Dozen parcel taxes on May ballot
Two-thirds threshold is tough barrier
Polling consistently indicates that California voters would support more funding for their local schools. But next month, despite dire financial projections for schools, only a dozen districts – all of them in Northern California – will put that assumption to the test, with balloting for a parcel tax.
The low number is not all that surprising, considering it takes a two-thirds majority of voters to pass a parcel tax – the same high hurdle for extending state taxes that’s paralyzing the Legislature. Once again this year, Sen. Joe Simitian of Palo Alto is proposing a constitutional amendment (SCA 5 this time) to lower the requirement for passing a parcel tax to 55 percent. But, as in the past, so far he hasn’t been able to find any Republicans willing to put the idea to the vote of the people. Sound familiar?
All 12 of the May 3 parcel tax ballots will be done by mail. They range from a low of $59 per parcel for seven years in Sunnyvale School District to $200 per parcel for two years in Davis Joint Unified, which already has $320 in parcel taxes on the books, according to Mike McMahon, a trustee of Alameda Unified, who has tracked parcel taxes on a web site and generously shared the information.
Except for Davis, all 12 districts are in the nine-county Bay Area. But that’s nothing new. According to McMahon, there are 95 parcel taxes currently on the books in 70 school districts (some, like Davis, Palo Alto, and Los Altos Hills, have passed more than one) out of about 1,000 districts in the state. All but 13 are in the Bay Area, and those include seven in Los Angeles County – Culver City, Santa Monica, and South Pasadena among them. They’re mostly small and mostly wealthy districts; an exception is Ravenswood School District in East Palo Alto, where voters dug deep three years ago to pass a $98 parcel tax and will consider adding another $98 next month.
Voters in three districts – Sunnyvale, Saratoga-Los Gatos Joint Union High School District ($49 for six years), and New Haven Union ($180 for four years) in the East Bay – will consider parcel taxes for the first time.
In three other districts where voters have rejected parcel taxes before – five times in the case of John Swett Unified – school trustees are hoping they’ll reconsider. They are Jefferson Union High School District ($95 for four years); John Swett ($60 for four years) and Pleasanton Unified ($98 for four years).
And in still others, voters will be asked to add to existing parcel taxes. If Los Altos voters OK an additional $193 for six years, voters next year will pay close to $800 per parcel. Lafayette Elementary is asking for $176 for four years on top of the current $313. Cupertino Union, which passed its first parcel tax two years ago, for $125 per parcel, will consider another $125 for six years. And San Carlos Elementary voters will consider extending its $110 tax for eight years, on top of the $78 tax passed two years ago.
A parcel tax is a form of a property tax that began being levied in the ‘80s as a way to raise more money in response to Prop 13 restrictions. Usually, it’s a uniform amount per parcel. Regardless of the parcel size or the value of the home or commercial property, owners pay the same amount.
To try to make it more progressive, some districts have begun experimenting by charging by the square foot of either the building or the lot, or, in the case of the college town Davis, also charging $20 per unit in apartment complexes.
In March, McMahon said, Alameda Unified voters passed a parcel tax of 34 cents per square foot, with a cap of $7,900 per property (warehouses could easily pay a lot more). That will raise $1,200 per student – $500 more per student than the previous parcel tax and still not enough to offset all of the state cuts of the past three years and the cuts that might be added this year.
In addition to asking $60 per parcel, John Swett is proposing .0085 cents per square foot – an effort to extract more money from the ConocoPhillips refinery.
According to McMahon, there have been 500 votes on parcel tax proposals since 1983, with 54 percent passing. But of the approximately 235 defeats, 165 would have passed had the threshold for passage been dropped from two-thirds to 55 percent.
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I wish a lawyer would respond to the following argument: that Proposition 13, or any similar proposition that passes by a bare majority but requires a super-majority for its own overturning, is inherently unconstitutional because it violates the Equal Protection Clause of the 14th Amendment to the Constitution. The argument here is that the earlier generation is more empowered, more protected, hereby than a later, even unborn one, since the past 51st voter gained a decision power that today’s 51st voter cannot.
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A parcel tax may respond to hysteria rather than reality. In 2009, the Legislative Analyst’s Office recommended deregulating “categorical” jobs programs and mildly increasing class sizes to lower the cost of funding mandates on local public schools. The first round of this deregulation was approved by the state legislature saving about $4.5 billion and thus offsetting state budget cuts to schools. The LAO recommended a second round of deregulation that would save $7.4 billion, making parcel taxes unnecessary; UNLESS local schools wanted to voluntarily maintain a HIGH SERVICE/HIGH TAX school system. Otherwise, less wealthy school districts that don’t have the parcel tax option may end up with a LOW SERVICE/NO TAX school system. In other words, slowly the old egalitarian reforms of school financing are slowly unraveling. Wealthy school districts will be able to have more services and lower class sizes if they wish; less wealthy districts the obverse. Another round of state budget cuts to schools does not necessarily mean core teachers would have to be laid off IF the legislature passes another round of deregulation of funding mandates. Lowering funding mandates and increasing class sizes would offer the prospect of absorbing up to a 21% state budget cutback to K-12 schools. Looking into the future unfunded pension obligation may start crowding out other line items in the state budget beginning around 2014. So that would leave pensions and Prop 98 school funding as Constitutionally mandated and everything else in the budget would suffer a cram down (assuming tax revenues stay flat or only grow modestly (1% to 3%). K-12 schools will all have the option of funding bonds for attractive new facilities and for continued funding for core teachers. But it will apparently ancillary services and class sizes that will mainly be effected not teacher layoffs. Taxpayers in some schools districts that may pass parcel taxes may end up feeling suckered if funding mandates are also deregulated, thus allowing the school district a windfall plus a parcel tax.
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I agree with you that a parcel taxes, especially those amounting to hundreds of dollars per student, can expand inequalities in an underfunded system. I disagree that simply providing flexibility on categorical spending, in this case accompanied by a 25 percent cut in categorical funding, implies inefficiency. It simply permits triage.
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I don’t see a real need to overturn Prop. 13, which protects homeowners, including minority homeowners, from the whims and discrimination of an assessor. Sale price is a good and objective inflation-indexed assessment.
California’s system of education financing is the culprit here and since the State determines how revenue is distributed, actual sources only have an incidental impact on the system. I agree with Wayne that parcel taxes really are evidence for the unraveling of egalitarian funding. Parents didn’t tell California to spend the money on prisons over education. Parents are left holding the bag and end up thinking that somehow parcel taxes will solve the budget issues.
The two/thirds requirement is intended to ensure that there is wide support for a special tax. Switching to a simple majority system should also include quorum requirements so that a small minority of voters can’t game the system and start raising taxes on the majority. That game is already played with special elections and mail-in ballots that typically have low voter turnout. Simple majority parcel taxes is a great way for special interests to step in and get the public to pay for their pet projects; unintended consequences!
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Any talk about lowering the threshold for the parcel taxes should also include a discussion of exemptions (mostly to seniors). In some districts, seniors already represent way over 10-15% of the voters and that percentage is only going to increase.
The threshold for school bond measures is already at 55% but there are no exemptions because the tax is ad valorem (i.e. seniors are already protected by Prop 13).
Maybe parcel taxes should move to that model.
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A parcel tax is a flat tax and is regressive (say $100 per year no matter if your property falls in value). So a parcel tax is NOT ad valorem.
The current K-12 financing formula under Prop 98 guarantees no downside in bad times but a large upside when the economy is good. This can end up with inflated education budget. What we’re seeing now is merely the bubble deflating and funding mandates for ancillary categorical jobs to buy votes being deregulated. Despite significant cuts core teachers have not been laid off in droves statewide. Another round of deregulation would not necessarily have to cut core teachers. What local school districts will have to decide if funding mandates are further deregulated is how many ancillary services they want to provide (after school programs, etc). In a prolonged Recession it will be a hard sell to ask taxpayers to pony up for discretionary busing program, or after school program. However, school districts and media use hysteria that their favorite teachers are being laid off – when they haven’t thus far. All this crying wolf may now come back to haunt them.
When the dust clears we probably will find that there would be no large increase in property taxes for schools if Prop 13’s two-thirds voting threshold were removed. That is because home values have literally collapsed in many areas of California (Stockton, Sacramento) and aren’t going to recover fast. This has already happened in the commercial property sector where commercial and industrial properties are being assessed at open market values in the aggregate. I am in the process of a study on this. You have to remember that if Prop 13 is removed markets will adjust property values downward by, say, 20% to 50%. So what do you gain?
Also if you eliminate supermajority vote threshold the makeup of Boards of Education will change from being filled with special interests to being pushed out by homeowner, taxpayer, and other groups. So ridding the state of Prop 13 might spell doom to all the lobbyists, activists, consultants, and power brokers that now predominate on many school boards. They should be careful what they ask for, they may get it good and hard.
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For the record, the Prop 98 guarantees can and have been suspended by the Legislature. Since 2008, per student funding from the State has dropped by over $600 per student.
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<i>I don’t see a real need to overturn Prop. 13, which protects homeowners, including minority homeowners, from the whims and discrimination of an assessor. Sale price is a good and objective inflation-indexed assessment.</i>
Prop. 13 insures that owners of nearly identical properties only pay the same property taxes when the properties are purchased at the same time. Paying a different rate than your neighbor for an identical floor plan, building, and lot is inherently unfair. To say that this system “protects” home owners from capricious assessors ignores the fact that assessments can be and are appealed, particularly when the market value of a property declines.
California’s system of education financing — largely from the general fund — is designed to smooth per-pupil funding between affluent and poor districts in order to pass constitutional muster. Local parcel taxes to make up the difference simply reinstitutes the unequal funding structures that were in place prior to the <i>Serrano</i> decisions.
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Bruce William Smith raises an interesting question of political philosophy, but not obviously one of constitutional law. Can a k-majority electorate bind a polity to a restrictive rule that requires a larger-than-k super majority to overturn?
This question really is no different than whether “rule of law” is real or not. You don’t even need to go to the level of super-majorities. Adding a super-majority condition for repeal is a signal about pre-commitment to the meaningfulness of a policy. If you do away with it, you threaten the entire concept of rule of law. (I recognize that there is a Chicken Little aspect to that slippery slope argument — sorry to mix metaphors — but there it is).
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Thank you, Brian, and I agree that this is a largely philosophical issue, but I don’t see why a court couldn’t invalidate, for example, Proposition 13, on the grounds that the majority of 1978 made an illegal pre-commitment to disempower the majority of 2011, without threatening the concept of the rule of law.
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I’m sick and tired of sore losers who bought homes at bubble prices whining about Prop 13. It would be disgusting if I had to lose my (paid up!) home because some specu-vestor who was able to borrow any amount of money bought the house next door for $2 Million, and all of a sudden I had to pay $25K/year in property tax!
And anyone who thinks their property tax would go down if Prop 13 were overturned is nuts! Everybody’s tax would go up!
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“Not only does an acquisition value system enable each property owner to estimate with some assurance his future tax liability, but also the system may operate on a fairer basis than a current value approach. … This result is fair and equitable in that his future taxes may be said reasonably to reflect the price he was originally willing and able to pay for his property, rather than an inflated value fixed, after acquisition, in part on the basis of sales to third parties over which sales he can exercise no control.
In addition, the fact that two taxpayers may pay different taxes on substantially identical property is not wholly novel to our general taxation [22 Cal.3d 236] scheme. For example, the computation of a sales tax on two identical items of personalty may vary substantially, depending upon the exact sales price and the availability of a discount. Article XIII A introduces a roughly comparable tax system with respect to real property, whereby the taxes one pays are closely related to the acquisition value of the property. ”
From: http://scocal.stanford.edu/opinion/amador-valley-joint-union-high-sch-dist-v-state-bd-equalization-30521
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I agree
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We have no “system” of public school finance in California. What we have is 40 years worth of lawsuits, legislative responses to lawsuits, and ballot box legislation that have been cobbled together and mask as a “system.” It’s a patchwork quilt that is thread bare and ready to fall apart at the seams. Systems, in my mind, ought to be thoughtfully planned and well thought out….that is hardly the case with Ca public education finance.
In 1968, Serrano v Priest argued that the quality of a child’s education should not be dependent on his/her address. The Ca Supreme Court agreed and in 1972, the old system was declared unconstitutional… unequal access. SB 90 and AB 65 were attempts to remedy the inequities, but when Prop 13 was passed, there simply wasn’t the money to equalize funding to school districts. Prop 98 was supposed to be a funding floor that provided some stability to education funding – instead it has become a ceiling and is a piece of legislation that is manipulated at will by the legislature. While I agree that parcel taxes are a band-aid (yet another piece of ballot box legislation) and exacerbate the equality issue, kudos to those communities (mine included) who refuse to give up on their kids and fight to provide the children in their communities what the state will not. Funny, I don’t think things are a whole lot different than they were in 1972, as far as equal access goes.
Prop 13, in my opinion, was an over reaction to a situation that the legislature SHOULD have addressed, but did not. The unintended consequences for education have been far reaching, as the state’s largest expenditure is K-12 education. Will Prop 13 ever be repealed? – probably not. It is still a very popular piece of legislation. However, it should be tweaked. It is precisely WHY our state income tax and sales taxes are higher than in many states. Being overly dependent on taxes that are tied to economy, makes recessions a lot tougher to weather. If we depended a little more on property taxes, and perhaps taxed a few services, I’ll bet we could afford to lower the sales and income tax rates.
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