9 June 2015
State Sen. Bob Hertzberg - the author of SB 8 (courtesy of the Los Angeles Times)
California Senate Bill 8 - the state bill introduced by State Senator Bob Hertzberg last year that would mean a sweeping overhaul of California's tax system - generated significant discussion in the media and press this past month. The bill would introduce a sales tax on services, as originally proposed by the Berggruen Institute's Think Long Committee in 2011, of which Sen. Bob Hertzberg (pictured) was a member.
In an editorial on June 8, the Los Angeles Times Editorial Board argued that "the California tax code is like a handyman's rickety stepladder, as untrustworthy as it is essential." Due to a shift in California's economy, a much larger percentage of tax revenue comes from "personal income tax revenue, which rises and falls much more sharply with the economy." Seeking to tax services, as SB 8 does, would "lessen the state's reliance on personal income taxes" and is thus aimed at "smoothing out state revenue while also promoting growth."
Also covering the issue, KQED - Northern California's PBS and NPR stations - asked "Is a Do-Over on the Horizon for California's Sales Tax?" As the article notes: "California's sales tax remains largely focused on goods and not services, while the state's economy has decidedly shifted toward more growth and reliance on services." The author highlighted SB 8 as a leading proposal in the discussion to reform California's sales tax system.
Finally, as Berggruen Institute senior adviser Nathan Gardels opined in the Sacramento Bee: "Even though California has one of the most progressive tax structures in the nation, inequality is rising and dashing hopes. Something more is needed as USC professor Edward Kleinbard has articulated and former Assembly Speaker, now Senator, Bob Hertzberg has sponsored in legislation: namely, a new philosophy of governance that focuses on the overall progressive outcome that can be achieved through modernizing the tax code and investing in infrastructure and public higher education - the key means of upward mobility. Such investments are inherently progressive in the distribution of their benefits and in the creation of new well-paying jobs." The bill will undergo hearings in the California legislature in the fall.
13 November 2014
Along with SB1253 -- the initiative reform measure the Think Long Committee successfully shepherded through the California legislature and which the Governor signed last month -- the second pillar of the Think Long blueprint for action was to establish a budget reserve to get the state through the revenue drought of hard times and manage the volatility that has afflicted the state’s finances for decades.
In the November 4th election, The Think Long Committee joined with Governor Brown in his campaign to successfully pass Proposition 2, "The Rainy Day Fund." We are happy to report that this ballot initiative passed with nearly 70% of the public voting in favor.
Under this measure the director of finance will estimate general fund revenues and expenditures for three years; the state will then deposit 1.5% of general fund revenues into the Rainy Day Fund until it reaches 10% of the state’s operating budget. Capital-gains revenue would be set aside automatically when it tops 8% of general fund revenue, and that money would go toward schools and community colleges during down years.
Prop. 2 captures one-time spikes in revenue to use for paying down the state’s wall of debt while creating a cushion to avoid budget cuts in an economic downturn.
With these two victories under our belt, the Think Long Committee will now turn its political action focus to the third pillar of our strategy, tax reform.
The essence of our plan is to lower income taxes across the board while maintaining California's progressive rate structure and levying a low tax on services to generate $15 billion a year for local government, higher education and infrastructure.
Services now account for nearly 70 per cent of California's $2 trillion economy, but are not taxed. If you buy a donut in a coffee shop you pay a sales tax; if you buy a legal, financial or entertainment service, there is no taxation.
As important as progressive taxation is, the key answer to reducing inequality is investing in the means of upward mobility -- job-creating infrastructure and higher education. To do that, California needs a steady and reliable stream of revenue. And for that, the Golden State needs a tax system for the 21st Century.
-- Nathan Gardels, Sr. Advisor, Berggruen Institute
Note: As the work has transitioned from developing solutions to advocating for change the work of the Think Long Committee now falls under a newly formed 501(c)(4).
28 September 2014
In major victory, Governor Jerry Brown signs Ballot Initiative Transparency Act - supported by the Think Long Committee for California - into law
Bill marks first major changes in four decades to California's century-old initiative process
Sacramento – Addressing concerns about the growing influence of special interests on California’s initiative process and the decline of voter participation, Governor Jerry Brown today signed legislation that strengthens Legislative and public oversight of ballot measures and increases transparency within a century-old process that has been stubbornly resistant to change.
“SB1253 strengthens the integrity of the initiative process, which is uniquely influential in California political life,” said Nicolas Berggruen, Think Long Committee for California chairman. “It introduces transparency of funding while also enabling broader debate and public review so that measures can be modified before they go to the ballot, avoiding unintended consequences. “
SB 1253, the Ballot Initiative Transparency Act, was authored by Senate President pro Tem Darrell Steinberg. Under the new law the Legislature holds hearings months before ballots go to print, allowing lawmakers and proponents to make changes, corrections and compromises before ballots go to the voters. Initiative backers also gain the ability to correct mistakes before an initiative appears on the ballot, preventing drafting or legal errors that have led to litigation and confusion. And the law pushes the Secretary of State to feature the top funders of proposed initiatives in online ballot materials.
“Together these changes let voters and the Legislature see what the ballot might look like months before the election,” said Robert Hertzberg, former Assembly Speaker and Think Long Committee member. “That lets lawmakers get to work on the policy issues at the heart of the various initiatives, make them public, make compromises, and fix errors, so voters get only clear and effective initiatives on their ballots. These changes are about making better public policy and making initiatives serve their intended purpose.”
“California is not the only state to allow direct voter participation through initiatives. But too often here, ballot measures are confusing and poorly written, and there has been no chance for initiative backers to make even the most routine changes let alone drive compromise,” said Ronald George, former Chief Justice of the California Supreme Court and a member of the Think Long Committee. “All of that stands in the way of voter confidence and understanding, and leads to bad policy outcomes.”
The changes in the law reflect what voters want to see. Nearly eight in 10 California voters want to see the Legislature do more to improve initiatives, want review and revision of measures, and support more clarity and information surrounding initiatives – and their support crosses party lines according to polling by the Public Policy Institute of California. But according to PPIC, the last significant reforms to the process date back to 1974.
Other changes in the law: initiative backers can withdraw a measure after petitions and signatures are submitted, but before ballots are printed, simplifying the ballot and helping to avoid unintended consequences; voters can request an email version of the voter guide, reducing costs; and extends the time for signature gathering by a month to allow more grassroots participation.
Initiative reform was a central recommendation in the Think Long Committee’s “Blueprint to Renew California,” released in November 2011. This bipartisan plan to restore the state’s dysfunctional democracy was based on a year of discussions and meetings with key stakeholders in the state, including Governor Brown.
On SB 1253, the Think Long Committee worked for a year with a diverse and bipartisan coalition from across the political spectrum. Other supporters of the legislation include the League of Women Voters of California, California Common Cause, the California Chamber of Commerce, California Business Roundtable, California NAACP, California AARP, California School Employees Assn., California Council of Churches IMPACT, and California Forward, among others.
The Ballot Initiative Transparency Act addresses California voters’ greatest concerns about the initiative process. According to a PPIC survey earlier this year, 83% of Californians agree that initiative wording is too complicated and confusing. 84% favor increasing public disclosure of funding sources for both signature gathering and initiative campaigns. And 77% support a review process to help avoid legal problems and drafting errors.
A key strategy in their work to improve policy outcomes, is the Think Long Committee’s work to increase voter and civic participation. Voters greatly value their direct say in the political process via initiatives, Berggruen noted, but they also feel that the integrity of the process has eroded.
“The new law will give voters clear information about who special interests are, what they want, and how much they are spending,” Berggruen said. “At the same time the Legislature and proponents of ballot measures will have avenues for correction and compromise, paving the way for clearer ballots and better policies.”
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