Capitol Alert

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It is undoubtedly challenging for voters to understand how Gov. Jerry Brown's tax hike initiative, Proposition 30, will fund schools and other state programs.

Whenever an initiative provides new money for the complicated state budget machine, campaigns on both sides can interpret potential budget scenarios in their favor. That is what we've seen as the Yes on 30 side claims that all new funds will go to schools, while the No on 30 side claims the money won't benefit education.

As we pointed out in analyses of the Yes on 30 ad and the No on 30 ad, both approaches are misleading.

Here's our stab at an analogy:

Let's say you spend $2,000 a month on mandatory expenses like rent, groceries and utilities. You spend $400 a month on groceries alone.

For your birthday, your mom gives you a $200 gift card to Joe's Groceries, your favorite supermarket. You can't spend that gift card anywhere else.

However, because you now have $200 in a Joe's Groceries gift card, you only need to spend $200 of your own money on groceries rather than $400. That frees up $200 to spend elsewhere, maybe on car repairs you've been putting off, movies or absorbing higher gas prices.

This is a rough way of explaining what happens with Proposition 30. The mandatory expenses in our example represent school funding. Proposition 30 proponents are trying to say that because all new funds from Proposition 30 technically go to schools, like mom's gift card must go toward groceries, it leaves lawmakers with no new discretionary spending.

Yet the initiative in a backdoor way relieves the state from having to spend other money on mandatory expenses, just like mom's gift card frees up the cash you'd normally spend on groceries. So lawmakers will have more discretionary money for the rest of the general fund budget.

To understand this further, we should add one wrinkle: Section 98 of the unusual contract you signed with your landlord says that half the value of your gifts must go toward supplemental rent. So out of the additional $200 you have to spend, you must pay $100 more on rent that month, leaving you with $100 in extra discretionary cash.

The No on 30 side claims that Proposition 30 only frees up money for discretionary spending and does not provide more for mandatory expenditures on schools - in other words, you get to spend all $200 on whatever you want.

No on 30 is essentially saying that you, the renter, will find a way to ignore your contract and stiff your landlord the extra $100. It is saying that lawmakers will find a way around Proposition 98 and avoid funding schools what they are owed under the constitution. It has happened before, but not without the landlord's tacit approval - and not without risking a lawsuit.



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