By Kevin Yamamura
kyamamura@sacbee.com
Published: Friday, Dec. 2, 2011 – 12:00 am | Page 1A
Last Modified: Friday, Dec. 2, 2011 – 6:25 am

Desperate to plug budget holes for the next five years, Gov. Jerry Brown will ask voters to raise $7 billion annually by taxing the rich and hiking the sales tax by half a cent.

The Democratic governor crafted his November 2012 initiative with legislative leaders and major labor unions behind closed doors, relying on polls showing voters may be willing to tax the wealthy and pay more for schools.

The state faces a $12.8 billion deficit over the next 19 months after relying on optimistic projections and onetime budget patches, according to the state Legislative Analyst’s Office. While Brown’s proposal would not eliminate the entire gap, Democratic leaders believe $7 billion is about the most that voters will stomach.

The governor refused to discuss his tax plan Thursday after appearing at a Capitol hearing on his public pension rollback. But he suggested his pension changes could persuade voters to approve taxes next year.

Brown told lawmakers that “without pension reform I don’t think we’ll have the credibility to ask the people to do other things that are very much needed and that you’ll want.”

The governor is going straight to the voters with a signature-gathering drive after GOP lawmakers rejected his tax plan this year. Senate President Pro Tem Darrell Steinberg said he has little hope for a bipartisan tax deal in 2012.

Brown’s proposal joins a crowded field of tax ideas, some backed by financiers with enough cash to gather signatures without politicians, unions or corporations.

Democratic leaders are counting on the power of the Governor’s Office and labor groups such as the California Teachers Association to discourage rivals from qualifying their measures. Conventional wisdom is that if tax initiatives flood the ballot, voters will thumb their noses.

“I think all of these other measures become the enemy of what Brown is doing,” said Rob Stutzman, a GOP strategist who helped former Gov. Arnold Schwarzenegger develop ballot initiative packages. “They’re larding the ballot with taxes. Voters won’t be able to tell the difference and will vote against them all.”

Brown said he will publicly release his proposal today.

Under the governor’s proposal, California would impose a half-cent sales tax increase starting in 2013 and an income tax hike on high-income earners retroactive to January 2012. Both would expire at the end of 2016.

The upper-income tax hike would start with a one-percentage-point increase at $250,000 for individuals and $500,000 for joint filers. A separate increase would charge 1.5 percentage points on income between $300,000 and $500,000; a third bracket would impose two percentage points on income above $500,000 for individuals. (Amounts are double for joint filers.)

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