Billionaire Nicolas Berggruen's Think Long Committee for California will not press a ballot measure this year to alter the state's tax system, a move seen helping Governor Jerry Brown's plan to put a tax measure to voters.
Berggruen's bipartisan group of business and civic leaders said in a statement on Tuesday that it would put its proposal for an independent Citizens Council for Government Accountability on hold.
It is clear from public reaction, stakeholder meetings and our own public opinion research that Californians are hungry for real reform and are more willing than ever to support a sweeping plan that is fair and will put an end to California's perpetual financial volatility and suffocating wall of debt, the group said.
At the same time, we recognize the practical constraints of the 2012 election calendar - and have come to the conclusion that it will take more time to perfect these proposals, eliminate unintended consequences and provide every stakeholder and everyday Californians a meaningful voice in that process, the group added.
The group said it would work on language for a tax ballot measure with the goal of putting one to voters in November 2014.
The group, which includes former Governor Gray Davis, Google Inc Executive Chairman Eric Schmidt, Los Angeles philanthropist and KB Home founder Eli Broad and former U.S. Secretaries of State George Shultz and Condoleezza Rice, has urged overhauling California's tax code to bring stability to state finances.
The Think Long Committee last year proposed cutting income tax rates while adding a sales tax on services - with an exemption for education and medical services - to broaden California's tax base.
California's government depends heavily on income taxes, especially on the volatile income taxes of its wealthy residents, to fill its coffers. When the state's wealthy are flush with capital gains, the state's revenue swells, but when financial markets slump, revenues shrink.
Despite that volatility, Brown aims to put a measure to voters in November asking them to approve temporary income tax increases for wealthy taxpayers along with an increase in the state sales tax to raise roughly $7 billion a year to bolster the state's finances.
His state budget plan anticipates voters will approve the measure, which would help fill a state budget gap for California's fiscal year beginning in July estimated at $9.2 billion. If voters reject the measure, Brown has said schools and community colleges would face nearly $5 billion in spending cuts.
Brown faces better odds of winning voter approval for his tax measure if it does not have to compete for attention with other tax plans, according to analysts.