(February 13, 2006) The California Chamber of Commerce is leading a broad-based and growing coalition of educators, private preschool providers, business groups, minority groups and taxpayer organizations opposing Proposition 82, Rob Reiner’s initiative on the June 2006 ballot that would increase personal income taxes to fund a new, government-run preschool program.
While expanding educational opportunities is a laudable goal, this initiative creates a complicated, costly government bureaucracy and is an inefficient use of the $2.4 billion raised from taxpayers and small businesses.
Reasons to Oppose
After reviewing the facts, the majority of local chambers are coming out in opposition to this seemingly well-intentioned but flawed measure. Here’s why:
- There are more important uses for limited state resources, like K-12 schools.
With California facing chronic budget deficits and a shortage of funding for existing important programs, we should not be creating a new, multibillion-dollar preschool bureaucracy. Currently, 66 percent of preschool age children attend preschool in California. Proposition 82 aims to bring enrollment to 70 percent. That’s $2.4 billion per year for a 4 percent increase in preschool enrollment — hardly a wise use of limited taxpayer dollars!
We should fix the problems we have with our current K-12 system before spending $2.4 billion annually in limited resources to create an unnecessary and duplicative new preschool bureaucracy.
The Legislative Analyst predicts this program will cost as much as $8,000 per student for a part-time, three-hour-per-day program. That’s almost as much as we currently spend for full-day instruction for K-12 students!
California taxpayers already spend more than $3 billion each year to subsidize preschool for low-income children in the state. Rather than raising $2.4 billion in new taxes and creating an entirely new bureaucracy, a more fiscally prudent use of resources would be to expand the preschool opportunities for lower-income children and families most in need.
For example, the Chamber Board was moved by a recent presentation from two superintendents of public school districts in the greater Bakersfield area. Their districts had developed a five-week preschool program for children just before they enter kindergarten. The children are taught by certificated teachers in existing facilities at a cost of no more than $350 per child. The academic results of children in this program are consistent with those of other preschool attendees.
Clearly, there are affordable, successful alternatives, and all these should compete in the legislative budget process for scarce resources.
- The measure fails to focus on expanding preschool availability for those children most in need.
According to an analysis by respected former Legislative Analyst William Hamm, only 9.4 percent of funding from the new program will go to enroll “high risk” kids in preschool who otherwise wouldn’t have gone — those children from lower-income families or children that historically have shown achievement gaps.
All the academic evidence (even the RAND report cited by the proponents) shows that lower-income, minority and high-risk children benefit most from preschool. We should target limited resources to help those kids most in need.
- Proposition 82 would reduce existing funding for schools, roads and other state programs and services, and could cost all taxpayers!
History shows that raising taxes on higher earners causes them to change their investment patterns to avoid the increased taxes. The personal income tax is now more than 50 percent of state General Fund budget revenue. Only 11 percent of California taxpayers pay 73 percent of this tax.
Proposition 82 imposes an 18 percent increase in the personal income tax rate currently paid by higher earners and will have a significant negative impact on revenues for other important programs such as schools, public safety, transportation and health care.
What’s more, it is highly likely that the new bureaucracy will cost much more than the $2.4 billion per year the proponents claim this tax will raise. When program costs exceed tax revenues, the Legislature will be forced to either raise taxes again or start charging parents of preschool kids.
In fact, hidden in the fine print of this measure is a provision that allows the state to assess user fees for parents with kids in this preschool program if the program runs out of money. A new parent tax!
- Small businesses targeted.
This increase in personal income taxes for those earning $400,000 or more will be particularly harmful to small businesses, the backbone of our economy. According to the California Taxpayers’ Association, 80 percent of California businesses pay taxes under the personal income tax.
The government-run preschool bureaucracy will also shut down thousands of private, community-based preschools that currently enroll nearly half of all children in California preschools — replacing thriving businesses that provide jobs and tax revenue with a government-run program.
Join Coalition
The groups opposing Proposition 82 support expanding educational opportunities and enhancing the availability of preschool for more children, particularly those most in need. However, Proposition 82 is riddled with problems, creates a new and unnecessary large bureaucracy at the expense of small businesses, and will not serve our children or our state well.
We hope you will join us in opposing Proposition 82. Go to www.stopreiner.org for more information and to sign up in opposition to this flawed measure.
Allan Zaremberg is president and chief executive officer of the California Chamber of Commerce.