* Voters approve tax hike sought by governor
* Supermajorities expected in both chambers of legislature
* Liberal Democrats start talking about new taxes
By Peter Henderson and Jim Christie and Mary Slosson
SAN FRANCISCO, Nov 8 California just became a
Governor Jerry Brown and his Democratic allies on Tuesday
won a mandate that might be the envy of President Barack Obama,
turning the nation's bluest state into one in which Democrats
will likely have all but complete political control.
Voters approved a tax hike championed by Brown and soundly
rejected a measure that would have gutted union political power.
Perhaps most importantly, if initial vote totals hold in several
very close legislative races as the final absentee ballots are
counted, they will have handed Democrats supermajority control
of both houses of the state legislature for the first time in 79
Brown, who largely failed to gain cooperation from
Republicans over the last two years, now owns the field. He has
the opportunity to overhaul the tax code, reform the Byzantine
governmental processes that have hobbled Sacramento for decades,
and even potentially touch the "third rail" of California
politics, the low-property-tax measure known as Proposition 13.
"I guess you might say it's our time," Senate President Pro
Tem Darrell Steinberg told a news conference.
The ascendance of Democrats and their union backers may give
more than a little pause to businesses and wealthy individuals,
who now face higher taxes and the prospect of even more new
taxes and regulations.
The state's top personal income tax rate was already the
second highest in the nation at 10.3 percent before Tuesday's
vote, and will now rise to 13.3 percent for the next seven
"Enabling the tax-and-spend majority in the capital to have
carte blanche to heap new and unanticipated taxes on already
struggling Californians gives us extraordinary concern," said
John Kabateck, California executive director of the National
Federation of Independent Businesses.
Brown was quick to acknowledge the need for restraint. The
former seminarian cited the Biblical story of Joseph and the
pharaoh at a news conference Wednesday, in which Joseph told the
pharaoh to prepare for lean years in times of plenty.
"We need the prudence of Joseph going forward over the next
seven years and I intend to make sure that's the story we look
to for our guidance," he said.
Indeed, despite the eye-popping income tax rates, the
state's overall tax burden is not exceptionally high due to low
property and business taxes. The effective business tax of 5.3
percent is only barely above the national average of 5.0
percent, according to an Ernst & Young report for the Council on
But some in the Brown coalition did appear to have more
spending on their minds.
"We have the capacity to rebuild this state," said Dean
Vogel, president of the California Teachers Association, which
spent $32.8 million in support of Brown's tax hike and other
ballot campaigns. He cited the need to address chronic
underfunding for education and clean up the tax code - which
could include closing tax loopholes.
PIONEERS IN POLITICAL INTRACTABILITY
California has historically been ahead of the nation in many
things - including intractable partisan political warfare.
Decades of extremism in both parties left little ground for
compromise, and the state's constitution allowed the
legislature's Republican minority, dominated by a conservative,
no-taxes wing, to block any major change.
Deals made to pass budgets have created tortuous funding
mechanisms and a welter of obtuse regulations, Democrats say.
Now, assuming the vote totals hold, Democrats, with
two-thirds majorities in the state Senate and Assembly, will
have the power to pass tax hikes or put constitutional
amendments before voters on their own.
The Senate appears likely to have 28 Democrats, one more
than needed to reach two-thirds, and the Assembly is on track to
have 54 Democrats, exactly two-thirds.
That supposed ease of governing contrasts with the
predicament of fellow Democrat Obama. His second term begins
with a Democratic-controlled U.S. Senate and a Republican
majority in the House of Representatives, the same divided
Congress that thwarted his agenda in the last two years.
Liberal Democrats in California were already talking about
new oil severance taxes, higher taxes on commercial real estate
and the end of tax breaks in so-called enterprise zones.
At the edges of many conversations was the question of
whether Democrats could or would change Proposition 13, the 1978
measure that keeps property taxes low and which voters approved
when Brown won the second term of his first tour as governor. He
was elected to a third term in 2010.
Prop 13 is still extremely popular, but some Democrats see
room to chop away at its protections for business property while
maintaining the core homeowner safeguard against rising property
Republicans cautioned that any such efforts would be
"The natural inclination for politicians is to
over-interpret the mandate they've been given with an election
like this one," said Dan Schnur, director of the Unruh Institute
of Politics at the University of Southern California, and a
former spokesman for Governor Pete Wilson, a Republican.
Still, voters broke from form in approving Brown's tax hike,
and clearly support more spending on education. California ranks
47th of 50 states in per pupil education spending, and if the
tax measure hadn't passed, $6 billion in additional education
cuts would have been triggered.
Brown, ironically, may now emerge as the conservative force
in discussions with the most liberal members of the legislature.
"The governor is going to see it as his mission to keep the
brakes on anybody going crazy with the money," said labor union
lobbyist Barry Broad.
Moderate Republicans might be more open to join the
conversation with Democrats, since it was the only way for them
to be relevant, added analyst Scott Lay, a lobbyist for state
But the supermajority gives the legislature room to ignore
Brown as well - or at least override his vetoes. That's likely
to put in check some of the governor's ambitions, such as a
second overhaul of public pensions.
"If I'm a Democratic leader of the legislature, I'm not
waking up this morning thinking 'Boy, I've got to go after
public pensions,'" said Jack Pitney, professor of government at
Claremont McKenna College.
Brown himself sidestepped the issue of vetoes at a news
conference. "This is about celebrations, not about drawing lines
in the sand," he said.