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December 9, 2011 > Anti-tax groups counter Brown's tax hike measure

Anti-tax groups counter Brown's tax hike measure

By Judy Lin, Associated Press

SACRAMENTO, Calif. (AP), Dec 06 - Just a day after Gov. Jerry Brown released his tax initiative proposal, anti-tax advocates announced Tuesday they have filed their own counter measure seeking to restrain government spending.

The California Taxpayers Association, Howard Jarvis Taxpayers Association and Small Business Action Committee filed a proposed ballot measure with the state attorney general's office that would limit spending after the state makes a full recovery from the recession.

Like the governor's initiative, the spending cap proposal would appear on the November 2012 ballot if supporters collect 807,615 valid voter signatures.

``We need a mechanism to make sure that the drunken sailor DNA of our Legislature doesn't kick in, and that we put that money away and we use it for debt reduction,'' said John Coupal, president of the Howard Jarvis group.

The measure is just one of many complications Brown faces as he tries to increase taxes on the rich and raise the statewide sales tax.

The Democratic governor and his labor allies want to ask voters to restore billions of dollars cut from public schools, universities and public safety. His proposed initiative, filed Monday, would temporarily increase taxes on the wealthy, starting with individuals who make more than $250,000, and raise the statewide sales tax by half a cent, to 7.75 percent. The proposal would raise about $7 billion a year for five years.

Republicans and conservatives want to impose a spending cap that uses excess money to pay down debt. The competing measures could offer a stark choice for California voters next year.

Brown is echoing the sentiments of the Occupy Wall Street movement to tax the rich, but organizers of the protests have criticized the governor's plan, saying it would hurt students and working Californians who would also have to pay higher sales taxes.

Brown also could face several competing tax initiatives from groups that want to raise taxes even higher. A coalition led by California Federation of Teachers and Courage Campaign filed a tax initiative seeking to raise personal income taxes only on individuals who make $1 million or more annually.

Attorney Molly Munger, the daughter of Charles Munger, a longtime financial partner of Warren Buffett, is leading a separate initiative that would impose a sliding scale income tax hike to raise $10 billion for California schools.

Last month the Think Long Committee for California, funded by billionaire Nicolas Burggruen, proposed a plan to raise $10 billion a year by expanding the sales tax to include services while cutting income taxes.

Brown was in Hollywood on Tuesday to help Universal Studios announce plans to build a new Harry Potter attraction that officials say will create more than 1,000 jobs. His spokesman, Gil Duran, said the governor hasn't had a chance to review the competing ballot measure proposal.

The governor released an open letter to the people of California saying he wanted to go directly to voters because he does not want to get bogged down in partisan gridlock in the Legislature, where he failed to reach a tax compromise earlier this year as the state faced a $26.6 billion budget deficit.

``The stark truth is that without new tax revenues, we will have no other choice but to make deeper and more damaging cuts to schools, universities, public safety and our courts,'' Brown wrote.

Proponents of the spending cap said they believe voters are more likely to support restraining government spending than tax increases. Should voters support both the spending cap and Brown's tax increase, Coupal said it would allow state government to spend more on schools until the cap is reached. After that, money would be used to pay down debt.

California is currently carrying $81.2 billion in outstanding bonds, according to the state treasurer's office.

``We believe it has been out-of-control spending that has created the budget problems in California. The Legislature and special interests have no desire in controlling spending,'' said Joel Fox, president of the Small Business Action Committee.

Fox said Democrats who control a majority in the state Legislature deliberately delayed a vote on a rainy day fund and spending cap that was supposed to appear on the 2012 ballot.

``They moved the measure to 2014 but no one's fooled. The ultimate goal of that delay is to eventually kill the measure,'' Fox said.

California already has a spending limit, but anti-tax groups want to make updates, saying the current limit has grown ineffective because it is set to the spending level in 1986-87, when the state had a $31.2 billion budget.

The new proposal would set base spending to the 2010-11 budget, which was $91.5 billion, and allow it to grow no faster than population and inflation growth. California's general fund spending now stands at $86 billion.

The proposed initiative would direct excess funds to primarily paying down debt. Currently, half of the state's extra cash is supposed to go to schools while the other half is refunded to taxpayers. That has happened only once in 1987 under Gov. George Deukmejian, when taxpayers were given back $1.1 billion.

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