CMA Capitol Insight is a biweekly column by veteran journalist Anthony York, reporting on the inner workings of the state Legislature.

Shaping the ballot

The legislature may be in recess, but the political fights in Sacramento continue. With lawmakers gone for the year, attention is turning to the ballot, where spillover from the legislative session, and some infighting among Democrats, are beginning to emerge.

The big question will be what, if anything, to do about taxes. In the last couple of weeks, we have seen two different versions of proposals to extend the upper income taxes in Proposition 30 – each with its own unique twist, and each with its own set of political problems.

First, we saw a coalition of major labor groups led by the California Teachers Association (CTA) come forward with their proposal, which would allow the quarter-cent sales tax in Prop. 30 to expire, while extending the upper income taxes in the 2012 measure for another seven years.

But the measure would exempt these new revenues from Prop. 2, the budget reserve fund passed by voters just last year, which was pushed by Gov. Brown as a necessary tool to help keep state spending in check and curb volatility in the budget process.

The move by CTA to exempt the revenues from Prop. 2 is an acknowledgement of the deep divisions among labor about how to move forward with tax policy. Because of the way Prop. 2 and the school funding guarantee in Prop. 98 work together, the fear was that any Prop. 30 extension would be gobbled up entirely by schools, leaving little or no money for health care, social services and other state programs. By moving the money around the new budget reserve, CTA was able to maintain its coalition, which at one point looked as though it would break apart over this contentious spending issue.

But the move makes it even less likely that the proposal will gain the support of Gov. Jerry Brown, who sold Prop. 30 to voters in 2012 as a temporary tax measure and convinced voters that Prop. 2 was a key part of getting the state’s fiscal house in order. Ultimately, it looks as though the teachers’ union opted to bend to the will of its coalition partners instead of the governor. But it makes the sales pitch of the new proposal that much tougher next year.

Meanwhile, a splinter group led by the United Healthcare Workers has a sort of Prop. 30 on steroids that would include an additional percentage point above and beyond the Prop. 30 threshold for those making more than $5 million per year. That money would be set aside for health care and early childhood programs.

While it’s unclear how this tax battle will play out, the moves we have seen over the last couple of weeks are a nod to the fact that the calendar for initiatives for 2016 is becoming a factor. New state rules require legislative hearings on any proposal heading to the ballot, slowing down the qualification process. If these initiatives are going to be tweaked or rewritten, there is pressure to get final language soon if the goal is still the 2016 ballot.

But that raises another question—why 2016? The income taxes in Prop. 30 don’t actually expire until the end of calendar year 2018. But 2016 is a presidential year, and the conventional wisdom is that turnout will be higher and more Democratic in 2016, and that this next electorate may be more inclined to pass tax increases than the 2018 electorate.

But is that really true? 2018 will be a high-intensity election, with an open race for governor and quite possibly an open U.S. Senate seat, depending on whether or not Dianne Feinstein decides to run for reelection. Those two top-of-the-ticket races will attract great interest. And it is possible with these state primary rules that at least one of those races may see two Democrats running against each other. Wouldn’t that boost Democratic turnout as well?

These are the strategy moves that initiative backers must make in the coming weeks as they decide how, when and whether to move forward with tax proposals. Their decisions will shape the next ballot, and could impact state politics and finances for years to come.