The initiated measure increases the state general sales and use tax rate from 4% to 5%. The additional tax revenue will be split evenly between K-12 public education and Medicaid. The education funds will be provided to school districts based on enrollment, to be spent improving education as school boards determine. The Medicaid funds will be spent only on payments to Medicaid providers and related state expenses.
Additional funds cannot replace or reduce state funding levels set for fiscal year 2012 relating to existing Medicaid and K-12 education programs, including state aid to education. Currently, state aid is to be adjusted annually by 3% or the rate of inflation, whichever is less. Under the measure, this annual adjustment cannot exceed the growth rate in state general fund revenues. Any resulting shortfall in state aid will be made up in subsequent years.