BLOG: Jerry Brown's tax bait-and-switch
- Published on 05/03/2012 - 10:05 am
- Written by Gordon M. Webster
Gov. Jerry Brown has a dirty little secret. He is trying to sell his tax hike to voters this November by saying it will go to schools.
In actuality, the new revenues are to backfill the insolvent teachers' pension fund.
A report presented to the board of the California State Teachers Retirement System this month indicated that pension contributions would have to increase by 68 percent to pay down its $65 billion unfunded liability over the next 30 years. If investment returns are lower than projected, school districts could be on the hook for an additional $3.5 billion to $10 billion annually over the next 30 years.
The leadership in Sacramento doesn’t want to upset the public unions and are in no rush to act since they’re counting on Mr. Brown’s tax to save the day. This fall, the governor is promoting a ballot initiative to soak millionaires i.e. (anyone earning more than $250,000 a year) to raise between $6 billion to $9 billion annually.
We all know those new revenues won’t help reinstate arts education, sports programs or bus service.
Instead, schools will have to use the money to cover their pension bills, or to pay teachers more to offset the higher contributions that teachers may be asked to make to their retirements.
The tax hike won’t improve schools or even educational-related services — it will merely postpone critical pension reforms that might otherwise take place.