Capitol Alert

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A well-financed initiative campaign for a corporate tax change similar to one being negotiated in the Capitol suggested Friday night that it may continue seeking voter approval if lawmakers grant an exemption for tobacco firms.

Backers of Proposition 39, including billionaire hedge-fund manager Tom Steyer, previously agreed to drop their effort if Assembly Speaker John A. Pérez could negotiate a change in the Capitol that would result in out-of-state firms paying higher taxes. Perez's proposal is designed to raise $1 billion, most of which would reduce tuition at California's public universities.

But a framework being negotiated with Senate Republicans and moderate Democrats could contain an exemption for out-of-state tobacco firms by classifying them as agricultural companies. The Proposition 39 campaign said in response to a Bee inquiry that the exemption was never part of its agreement to drop its campaign.

If both the legislative change and Proposition 39 pass, the initiative would likely take precedence.

"We're in the dark, like everyone else," said Alexa Bluth, spokeswoman for Proposition 39. "We agreed to drop our campaign if the tax loophole was closed for middle-class college scholarships. We did not agree to end the campaign for a partial-fix that also subsidizes Big Tobacco. We obviously hope the rumors aren't true, but we haven't seen a bill or any language yet."



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