Consumer Federation of California

Sales tax in San Mateo County is now more than 9 percent and could remain that high if voters approve Proposition 1A, an increase on income and vehicle taxes that will help balance the state’s 2009-10 budget.

The proposition is part of a package of measures placed on the May ballot by the Legislature to address an ever-growing state budget deficit. Five measures on the ballot seek to address the budget. The package also includes Proposition 1F, a proposal to limit salary increases to elected and appointed state officials during times of economic trouble.

If Proposition 1A is passed by a majority of California voters, $10 billion in sales, use, income and vehicle taxes imposed as part of the 2009-10 budget agreement would each be extended for one or two years, resulting in a further tax increase of some $16 billion.

A one-cent-per-dollar increase in the state sales tax, from the current tax of 8 percent to 9 recent, will be extended for one year through 2011-12.

The state’s Vehicle License Fee will go from .65 percent to nearly 1.15 percent of a vehicle’s value for two additional years through 2012-13, according to the Legislative Analyst’s Office.

The proposition also calls for the state to increase its ‘rainy day’ fund from 5 percent to 12.5 percent. The measure would require any annual state revenue increase that is above ‘historic trends,’ plus an increase for the rate of inflation and population growth, to be deposited into the state budget stabilization fund each year until the fund reaches 12.5 percent of the state general fund, according to the LAO.

However, even if there is a revenue increase, those deposits would only occur once education-spending levels mandated by 1998’s Proposition 98 are reached.

The proposition is supported by a long list of state organizations, including the League of California Cities.

‘Our board had a very spirited and respectful debate, representative I suspect of the one that is going on across California. As city officials, our most important job on state financial matters is to protect local government revenues. The difficult decision to support these ballot measures reflects our conviction as city leaders that the short-term and long-term interests of cities and the entire state will be better served if these measures pass,’ League President Judy Mitchell, mayor of Rolling Hills Estates in Southern California, said in a prepared statement.

The Service Employees International Union and American Federation of State, County and Municipal Employees oppose the measure.

‘Instead of making our budget process more transparent and accountable, 1A does the opposite. Its complex formulas and fine print will invite unintended consequences and behind the scenes manipulation’ according to arguments against the proposition, signed by the Congress of California Seniors, California Faculty Association and Consumer Federation of California.

There are few opponents of a state salary cap.

Proposition 1F would prohibit the state commission that sets salary levels for the governor, other top state officials and members of the California Legislature from increasing those salaries if the state General Fund is expected to end the year with a deficit, according to the LAO.

Currently, California legislators are paid $116,208 annually, which is the highest among state legislators in the United States. Legislators also are given $170 per day per diem expense money for each day they are in session.