It’s not business, it’s personal
Bringing budget cuts home to make them real
It’s a measure of how worried and angry people are that nearly a hundred parents, students, educators, and policy makers gave up their Saturday to learn just how badly schools will be hit under Gov. Brown’s all-cuts budget, due out today, and to discuss some of the not-so popular solutions. Hoi Yung Poon, executive director and founder of Parents for Great Education, who organized the event, worried needlessly that “no one would show up.” The 21st Century Education Summit at De Anza College in Cupertino drew Silicon Valley Congressman Mike Honda and San Francisco Assessor Phil Ting. A group of Chinese American moms drove down from San Francisco with an interpreter, a parent organizer came up from Los Angeles, and a community college trustee flew in from Orange County.
Facing down Prop 13
Most speakers challenged the belief that extending the tax increases is the only way to solve the pending crisis in public schools. Ting in particular has been on a mission to stop the worshipping of one of California’s sacred cows: Proposition 13. He even has a website, called Close the Loophole, that’s devoted to eliminating the loophole that lets commercial property owners make improvements without paying increased taxes, because the property rarely changes hands. Ting said there’s been a complete flip in property tax contributions as a result of Prop 13. In the 30 years since the initiative passed, property tax contributions have flipped in San Francisco from 59 percent paid by commercial property owners and 41 percent by homeowners, to 43 percent and 57 percent respectively. He estimates that taxing commercial property at fair market value could raise $7.5 billion a year.
Since Prop 13 passed, residential property owners in San Francisco have been paying more taxes than commercial owners. Click to enlarge. (Source: San Francisco Assessor Phil Ting)
When asked how he would respond to businesses that argue they should be included in Prop 13 because they create jobs and improve the economy, Ting had a ready answer. He said Prop 13 was sold to Californians as a local measure to protect residents, but “consumers get no subsidy” from the tax break to commercial property owners. He gave an example fro nearby Menlo Park. “Draeger’s (an upscale supermarket) pays $66,674 in property taxes, while Trader Joe’s pays about $7,000 because the people who own Trader Joe’s land have handed it down to their heirs who live in Massachusetts.” Not only is the tax break going out of state, but local residents get no benefit, said Ting. Plus, a gallon of milk at the Trader Joe’s in San Jose doesn’t cost any more than a gallon of milk at the Trader Joe’s in Menlo Park, even though that one is paying so much less in taxes.
“What we do in California is tax the hell out of new businesses and we don’t tax the windfalls that accrue on everyone else, said Ting. “The benefits of the new business taxes goes to a windfall for the older businesses.” Consumers, he added, get no subsidy.
Although Ting’s position isn’t yet universally embraced, it is gaining more vocal adherents. Mary Perry, the deputy director of EdSource, a nonprofit, nonpartisan education research organization, says the current funding structure isn’t sustainable, not with the changing mission for our public schools. “To expect schools to innovate and change their paradigm and be more effective while they’re trying to figure out how to keep the lights on is a little disingenuous, a lot disingenuous,” said Perry. ”The restriction on state revenue on California’s ability to raise revenues for its local services that were created by Proposition 13 are due for reexamination. If people understood the negative consequences for them personally and the economy as a whole it would not any longer be something sacred.”
Low-hanging fruit
Lenny Goldberg, with the California Tax Reform Association, said that just by going after the “low hanging fruit” the state could bring in several billion dollars:
- $2.3 billion raising income taxes on the wealthiest 1% of Californians by 1%. “The Bush tax cuts gave the top 1% in California $9billion in tax relief,” said Goldberg.
- $1.3 billion from implementing a production tax on oil. California is the only oil-producing state in the world without this tax, says Goldberg.
- $1.3 billion from eliminating the corporation tax election, a new law that allows California companies to decide each year what formula they’ll use to pay taxes on their operations in the state.
- Collecting taxes for online commerce, such as Amazon.
- $1.7 billion by eliminating redevelopment districts and reallocating property taxes diverted to those districts to schools, cities and counties.
- $900 million now and $500 million ongoing by eliminating enterprise zones.
Education funding is rooted in values
Not everyone put the blame on Sacramento or Washington, D.C. “We are as responsible for the reason the system is broken as anyone,” said Cindy Chavez, executive director of the San Jose-based Working Partnerships USA, a social change organization funded by labor. She said the uncompromising tone of political debate has turned a significant number of people against any taxes for any reason. “I think it’s become so fashionable in this state and in this country to blame others that we’re going to kill this country and this state.”
What really irks Chavez is how the conversation about education funding is devoid of values. When the purpose of school is discussed, she said it’s always about training students for jobs; the idea that education has value in and of itself isn’t discussed. “In no environment has it worked to say ideology doesn’t matter,” said Chavez. “We design political systems and economic systems with the idea that people are dispassionate.”
Map it
Parents advocates hope to bring out some of the passion, especially in parents, with a new mapping tool that shows how much their children’s district stands to lose under the worst-case scenario budget. Click on the district and it shows the decrease per student and the total cuts to the district.
“I had an idea for some sort of tool that would show school funding information that was digestible,” explained Dr. Cynthia Liu, founder of a parent news site called K-12 News Network, who has been working with Parents for Great Education. Liu is also hoping that seeing those numbers will inspire people to lobby their legislators. “We really need something that helps community understand the urgency and the severity of the cuts. It’s hard to be motivated without the facts and figures.”
Thanks for the great recap — I was sorry to miss the event on Saturday!
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Tax and Spend…..So, What’s new about that in California?
These people are leaning so far to the Left, it’s a wonder they don’t fall into the Pacific……
How about this: Let’s have a State-Wide discussion about what we really value: Educating the next generations of Californians/Americans, or continue the wasteful State spending on Welfare, Prisons, and a bloated bureaucracy, staffed with 100’s of thousands of State Employees? Then ask yourself this: Why do we need a full-time sitting Legislature? Why allow thousands of political-types to draw huge salaries, benefits, and pensions as well as their staffers, for what? To draft MORE business-killing regulations, wasteful pork-barrel spending, taxes on productive people to pay for the half that pay for nothing, and a home for lobbyists to hang their hats?
It’s obvious you can’t have it both ways………The State Government is running out of other people’s money, time to start cutting back, way back…….
If we truly value our children and the future of California, we will fund Education without raising taxes and stop driving away what’s left of our California Businesses. If we don’t value the future, but want to wallow in the past and continue to reward non-contributors, they we will have no one to blame but ourselves
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So how much money do schools need to do a decent job? I see all kinds of funding levels by district, state, and country but I see no correlation between performance and funding. Everyone wants more money but is there some dollar value which you can say is the minimum necessary to do a decent job? Another dollar value which you can say is necessary to do an optimal job? Or is it always more, more, more?
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The differential in commercial/industrial taxes could be addressed in part if the state were to simply amend the definition of a “sale” of the property. Specifically, if/when stock companies turn over more than 50 percent of their stock in cumulative trading, such turnover should be deemed a “sale” of the property and their real and personal properties should be re-assessed. This would trigger much more frequent re-assessments and bring them more on par with residential re-assessments.
Much of the differential (at least outside of San Francisco) is due to redevelopment agencies’ siphoning-off of incremental growth in property taxes within their districts. Annual tab to the state for this has grown from $600 million/year several years ago to over $6 billion/year today.
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I think it’s important that opinion leaders and the press have a clear view of the fact that the corporate world in California opposed Prop. 13 in 1978 — because it was clear that it would undermine our state’s economy and infrastructure. Here’s a good account:
Proposition 13 was opposed by every major Democratic leader in the state and also by a long list of prominent Republicans including two future GOP Governors, Deukmejian and Wilson. Then mayor of San Diego and a candidate for governor, Wilson campaigned against the initiative, calling it “a meat ax approach.” Proposition 13’s opponents also included the pro-business California Taxpayers Association along with The Bank of America, Atlantic Richfield, Southern California Edison, Southern Pacific Railroad and Standard Oil of California. The corporations not only not only opposed Proposition 13 but gave huge cash donations to the campaign to defeat it. The executive vice president of Southern California Edison explained to reporters, “Although business stands to receive at least $4 billion of the anticipated $6 billion in property tax relief, we felt it was time for the private sector to stand up for principle and fight this measure as financially unsound.”
This is from Democracy Center — if I post the link, this site won’t post my comment.
The Democracy Center quote jibes with my memory as an aware California voter and homeowner in 1978.
By the way, it’s also really important to understand that most Californians have only the haziest idea of what Prop. 13 is/was/did — if any idea at all. If you were born after June 1960, you weren’t old enough to vote in that election; if you didn’t live here in 1978, obviously you weren’t here. That probably rules out most people. Polls showing that so-and-so percentage support Prop. 13 are not valid. They are based on reading a paragraph of explanation to the huge majority of people they ask who have no clue what it is. I once asked pollster Mark DiCamillo about this for a blog item and he sent me the paragraph they use — it’s evenhanded, but even so, it’s not valid to count someone’s opinion on something they only heard of that moment.
Michael G., if adequate funding weren’t critical in providing better schools, why do the rich routinely pay $30K per kid per year to their private schools and hit up donors for still more?
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Caroline G. - I’m not saying “adequate” funding isn’t necessary but you need to define adequate – define minimal, adequate, and maximum (max. being above which more money has no effect on outcomes). If you don’t define what you will be satisfied with, then you have the very real risk of being ignored because it will appear that there is no limit and no matter what you get you will want more.
You need to tie these levels of funding to outcomes so we know what we can expect to get in return for what funding you are given. The current way of always demanding more and never accepting cuts and layoffs as an inevitable part of a fluctuating economy is that we have no idea where to draw the funding line.
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Well, if it costs >$30K/year to educate private-school children who come to school with no material needs and every possible privilege, we have to add large extra amounts if we want the schools to meet the needs of kids who come with enormous needs unmet, right?
Obviously that’s not realistic, but the implication of the “how much is enough?” question — that public schools are somehow making excessive demands — is blown out of the water by what private schools spend.
To be practical, one would have to say “it depends” — just as if you asked the question “How much does a family need to live on?” The variables are huge.
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The Amazon tax loophole is just atrocious. Why shouldn’t one of the largest retailers pay their fair share? Closing the Amazon tax loophole would mean up to $1 billion in new state revenue, while helping to level the playing field for California’s small businesses. Phil Ting launched a new website last year, called Reset San Francisco, to engage citizens and give them a greater voice in the local policy process. It’s an online forum to share your ideas about how to make government work better. It’s our schools and our tax dollars: let’s DO something about the cuts.
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It seems to me schools have accepted, or at least absorbed, huge amounts of cuts and layoffs in the past few years.
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