SACRAMENTO (CBS / AP / BCN) -- California voters have approved Gov. Jerry Brown's plan to raise income taxes on the wealthy and raise the statewide sales tax to fund education and help balance the state budget.
The Proposition 30 vote was close and its passage, with almost 54 percent of state voters favoring it, was not clear until Wednesday.
No state politician had more at stake on the 2012 ballot than Brown, who was elected after promising to lift the state from its long-running budget crisis. He personally championed the tax boost that he said would restore California's luster, especially for its schoolchildren.
Brown said Wednesday that Proposition 30 will put California on a course to fiscal stability after five years of battering by the recession. He characterized his victory as "a vote of confidence with some reservations."
"I know a lot of people had some doubts, had some questions, about `Can you really go to the people and ask them to vote for a tax?"' Brown said, projecting optimism. But he said people from diverse groups came together to support it. "A core reason that brought people together in support of Proposition 30 was a belief in our schools and our university and the capacity of the state government to make an investment that benefits all of us."
Proposition 30's passage increases the statewide sales tax by a quarter cent for four years, starting in January, while people who make more than $250,000 a year will pay higher income taxes for seven years retroactive to the beginning of 2012. If voters had rejected it, the Democratic governor had pledged to enact $6 billion in cuts to schools and colleges.
Voters' passage of the measure got an immediate nod of approval from the credit rating agency Standard & Poor's. It called the measure "the linchpin to the governor's broader, multi-year strategy for reversing the state's negative budget position."
Revenue from the initiative will help avoid deep cuts for the state's 9,895 public schools that enroll 6.2 million students, as well as more tuition hikes at California's colleges.
Business groups that had feared a downward slide if the measure failed and forced huge education cuts, also cheered the win, despite higher tax bills for some Californians.
Brown had "done the near impossible" and given California "the temporary breathing room it needs to continue getting its fiscal house in order, restore our economy to health and avoid additional massive cuts to education and vital local public services," Jim Wunderman, president and chief executive officer of the Bay Area Council, which represents businesses in the San Francisco Bay area, said in a statement.
In winning passage of his initiative, Brown overcame strong voter distrust of state government fueled by a stream of negative publicity over the summer.
Brown was aware of the challenges and did his best to tie the tax initiative to education funding, noted Mark Baldassare, president and CEO of the Public Policy Institute of California.
"All of this just reinforces just how knowledgeable the governor is about the political process as well as the policy process to make this happen, because it's not easy," Baldassare said.
School districts that were prepared to lay off teachers and cut as many as three weeks of classes were jubilant, as were leaders of the state's university and college systems. The California State University system, which faced a $250 million mid-year budget cut if the initiative failed, was set to hand out $249 per-student tuition refunds for the current semester.
The system's board of trustees already approved a plan to rescind the semester fee hike that started with the fall semester this year, and now annual, full-time tuition will go back to $5,472 charged during the 2011-2012 school year, officials said.
Exit polls showed Brown's initiative did well with minority and younger voters, and that the poorest voters were the most likely to support it. A coalition of community groups that initially backed a separate millionaire's tax claimed credit for turning out some of the new and infrequent voters who they said helped push Brown's initiative over the threshold.
"This coalition of community, interfaith and labor came together because we knew passing Prop. 30 would be tough, and believed that a focus on turning out our base voters could be decisive," said Anthony Thigpenn, chairman of the group California Calls.
The competing plan, Proposition 38, sponsored by wealthy attorney Molly Munger, would have increased income taxes to inject schools with billions of dollars in new spending. Munger told supporters gathered at a trendy Los Angeles restaurant late Tuesday night that the vote was not the end of the fight for increased school funding.
"Obviously this is not the outcome we all hoped for, but transformational change can take a long time and we all know that," Munger said.
She congratulated Brown for a well-run campaign but her supporters seemed less enthusiastic, offering only a smattering of applause.
In all, the campaigns for and against the competing initiatives raised a whopping $372 million, according to MapLight, a nonpartisan research group that tracks political spending.
(Copyright 2012 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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