and its higher education depends on better state spending ““ we cannot justify pumping more money into this wrongfully bureaucratic system.

While Munger’s tax plan would effectively increase the state income tax rate in graded levels for all Californians except the poorest, the money is to be spent on a per pupil basis and cannot be used to raise salaries or pensions.

Most importantly, the money cannot be diverted to other legislative funding.

But seeing that Munger’s initiative has no plan for the UC, does it become worthwhile to fight tooth and nail for Brown’s proposal?

Turning to Prop. 30, we find more of the same.

This plan puts a heavier burden on California middle class individuals and small businesses than corporations, though the former have been hit much harder by the current economic climate. And although money from the tax increases are designated for education, there is nothing in place to prevent the government from hypothetically shifting money out of the education budget not designated to Prop 30.

Already, more than 50 percent of K-12 funds go toward administration and overhead costs. And while UC faculty has grown 33 percent in recent years, senior management has increased by 194 percent from 1994 to 2009.

Should Munger’s or Brown’s initiative pass, a larger question should remain on our minds: How long until another tax hike is needed, and another?

Regardless of the end result, the dialogue needs to shift from taxes to further addressing the need to cut government spending.

Email Ugarte at [email protected]. Send general comments to [email protected] or tweet us @DBOpinion.