What Happens if Both California Tax-Hike Propositions Pass?

Credit: umich.edu[/caption]

Conventional wisdom says if voters approve both California tax-hike propositions in November, then the proposition with the highest number of votes wins and nullifies the other. However, under one scenario, if Propositions 30 and 38, which aim to fund education, both pass then non-overlapping parts of both might be valid. Courts and the Franchise Tax Board could then make the final decisions after inevitable court challenges and lawsuits.

The non-partisan Legislative Analyst’s Office says the proposition with the highest number of votes wins, but then hedges their opinion somewhat.

“Could pieces survive? That’s something that would need to be interpreted,” said Edgar Cabral, the principal fiscal and policy analyst for the LAO.

The California Federation of Teachers is a major backer of Prop 30. Their communications director Fred Glass said they might go to court if both measures pass and the situation warranted it. The state constitution says the highest vote getter in conflicting propositions wins but says nothing about non-conflicting measures in two measures that win. Further complicating this are provisions in both propositions nullifying measures in the other if both win and the other gets fewer votes.

The results here are not trivial. Prop 30, backed Gov. Jerry Brown, would raise sales tax by 0.25% and increase taxes for those with taxable incomes more than $250,000. Prop 38, backed by wealthy attorney and education advocate Molly Munger, raises taxes for most everyone on a sliding scale and uses 70% of revenues for schools and 30% to pay down debt.

Perhaps most crucially, if Prop 30 loses, then automatic “trigger cuts” of $5 billion to education will immediately take effect. Prop 30 will raise an estimated $6 billion a year, use much of the money to pay off obligations, and keep funding for schools at the same level. Prop 38 will bring in $10 billion and will boost spending for education.

Many education advocates are urging yes votes on Prop 30 and Prop 38 to insure that spending on education is not decimated. However, no one is quite sure what the outcome will be if both California tax-hike propositions pass.