Prop. 30 wins, Prop. 38 flames out

California Governor Jerry Brown joins supporters of the "Yes on 30" and "No on 32" campaigns as they gather at the Sheraton Grand hotel in downtown in Sacramento, Calif., on Tuesday Nov. 6, 2012, to watch election night returns. less California Governor Jerry Brown joins supporters of the "Yes on 30" and "No on 32" campaigns as they gather at the Sheraton Grand hotel in downtown in Sacramento, Calif., on Tuesday Nov. 6, 2012, to watch ... more Photo: Michael Macor, The Chronicle Photo: Michael Macor, The Chronicle Image 1 of / 18 Caption Close Prop. 30 wins, Prop. 38 flames out 1 / 18 Back to Gallery

(11-07) 07:49 PST SACRAMENTO --

California will avoid deep spending cuts to public schools and universities, and be able to pull out of the fiscal swamp without slashing other services further, after voters handed Gov. Jerry Brown's signature tax measure a decisive victory Tuesday.

Proposition 30 had an 8 percentage point lead Wednesday morning, with 99 percent of precincts reporting.

Seventy-two percent of voters handily rejected a rival measure, Proposition 38.

Brown's tax measure has been his central focus since his election two years ago and will have major implications for the state's finances. If it had been defeated, nearly $6 billion in automatic spending cuts, falling almost entirely on public schools, would have been automatically enacted under the budget approved by lawmakers earlier this year.

Prop. 30 will raise the sales tax by one penny for every $4 spent for four years, while increasing the income tax on the state's highest earners for seven years. It would generate about $6 billion per year in new revenue. The sales tax hike will go into effect Jan. 1, while the personal income tax increase is retroactive to the beginning of this year.

At an election night event at a hotel near the Capitol, a few hundred backers of Prop. 30 were in a celebratory mood. Brown, who took the stage soon after the measure gained majority support for the first time, expressed confidence that it would pass.

"I know some people had some doubts, had some questions - can you really go to people and ask them to raise their tax?" Brown said. He added that he believes California is the only state where voters said, "Let's raise our taxes for students, for our schools, for our California dream."

The measure enjoyed strong support in coastal counties like San Francisco, where voters approved it by a 3-1 margin, but was defeated in more conservative areas.

Opponents had argued that state leaders should reform what No on 30 spokesman Aaron McLear called a "broken system," prior to "asking voters for a $50 billion bailout the politicians can spend on anything they want."

Voters easily defeated Prop. 38, which would have increased the income tax rate on nearly all Californians for 12 years, generating about $10 billion per year. Nearly all of that money would have gone to public schools, though some of it also would have been spent to pay down the state's debt.

Finally getting a public vote on his tax measure has been Brown's top policy goal, and he had hoped it would be the only tax measure on the state ballot. The governor melded his measure with another being pushed by the California Federation of Teachers, but he was unable to persuade civil rights attorney Molly Munger, who has bankrolled Prop. 38, to drop her effort.

Munger conceded Tuesday night. "A powerful coalition has begun coming together and a strong movement has been formed," she said. "As we continue this fight, we can and will build on all the good work that has been done."

For Brown, the vote will finally answer the question of how to proceed with restoring California's finances.

The governor ran for office on a pledge that he would not increase taxes without a vote by the people - and told voters he knew best how to right California's fiscal ship. Soon after he was sworn in, he began efforts to put such a measure before the people.

Brown had hoped for such a vote in May 2011, before the enactment of his first budget, but he was unable to win the backing of enough Republicans in the Legislature.

That experience also earned him criticism for not realizing that the politics of the state had changed dramatically since he was last in the governor's office, and that it would take something short of a miracle for Republicans to agree to even put a tax measure on the ballot, let alone vote for it.

But the governor has been dogged in his determination to hold such a public vote, and started a signature-gathering effort to place the measure on the ballot. He has spent the past few weeks barnstorming the state on the issue, sometimes visiting multiple cities a day, and was assisted by a strong union push.The measure's passage was a huge win for the governor. But a loss wouldn't have tarnished his legacy, said Barbara O'Connor, emeritus professor of communications and director of the Institute for the Study of Politics and Media at Sacramento State University.

Had it lost Brown would say, " 'The people have spoken, we'll deal with this in the normal course of our budgeting,' " she said. "That's his legacy: Be straight with people, and try to get the best deal."

Whether the governor was being straight with voters was the focus of much of the campaign against the ballot measure. Opponents hammered Brown for saying that all the new money would go to education, when in fact much of it would benefit other parts of the state budget.