More on California Fiscal Policy: Proposition 30 Revenues
Proposition 30 is a temporary tax approved by voters in November 2012 to prevent more than $5 billion in education cuts and restore the fiscal health of California schools. To learn more about the measure, including how school districts benefit, visit the Controller’s trackprop30.ca.gov.
Using the Governor's current long-term forecast (through 2017-18), we can see how much the proposition adds to the State’s General Fund resources. Figure 2 shows that the proposition generates between $6.3 and $7.3 billion in each of the five years starting in 2013-14, and accounts for between 5 and 6 percent of General Fund resources.
The sales tax, which expires mid-year in 2016-17, provides between $1.3 billion and $1.5 billion on a full-year basis through 2015-16.
Compared to the sales tax, the personal income tax levied by Proposition 30 provides a much more robust addition to the General Fund. During the five-year period displayed, the income tax change starts generating annual revenue of about $4.9 billion and ends the period producing about $6.4 billion, implying an average annual growth rate of about 6.9 percent. This growth rate is about 50 percent faster than the growth rate for the permanent tax base, which is expected to grow at an annual rate of about 4.5 percent through June 30, 2018.
The income taxes generated by Proposition 30 account for about 5 percent of all General Fund resources for the five years.
Figure 2: Comparison of Annual General Fund Revenues 2013-14 through 2017-18
Prop. 30 and Base Revenues (Dollars in Millions)
Source: DOF Long-Term Forecast and author's estimates