California Tax Extension Proposals Take Shape -- With Input From Governor

It's looking like voters will have one chance to extend income taxes on California's wealthiest residents this fall -- and supporters of the ballot measure are hoping their latest version will appease the state's most powerful voter: Gov. Jerry Brown.

A compromise proposed ballot measure authored by unions and other groups representing teachers, the health care industry and advocates for kids was updated Monday with new language aimed at appeasing a skeptical Brown.

Last week, the governor criticized a provision in the original initiative that would have exempted any additional state revenue raised by the ballot measure from being earmarked for the state's rainy day fund (Brown has worked hard to grow the state's reserves since taking office five years ago and has generally pushed a message of fiscal restraint, including in last week's budget proposal).

“Those tax measures don't incorporate what people said they wanted by an overwhelming supermajority,” Brown said, calling that omission "a fatal flaw.”

So this week, the measure's backers -- including the powerful California Teachers Association and the California Hospital Association -- removed that exemption and made other tweaks they hope will satisfy critics.

The initiative grew out of competing proposals authored by the CTA and the health care and children's groups, respectively. The compromise measure seeks to extend through 2030 an increase in personal income taxes on couples who make more than  $500,000 a year. Those increases were originally instated by 2012's Prop. 30, which also raised sales taxes in the state through the end of 2016.

Brown championed Prop. 30's temporary tax increases -- the income tax increases were set to expire in 2018 -- as a way to stabilize California's budget at a time of deep cuts. But he promised from the beginning that the increases would be temporary. So even with the tweaks, it's an open question whether the governor will actually support the compromise ballot measure.

Backers of the tax extensions now have several months to collect the 585,407 signatures needed to place the measure before voters in November. It's likely to be a crowded ballot.