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Responding to concerns by Gov. Jerry Brown, Democratic leaders and budget stakeholders, civil rights attorney Molly Munger today submitted a new version of her initiative to increase income taxes for California schools.

The latest version uses $3 billion for state bond repayment for the first four fiscal years, starting in 2013-14, and the remaining $7 billion for K-12 schools and early childhood programs. For the final eight years of the 12-year initiative, $10 billion would go toward K-12 and pre-kindergarten programs.

The state would have to prioritize repayment of school bonds before using the money on other debt. It raises $10 billion by hiking income taxes on all but the poorest Californians, at increasing marginal rates up the income ladder.

Brown has filed his own proposal to raise an estimated $7 billion annually through higher income taxes on the rich and a half-cent sales tax increase.

The governor is trying to persuade Munger and other tax initiative proponents to back away from their measures. Political strategists believe that if multiple tax proposals qualify for the ballot, voters will be confused and less inclined to vote for any of them. Munger's change is the latest development in negotiations among tax proponents.

"This alternative version of the Our Children, Our Future Act has been drafted in recognition of California's dire short-term fiscal situation," Munger said in a statement issued by the Our Children, Our Future campaign. "Voters may want to help close our state's budget deficit in the near term as a relatively small part of making a transformative long-term commitment to education as their highest priority."

Brown's initiative allows all of the money to count toward the state's general fund -- a key distinction from the Munger proposals. If money doesn't count toward the state's general fund, in theory, it means the governor and lawmakers would still have to find other ways to address a projected $13 billion deficit. It also makes cuts to social services and health care more likely.

Munger's original proposal would have earmarked all $10 billion for K-12 districts and early childhood programs outside the general fund. That would have done little to solve the $13 billion deficit unless state leaders suspended Proposition 98, California's constitutional funding guarantee for education -- a politically unpalatable path that commits the state to paying more money to schools down the road.

The changed proposal has at least two upsides for state leaders:

-- It would solve $3 billion of the state's deficit for four years, freeing up money for other state services. California's current general fund budget spends $5.5 billion on debt repayment. According to Treasurer Bill Lockyer, that amount is expected to range between $4.7 billion and $5.5 billion annually over the initiative's four-year period.

-- It does not count that $3 billion as general fund revenue. This means California would not owe more money to education by virtue of accepting that $3 billion.



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