Chancellor Marye Anne Fox announced in a campuswide e-mail last week that the University of California endorses Proposition 1A, an initiative on the upcoming California ballot that would draw funds for state colleges from a $16 billion tax increase.
Proposition 1A is one of six measures on the May 19 special-election ballot. Also known as the Budget Stabilization Act, it would mitigate the $41.6 billion state budget shortfall by establishing annual spending limits for the state Legislature and increasing the amount of funds in California’s ‘rainy day’ reserve to protect the UC system from future budget reductions.
The new funds would be raised by extending the recently approved 1 percent sales-tax increase by one year. The two-year vehicle license-fee increase and 0.25 percent income-tax hike would be extended to four years. The proposition would also eliminate the $200 tax credit families receive every year for each dependent child.
The new tax hikes would cost the average family over $1,100 per year.
Under the initiative, revenue would be pumped into California’s general fund beginning in 2010 and ending in 2013. About $9.3 billion could flow back into education over time.
Although the specific financial benefits to the UC system have not been determined, the funds would be used to support the university’s instructional services, including faculty, staff and student support such as scholarships, said Lynn Tierney, associate vice president of communications at the UC Office of the President.
Opponents of the measure ‘mdash; including the Service Employees International Union and the California School Boards Association ‘mdash; argue that the new taxes would hurt low-income residents and small businesses. The Howard Jarvis Taypayers Association, California’s leading taxpayer organization, labeled the measure the ‘worst anti-family tax package in history.’
The California School Boards Association said in a statement that Proposition 1A adds ‘more broken layers to an already broken system,’ and would only provide short-term benefits by ‘arbitrarily restricting state spending.’ ‘ In order to prevent the state Legislature from overspending, revenue that exceeds California’s average general fund growth of 5 to 6 percent annually would go into the ‘rainy day’ reserve. The reserve would be capped at 12.5 percent of general funds, which sit at roughly $12 billion, a significant increase from the current 5 percent cap.
Gov. Arnold Schwarzenegger is a strong supporter of Proposition 1A. The initiative will directly benefit community colleges, the UC system and’ the California State University system, spokeswoman for the governor’s office Julie Soderlund said.
‘It ties the hands of state legislatures,’ she said. ‘We want to have responsible growth in government and not create programs we can’t sustain. The state will be required to save money in good [economic] years so we’ll have funding in bad years. For example, 2006 was a really good [fiscal] year, but we spent all the money, with no savings to alleviate cuts and tax increases.’
If Proposition 1A is not approved, the university could face another round of cuts, according to UCOP spokesman Ricardo Vazquez.
The current $450 million deficit for the UC system includes $115 million in new reductions, $122 million in the 11,000 unfunded enrollments and $213 million in unfunded mandatory costs, such as utilities and employee health benefits.
Readers can contact Kimberly Cheng at [email protected].