Both Angelides and Westly spoke at the state convention of Education Trust-West, a group which, according to its website, is “squarely and relentlessly focused on California’s most serious problem: the huge achievement gaps separating poor students and students of color from other young Californians.” 

They both agreed we need to provide additional funding for our schools.  Right now, it appears that there is some sort of consensus being built around additional funding for K-12.  Well, at least among Democrats.  This is a good thing.  Now comes the point where disagreement arises, how the hell do we pay for the additional funding?  Heck, how do we even pay to get to Prop 98 levels?

Check the flip…

Westly went first, focusing on his plan to alter lottery payouts:

Steve Westly, the state controller, promised to raise K-12 funding by changing the payout formula for the California Lottery to offer a smaller percentage in prizes for lottery ticket buyers and a larger share of revenues for schools.
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Westly…charged that California is turning its back on public education. “We have tied their (students’) hands with funding cuts, crowded classrooms and broken schools,” he said. “If we want a high school degree to stand for something, we have to stand by our kids.”
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In an interview, Westly said he wasn’t sure if he would need to bring a new initiative before voters to rewrite the lottery funding program from the 1984 voter-approved California Lottery Act or whether he could put into law a reform measure passed by the Legislature.

“While it was passed by voters,” Westly said of the lottery initiative,”a lot of voters thought more money would be going to education.”
(Sac Bee 4/4/06)

Well, as Angelides’ people brought up, there will be a problem with the lottery plan.  Namely, it will be hard to maintain the same amount of people buying if we lower payouts.  Also, multi-state programs, which we have had several brief flirtations with, have fixed payouts.  Personally, I’m not a huge fan of lotteries in general.  They are somewhat of a “math-impairment tax,” and take away money from those who really need it.  Let’s face it, spending on lottery tickets is disproportionately focused in the lower quintiles.  The Charlotte Observer did a piece on this last month regarding North Carolina’s new lottery.

In South Carolina, where the lottery sells dreams of riches, those who can afford it the least spend the most.  Low-income people also spend a greater portion of their income on the games than more affluent players, according to an Observer examination of four years of lottery data.  Experts suggest that North Carolina can expect similar rates when its lottery starts March 30.

“When North Carolina’s lottery starts up, there will be financial problems for some households. The state needs to be ready to step in for services,” said Duke University public policy professor Philip Cook, who has studied lotteries.

Like the Palmetto state, North Carolina plans to offer counseling referrals and other services to people with gambling problems. Neither state lottery will target low-income players.  Cook said in most states, the dollar amount spent on lotteries generally does not fluctuate much over income brackets.  But in South Carolina, the Observer found that lower-income people spend more. People earning less than $30,000 a year spent an estimated $627 per household annually, nearly triple the spending of those making more than $50,000.(Charlotte Observer 3/18/06)

However, I do agree with Westly that if we are going to have a lottery, that we should be sending all of that revenue to our schools.  Tweaking the formula will probably help, but I’m a little suspect about the ability to totally fund our schools using the lottery funding.

On the other hand, Angelides wants a tax on the highest bracket and the closure of corporate loopholes:

Phil Angelides, the state treasurer, sold his plan to tax high-income earners and close corporate tax loopholes to pay for training and recruiting more teachers for public schools as well as rolling back student fee increases at the University of California and California State University systems.
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Angelides also chided both Westly and Republican Gov. Arnold Schwarzenegger, who say they don’t support a tax increase, for being in denial over how to fund education.
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Angelides, noting that California has the largest number of low-income students and English learners of any state, complained that the state ranks near the bottom in education spending, declaring: “We are never going to have first-rate schools with second-rate levels of investment.”
Turning his attention to Westly and Schwarzenegger and their stated resistance to raising taxes, Angelides said: “Let’s be clear. I’m the only candidate for governor who will do what it takes to fully fund our schools and balance the state budget.”(Sac Bee 4/4/06)

Now, with a tax, you have the ability to select how much money you can take.  Also, the increase of a state income tax doesn’t hit most taxpayers as hard as federal income tax increases due to the fact that most taxpayers can deduct their state tax.  However, the Alternative Minimum Tax is biting into that benefit.  There has been a lot of discussions of fixing the AMT, but it doesn’t look to happen this year with the election.  It would cost the federal government hundreds of billions, so the correction of the AMT would require cuts in services or raising other taxes.  Or, if you are W, neither and let your grandchildren pay for it.  Woohoo, I got me a credit card.

Back from that federal diversion, there is another issue with taxing the upper incomes.  We are going to be taxing them for Prop 82, if it passes.  An additional tax on top of that might make some people move.  Maybe.  Just maybe.  I’m somewhat skeptical of this argument, but I think it must be considered.  Of course, the passage of Prop 82 would probably hinder this component of Angelides’ plan.

And this brings me back to my opposition of the supermajority rules.  If the state didn’t have these arcane supermajority rules, perhaps we wouldn’t be arguing about 82 vs. 98.  The funding could be considered in an ordinary and orderly budget process.  But nope, Howard Jarvis doesn’t want it that way.  And you know Grover Norquist would go crazy if the supermajority rules were ever repealed. (Btw, what better reason is there to reform the supermajority rules than to give Norquist a hissy fit?)

Also on that note,  Is Angelides going to get a supermajority to increase taxes?  And if not, will he be able to get a ballot measure through?  It will be difficult.  My word, governing this state is quite a challenge.  I think Peter Shrag is right, the structure of California politics is broken:

But in the long meantime, California’s cumbersome governmental machinery – its supermajority vote requirements, its auto-pilot spending mandates, its incomprehensible fiscal machinery, its wild-card initiative process – make it appear that despite voters’ expressed desires, they really aren’t sure they want the thing to work at all. (Sac Bee 2/2/06)

I agree with closing loopholes, but who doesn’t in the abstract?  Specifics of the plan are probably necessary in order to determine if that’s actually going to bring in a lot of money.  Plus, some of those “loopholes” might be incentivising business in the state.  I don’t know.  The Franchise Tax Board is going after tax shelters this year, so perhaps that can help matters with upper income tax fraud. 

However, in general, I think both ideas are a good start.  We are probably going to have to throw most of the kitchen sink at these funding issues, so every idea should be welcome.  At least we are talking about the issue, Arnold has been so busy talking about his pretty infrastructure bonds that he’s be neglecting the school funding issues.

If you’ve been a regular here at Calitics, perhaps you’ve seen me show a bit of my fiscal conservatism.  Those words are probably a poor description of it.  Truth be told, I am simply a budget hawk.  I see paying your bills, or at least maintaining the ability to repay them without massive hardship, crucial to the stable management of a government.  (Are you listening Mr. President?) What I really want to avoid is another Orange County disaster.  Thus, I am far more comfortable with a government that can pay its bills, whether that’s through revenue increases or spending decreases.

But I have also complained about the Prop 13 (and its ilk) restrictions which have hampered the revenue flow of this state.  It has made the addition of any major programs essentially impossible.  If we can’t increase revenues in the legislature, then we can’t provide services for the state of California and its citizens.  This has led to governance via the ballot box in the form of propostions.

And all this brings me to Prop 82, the Preschool for All Initiative.  I was fortunate enough to have the chance to speak to Rob Reiner, a leading proponent of Prop 82.  Being that I am initially skeptical of all propositions, especially multi-billion dollar propositions, I was looking for a reason why I should be in favor of this.

Check out the flip…

Both before and after speaking to Mr. Reiner and Catherine Atkin, President of Preschool California, I knew that preschool was very beneficial to the development of children.  However, I was somewhat unaware of just how significant the benefits of preschool are.  Crime rates are significantly lower.  Dropout rates decrease substantially and you earn a decent return on the money spent ($2.62 for each dollar, according to RAND).  You can get all of that information all over the web, but Preschool California’s Benefits Page does a pretty good job of consolidating the data.  I think there is little doubt that preschool for 4-year olds is beneficial.

And yes, there are some parts of Prop 82 which make me uncomfortable (such as Michael Milken’s involvement and the for-profit preschools).  However, the big controversy, of course, comes when we start talking about how we pay for it.  It’s even split those that you would ordinarily call progressive.  Perata has withdrawn his support as have other Dem legislators.  It’s understandable: It’s a lot of money.  I was, and remain, wary of spending such sums through the ballot box. 

However, Preschool for All can kick open the door to Progressive Causes that have been neglected for so long.  When was the last time we had a major social initiative?  The Great Society?  Reiner has been suggesting that a reason why the opponents have been so critical is precisely because they fear major new social programs.  And because California propositions are known to be contagious, this is something that is extremely scary.

Listen, I really, really would like to break the gridlock in Sacramento which made passage of this legislation impossible.  Government by proposition rather disgusts me.  However, until we can change the super-majority rules, we will need to accomplish some of our goals through the ballot box.  We kick in the door to these new social programs, and we set a precedent for the state and the nation.  California gets to be a progressive leader, and we get education for our 4-year olds in the process.

A poll on Prop 82 has come out showing some strength going into March:

With about 90 days until the June election, 55 percent of likely voters support the Preschool for All measure, compared with 34 percent against and 11 percent undecided. Oakland Tribune 3/8/06

So, support is running pretty high, but not quite high enough to call this a slam dunk.  As I’ve said before, I am very uncomfortable with the way that this Proposition isolates funding from legislative control, creating another sector of the state government that is not truly accountable.  That being said, I think preschool in general is a good idea. 

However, Prop 82 is now having some other problems as well.  Check the flip…

Sen. Tom Torlakson, D-Antioch, has withdrawn his support.  Coming after Perata’s withdrawal of support last week, this is not a good sign.  Prop 82 has more than its share of supporters, but if they keep falling away as election day draws closer, it faces a difficult run.

But the luke-warm support isn’t the only problem that Prop 82 faces.  AG Lockyer has publicly suggested that there might be a probe into funding from Reiner’s Prop 10 funds.  SUch a crossover in funds would be against the law and could create a possibility of invalidating the election or taking it off the ballot. 

Prop 10 is a really good (or bad, depending on how you look at it) example of the domains of no-legislative oversight.  The legislature has very little control over the spending decisions made by the board headed by Reiner.  It has come under much fire recently for some of these spending decisions. This is the result of some really bad policy-making by ballot box in the form of Prop 13, which handcuffed the hands of the legislature from raising any new revenues for the state.  Boy do we ever need another proposition to get rid of Prop 13’s more draconian provisions.