YES on Prop 55: Children’s Education and Health Care Protection Act.

For background information on this measure, refer to the Legislative Analyst’s Office analysis included in the Official Voter Information Guide.

League Analysis:

The LWVC endorses Proposition 55, which would extend the existing income tax rates that were put in place by Proposition 30 of 2012. These taxes bring in revenue essential to funding the services that Californians, especially California’s children, need and deserve.

Over the past twenty-five years, the League has consistently supported revenue solutions as part of balancing the state’s budget. In 2012 the League supported Proposition 30, which instituted a temporary one-quarter cent increase in the state’s sales tax as well as an increase in the income tax rates for the highest income (> $500,000 for married couples) California residents. Under Proposition 30, the sales tax increase will expire at the end of 2016, while the increased income tax rates will expire at the end of 2018.

The increased revenue, currently around $7 billion per year, has made it possible for the state to improve funding for K-14 education and to restore some program cuts that were made during the great recession. However, school funding has still not returned to pre-recession levels.

Under Proposition 55, the sales tax increase will expire at the end of this year, but the current higher income tax rates will remain in place until 2030. Proposition 55 allocates the proceeds from this increased revenue via formulas that interact with the requirements of previous ballot measures. Because of Proposition 98, approximately 50 percent will go to supporting K-14 education. Up to $2 billion/year will go to Medi-Cal (the state’s version of Medicaid) to provide health care for children and their families. A large portion of the tax revenue raised by this measure comes from taxes on capital gains: when revenue from this source is high enough it goes to reducing state debt and to paying for infrastructure under Proposition 2, the “rainy day fund” measure passed in 2014.

The extent to which this income tax revenue has improved California’s fiscal situation cannot be emphasized too much. It has increased state funding of K-14 education; a study by the California Budget and Policy Center shows that with these additional funds the student-teacher ratio in public schools has declined slightly, ending several years of increases. Some, although not all, cuts to social safety net programs and health care have been restored. The state has been able to fund its Budget Stabilization Fund (“Rainy Day Fund”) for the first time ever, so that the state will be better able to withstand a recession. California has also set aside the funds to repay the deficit reduction bonds issued in the early 2000s.

Although California’s financial situation is far better than it was six years ago, a rosy future is not assured. In 2014 California ranked 35th out of the 50 states and the District of Columbia in per pupil spending for K-12 education. California has the lowest reimbursement rates for Medi-Cal/Medicaid in the nation.

California still needs this revenue. The defeat of Proposition 55 would be the loss of up to $4 billion/year for K-14 education, meaning the return of layoffs, elimination of programs, and larger class sizes. Defeat would also necessitate another $3 billion of cuts elsewhere in the budget.

The League has strong positions supporting adequate revenue for public education as well as favoring taxes based on ability to pay, with a preference for income-based taxes, and thus we strongly support Proposition 55.

Materials and Other Resources

Join our campaign: Yes on 55: Help Our Children Thrive! Materials available on the campaign website include this fact sheet.

Vote with the League! Share our flyer with your friends and family.

The California Budget and Policy Center (CBPC) has produced fact sheets and an issue brief on the impact of Proposition 30.

• CBPC Issue Brief: What Has Proposition 30 Meant for California? (A second brief will be published later.
• CBPC fact sheet: The Expiration of Proposition 30’s Tax Increases Would Leave a Permanent Gap in State Revenues
• CBPC fact sheet: The Number of K-12 Students Per Teacher in California’s Schools Has Dropped Since Approval of Proposition 30

Sample Letters to the Editor

Note: Please adapt these letters to your own community and check your local paper’s word limit for a published letter. If you are not a League president or their designee, you are not authorized to sign letters to the editor in the name of the League. You are encouraged, however, to express your views as a Californian and you are welcome to cite that you agree with the League’s position.

Dear Editor:

Proposition 55 is not a tax increase. It simply extends the income tax rates established by Proposition 30 of 2012. Only the wealthiest 1.5% of Californians (income over $500,000 a year, for couples) pay these higher rates. The defeat of Proposition 55 would mean the loss of up to four billion dollars a year to K-14 education, pushing us backwards to larger class sizes, loss of valued programs, and pink slips every spring. But it is not just our schools that Prop55 impacts. Up to two billion a year will go to Medi-Cal, health care for low-income children and families. Funding also goes to reducing state debt and building the rainy-day fund. California economy has greatly recovered; let’s keep it that way. Prop 55 will maintain the tax rates that made this improvement possible and help our children thrive. Vote YES on Prop 55!

Sincerely,
Your name