The document proposes reforms to stabilize California's budget including: 1) empowering local governments, 2) creating an independent watchdog for the public interest, and 3) updating the tax system to provide stable revenue by reducing income taxes for most, broadening the sales tax base, and reducing corporate taxes. It estimates the tax changes would generate $10 billion annually for schools, higher education, counties, and cities. Other reforms include a rainy day fund, multi-year budgeting, and initiative process changes.

1. Think Long
http://berggruen.org/files/thinklong/2011/blueprint_to_renew_ca.pdf

2. Think Long Committee for CA
 Revenues are $700 M below expectations
 Sacramento continues its partisan
wrangling
http://vimeo.com/32472631

3. Proposal #1 (of 3)
 LOCAL EMPOWERMENT. Returning
decisionmaking power and resources from
Sacramento to counties and cities

4. Proposal #2
 AN INDEPENDENT CITIZEN’S WATCHDOG.
Creating an independent watchdog for the long-
term public interest, empowered to place
initiatives directly on the ballot for public
approval

5. Proposal #3
 A MODERN, BROAD-BASED TAX SYSTEM.
Updating California’s tax system to provide a
stable, broad-based tax system that is
sustainable over the long term

6. Tax Reform

7. Tax Proposal Background
 Over the past 60 years, California’s economy
moved from one that was fueled by agriculture
and manufacturing to one that is increasingly
driven by services
 As this occurred, our tax revenues became less
reliant on sales and use tax and more driven by
Personal Income Tax

8. The Fine Print (on taxes)
 Reduce the sales tax on goods from 5% to 4.5%, while
broadening the sales tax at a 5% rate to apply to
services (except education and medical care)
 No income tax on those earning $45,000 and under
 2% income tax on incomes up to $95,000
 7.5% income tax on incomes above $95,000. Because
of the 1% surcharge for mental health on millionaires,
they would pay a top rate of 8.5%.
 Double the homeowners’ exemption and renters’ credit

9. More on Taxes
 This combination of changes to California’s tax
system (cutting income taxes for most
Californians while broadening the tax base) will
help stabilize the boom and bust cycle of the
budget while generating $10 billion in new
revenues annually

10. Corporate Taxes
 “S” corporations and LLC’s, whose profits and
losses are taxed at the personal income tax
rate, will thus have their taxes cut
 For large “C” corporations, the mandatory
single sales factor would be imposed, while
at the same time California’s corporate tax
rate would be reduced from 8.84% to 7%

11. Revenue Outcome
 Gradually phasing in these changes will
result in an estimated $10 billion/year in
additional revenues

12. What will we spend it on?
 Initially:
 Repayment of $15 billion in Economic
Recovery Bonds (ERBs)
 Increased funding for K-14 schools by $5
billion/year

13. Starting in 2014-15
 $5 billion for K-14 education
 Up to $2.5 billion for higher education
 Up to $1.5 billion to counties for the
recently enacted Public Safety realignment
 Up to $1.0 billion to cities as unrestricted
revenue

14. Other Reforms
 Create a Rainy Day Fund
 Multi-year budgeting
 Greater legislative oversight of budgeting
 End to “gut and amend”
 Pay-Go for legislation or initiatives costing more
than $25 million
 Modify term limits: allow for 12 years of service
in either the Assembly or Senate (or both)

15. Initiative Reform

16. Initiative Reform
 Include in ballot pamphlets a list of the five top
contributors of $50,000 or more on each side of
initiative campaigns as well as the total amount
of contributions
 Allow the Legislature to review pending initiative
proposals and fix flaws, legal or otherwise, or
propose an alternative version, contingent upon
final approval by the proponents of the initiative
measure.

17.  Increase the number of signatures needed
to qualify an initiative for the ballot
 Increase the time allowed to gather
signatures from 180 days to 365