Q & A about the California Tax Budget

The Mercury News posted an article online breaking down the California budget - what it all means - tax increases - spending, etc..

Q When will the "temporary" sales tax increase take effect, and when will it end?

A The 1-cent-on-the-dollar increase begins April 1, but when it ends depends on the outcome of a ballot measure calling for a cap on state spending. If the spending cap fails, the tax hike ends June 30, 2011. If the cap passes, the tax ends June 30, 2012

Q What's a spending cap?

A It's a way to force state government to limit how much money the state can spend. In this case, by using a formula that links spending to inflation and population growth, the increase in annual expenditures would be capped at about 5 percent each year.

Q What are all these ballot measures related to the budget, and when are the elections?

A There are six measures that require voter approval at a special election May 19. They seek to: implement the spending cap; require the state to increase annual education funding by $9.3 billion in future years; shift Proposition 63 mental health services money; redirect how Proposition 10 cigarette tax money is allocated; clarify education appropriations from the state lottery; and deny pay increases to lawmakers during budget deficits. A seventh measure, on the June 2010 ballot, would do away with partisan primaries, which would allow candidates for statewide and congressional seats to run for office without listing their party affiliation.

Q How much more will it cost to register my vehicle?

A Beginning May 19, the vehicle license fee rises from the current level of 0.65 percent of the value of the car to 1.15 percent of the value. The tax increase goes away by June 30, 2013.

Q And there's a tax on income tax, too?

A Yep. A 0.25 percent surcharge on personal income tax, though the increase would be cut in half if the state receives more federal stimulus funding than expected. The surcharge, for the 2009 tax year, lasts through tax year 2012 at the latest.

Q What does the budget mean for education funding?

A The Legislature slashed $8.4 billion in funding for schools and community colleges. As a result, the California Teachers Association predicts class sizes will increase, thousands of teachers could be laid off and programs will be eliminated. Funding was maintained to continue smaller class sizes in grades K-3, and school districts will have more flexibility in how they spend money geared for specific programs.

Q What about other colleges and universities?

A The University of California and California State
University systems will each suffer a 10 percent cut. Annual fees for CSU students will rise to $3,354 from the current $3,048.

Q What happens to those on welfare programs?

A CalWORKS, the welfare-to-work program, will not provide cost-of-living increases. Those who receive state and federal supplemental income, such as certain seniors or disabled recipients, also will not get an increase.

Q Will the Department of Motor Vehicles and other state offices remain closed due to state worker furloughs every two weeks?

A Yes, for now, until labor unions and Gov. Arnold Schwarzenegger's negotiators find a way to trim $1.4 billion in payroll expenses. The next state office closing is today.

Q Is there any good news in the budget?

A Well, yes. The budget includes tax credits for businesses that invest in California, and it ensures that previously approved public works projects can continue.