Created: 10/30/2011 07:01:21 PM PDT
California’s largest teachers union seems to be having reservations about a proposed “millionaire’s tax,” even as labor groups hash out strategies for next year’s elections.
Dean Vogel, president of the powerful California Teachers Association, says a tax on people making $1 million a year or more – a levy being pushed by the smaller California Federation of Teachers – won’t generate enough revenue. He also worries that having more than one tax initiative on the November 2012 ballot would turn off voters.
“Our best guess is that CFT’s potential proposal is that it’ll generate $4 billion, far less than what’s needed,” Vogel said, adding that at least
$8 billion is needed to cover holes in the state budget.
Vogel said he told Gov. Jerry Brown last week that he agreed with his concerns about avoiding an expensive ballot war that a tax on the wealthy might provoke.
“We must be smart about putting forth an initiative that has the best chance of success, meaning it does have broad coalition support and it is winnable,” Vogel said in a speech to the CTA’s state council last weekend.
Resources will be stretched for the 300,000-member CTA and other labor groups gearing up for an even larger fight next November: to kill an initiative that would forbid the use of members’ dues for political purposes.
The CTA’s state council approved $8 million for initiative battles next year, but that price tag is expected to soar.
Earlier this year, Brown sought to extend taxes on purchases, income and vehicles with a special election he never got because Republicans refused to put a tax measure on the ballot.
But the governor’s broad approach to taxes won the support of many business leaders and groups, so Brown is expected to take a similar tack as he seeks to raise revenues.
Vogel said the governor’s priorities “looked like ours. He knows it’s going to take a broad coalition – labor, community and business – in order get the job done.” But the California Federation of Teachers, which has 100,000 members, remains hopeful it can persuade the larger union and Brown to support a tax hike on the wealthy, said Joshua Pechthalt, the CFT’s president.
Originally, the plan called for an increase on those earning a million dollars or more a year. But as it works out the details, the CFT is now looking at taxing those who make $500,000 or more a year.
A proposal is in the final stages of drafting and should emerge by the end of this month or early November, Pechthalt said.
The CFT has the support of a pair of Southern California locals of the Service Employees International Union and is in talks with the SEIU’s statewide union, which has 700,000 members.
The key is Brown, Pechthalt said.
“I’m pretty confident that if the governor comes up with a measure that’s progressive in nature, unions are likely to support it,” Pechthalt said. “The educational community will be united around some progressive proposal … something that raises taxes on people who are doing well.” Pechthalt is less concerned about avoiding the wrath of business groups than Brown or Vogel have expressed.
“We know that as popular as a tax-the-rich notion is, that it will face stiff and well-funded opposition,” Pechthalt said.
The San Jose Mercury News
Pension proposal’s chances appear remote
Even as Gov. Jerry Brown announced his plan Thursday to reduce pension benefits for public employees across the state, its prospect of passing intact appeared dim.
California’s powerful labor interests objected to major parts of the plan, and the leaders of the Democratic-controlled Legislature – neither of whom attended Brown’s announcement – reacted warily.
Brown said he thinks the Legislature will “rise to the occasion,” but even he wasn’t sure of the outcome.
In the Legislature, he said, “There isn’t a history of curbing pension benefits.”
Nevertheless, Brown promised pension changes in his campaign, and the proposal could blunt Republican criticism of his labor ties as he prepares next year to ask voters to raise taxes.
“He looks great asking for it,” said Thad Kousser, a political science professor at UC San Diego. “This is kind of like Obama’s jobs bill. He can take a stand, even though he knows it may be dead on arrival.”
Brown proposed increasing the retirement age for newly hired state and local government employees and offering them less generous retirement benefits, a package he will ask the Legislature to put before voters in November 2012.
His 12-point plan was propped on easels beside him, and Brown said, “I’m going to push this.”
Brown’s record of legislative accomplishment does not suggest a great likelihood of success. Republican lawmakers blocked his bid for a bipartisan budget deal and for passage of a tax and jobs plan this year.
Opposition to his pension plan is likely to come primarily from fellow Democrats.
“I think the problem will be with his friends and allies,” Assembly Republican Leader Connie Conway said. “We’ve been willing to do this for a long time.”
Senate President Pro Tem Darrell Steinberg, a Democrat, said the Legislature next year “will pass a robust pension- reform package.”
If it does, it may opt for some of the more modest proposals in Brown’s pension plan, among them prohibiting the purchase of additional retirement service credit, or “airtime.”
Far less likely to pass intact are Brown’s proposals to increase the retirement age to 67 for most new, non-public- safety employees and to replace defined-benefit pensions with a “hybrid” system combining a smaller, defined benefit, Social Security and a 401(k)-style benefit.
“I believe in defined benefit,” Steinberg said. “I believe in defined benefit because I don’t think that retirement should be based on the ups and downs of what occurs on Wall Street.”
The California Chamber of Commerce and California Business Roundtable both praised Brown’s plan, the chamber calling it “bold and substantive.”
The effect of business support on lawmakers, however, is unclear.
“The hard part for Brown is that the opposition is likely to be more intense than the support,” said Jack Pitney, a government professor at Claremont McKenna College.
Nor are Democratic lawmakers beholden to the governor, Pitney said.
“Even though his popularity is pretty good,” he said, “he doesn’t really have a lot of IOUs to cash in, so he’s gong to have to do it the civics textbook way, rely on the actual merits of the issue.” Pitney said, “It’s tough, but tough doesn’t mean impossible.”
Brown briefed labor leaders on his plan Wednesday afternoon, and already they are preparing for a fight.
“The governor has indicated that labor will not like many of his proposals,” Dave Low, the chairman of the union coalition Californians for Retirement Security, said in a prepared statement. “He is right.”
The Sacramento Bee