Local Politics

Tuesday, Nov 06 2012 11:50 PM

Brown's tax initiative too close to call; rival proposal easily defeated

BY JULIET WILLIAMS The Associated Press

LOS ANGELES -- California voters rejected a broad-based income tax increase to fund the state's beleaguered public schools Tuesday, while they approved tougher penalties for people convicted of human trafficking and revised the harshest three-strikes law in the nation, allowing for shorter sentences for some offenders.

One of the most closely watched initiatives, Gov. Jerry Brown's proposal to raise sales and income taxes to help balance the state budget, remained too close to call, as did measures to repeal the death penalty and require labeling on genetically engineered foods.

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SAN FRANCISCO -- Early returns from Richmond in the Bay Area and from El Monte in Los Angeles County were showing voters rejecting a penny-per-ounce tax on businesses that sell soft drinks and other sugar-sweetened beverages.

Officials said late Tuesday Richmond's Measure N was losing by about a two-to-one margin.

Backers of the measure had argued the tax would reduce consumption of soft drinks, blamed for child obesity, while generating revenue for youth programs.

But opponents said businesses would lose millions of dollars in sales, while prices would go up for consumers.

Campaign finance statements released in early October showed the "No on N" campaign had spent $2.2 million compared to just $25,000 by supporters of the tax, with the opposition being led by beverage industry lobbying organization, the American Beverage Association.

In El Monte, a similar soda tax on the ballot, intended to raise money for the city, was losing by a wide margin.

Backers of the measure said the tax would produce between $3.5 and $7 million a year.

Those were among a slate of 11 weighty ballot measures facing California voters Tuesday.

Brown's initiative, Proposition 30, asked voters to raise income taxes on those making more than $250,000 a year and sales taxes on everyone to help balance the state budget and avoid about $6 billion in cuts, mostly to schools.

The spending cuts are already built into this year's state budget, and Democrats warned of dire results if the taxes were not approved, including some school districts that could shorten the school year by as many as three weeks.

The Democratic governor spent the final two weeks trying to remind voters of the choice, and Democrats toted his Welsh corgi, Sutter, around the state trying to boost enthusiasm. Recent public opinion polls showed the initiative falling below the 50 percent threshold needed for passage, but Brown's supporters were focused on the 14 percent of likely voters who were undecided. They believed a few hundred thousand votes could push it over the top.

Brown faced competition from a rival proposal to broadly raise income taxes and send the money directly to public school districts. That initiative, Proposition 38, was funded by wealthy civil rights attorney Molly Munger, who topped all donors for the ballot measures, giving $44 million to her campaign.

Voters easily rejected that initiative, and Munger conceded at an election night party at the upscale Drago Centro restaurant in downtown Los Angeles.

"Obviously this is not the outcome we all hoped for but transformational change can take a long time and we all know that," Munger told supporters. She congratulated Brown for a well-run campaign but her supporters seemed less enthusiastic, offering only a smattering of applause.

In all, the campaigns for and against the initiatives raised a whopping $372 million, according to MapLight, a nonpartisan research group that tracks political spending.

A hedge fund billionaire financed the campaign for a third tax question, which would repeal a loophole pushed by Republicans in the Legislature in 2009 that allows out-of-state companies to set their own tax rate and put California-based companies at a disadvantage. The $1 billion a year to be raised if voters approve Proposition 39 would be split for the first five years between the state general fund and energy efficiency improvements for public buildings. After five years, all the revenue would be directed to the state general fund.

Unions and other Democratic interests have spent at least $75 million in an attempt to defeat Proposition 32, an initiative aimed at thwarting the political influence of unions. Corporate interests and wealthy Republicans have spent as much as $60 million in favor of the initiative, with some of that money also going into the effort to defeat Brown's tax initiative.

The anti-union initiative follows conflicts in Wisconsin, Ohio, Indiana and elsewhere where Republican efforts to weaken organized labor have produced protests and political tumult.

After a contentious last-minute legal fight that went to the state Supreme Court, it was revealed Monday that an $11 million donation to a group backing the anti-union initiative and opposing Brown's tax plan came from two groups that have spent millions on conservative causes nationwide. The Arizona nonprofit that funneled the money into California declined to reveal the original source of the contribution, however.

A proposal to abolish the state's death penalty was trailing in early returns. It would convert the sentences of the 726 inmates on California's death row to life in prison without the possibility of parole, and a plan to revise California's Three Strikes law to ensure that a final crime must be serious for felons to qualify.

Another contentious initiative that would require most genetically engineered food and produce sold in supermarkets and other outlets to be labeled was also trailing in early returns Tuesday. The GMO foods would be barred from calling themselves "natural" on their labels.

Voters easily approved new Senate district maps that were drawn for the first time by a voter-approved independent panel of citizens.

Other statewide propositions include revisions to the state budget process that would have lawmakers draft two-year spending plans, an attempt by an insurance magnate to give auto insurance companies more leeway in setting their rates.

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