Proposition 13, California’s iconic, tax-cutting ballot initiative of 1978, is confronting its most serious political challenges in decades as majority Democrats push to reduce the thresholds needed to approve local tax measures.
“Next year will be the year to take a look at some more fundamental changes in the local government relationship, and that will include taxes,” said Senator Lois Wolk, D- Davis, who authored one of several bills or constitutional amendments seeking the lower tax threshold for for local projects.
Democratic leaders, fearful of the political fallout for supporting higher taxes, ordered the measures parked in the Rules Committee instead of being shipped to the floor for a vote.
Wolk’s SCA 7 would have lowered the voter threshold to impose a special tax to 55 percent of voters in a district or county, under certain circumstances. Cities, counties and special districts would be allowed to issue bonded indebtedness for the development of public libraries, and be required to coordinate with accountability measures put in place as part of the amendment.
Proposition 13, approved decisively 35 years ago, cut property taxes across the board by 57 percent and limited new increases. The proposition treated residential and commercial property similarly. Efforts to tax business property at a higher level than residential property – the so-called “split roll – were rejected.
The Committee on Elections and Constitutional Amendments referred four SCAs – all seeking to raise special taxes for a specific purpose with a 55 percent vote — to the Senate Rules Committee “for further review,” rather than to the Senate floor.
“This is being done to ensure they are reviewed collectively,” said Alex Barrios, spokesperson for committee chair Senator Norma Torres. “The Senator believes we should look at these in the context of the big picture.”
The important thing when considering these constitutional amendments, according to Senator Wolk, is to have as much support as possible.
“It needs two-thirds to get put on a ballot, and beyond that it needs support of the public to pass and the governor,” Wolk said. “The governor has been silent about what kinds of fundamental changes he might consider, and it’s very important to have Jerry Brown’s support.”
State government officials are, for the time being, focused on maintaining a balanced budget. But the number of proposals, which anti-tax proponents consider to be attacks on Proposition 13, shows a desire among legislators, especially Democrats, to make a change at the local level in the ability to collect tax.
But critics believe backing the 55-percent threshold will lead to problems at the ballot box, making legislators vulnerable in next year’s elections.
Jon Coupal, president of the Howard Jarvis Taxpayers Association, tweeted commentary on the vote of another amendment to lower the voter threshold in approving bond measures, “All Dems went up on ACA 8. Let’s just say that, for a few of them, the targets on their backs just got a little larger.”
Public support, according to a poll conducted by the Public Policy Institute of California, remains highly positive about the overall impact of Prop 13. But 58 percent of likely voters would favor a “split roll” property tax, which would tax commercial properties according to current market value and keep the existing system for residential property.
“Let’s remember: everybody gets to vote on this, but only property owners need to pay the tax,” said Rex Hime, president and CEO of the California Business Properties Association.
“We seem to think that we, on a regular basis, can argue we shouldn’t allow quote the minority to dictate tax policy. Well, the minority isn’t dictating tax policy, the minority is saying we don’t think this is a good idea because we’re the ones paying it.”
At the local level, districts are testing the boundaries on how to collect money to fund specific purposes, like K-12 education, within the parameters of Proposition 13. Alameda County Unified School District has been in a legal dispute involving a lawsuit against parcel tax Measure H, passed by voters June 3, 2008.
This measure, narrowly approved by voters, imposed a parcel tax of $120 a year to raise $4 million in four years. The parcel tax drew a harsh reaction from property owners because it did not “uniformly” collect taxes on residential and commercial properties. Instead, commercial and industrial properties were levied a $.15 per square foot parcel tax along with graduated rates based on property size.
The county’s school district argued Measure H was applied uniformly, under the California Constitution, on properties that fell within the same classification. An appellate court invalidated parts of the measure as exceeding the districts taxing authority. California’s state Supreme Court recently denied the defendant’s request to reconsider the ruling – an action that, in effect, is a reaffirmation of Proposition 13. Legal observers say the Measure H decision will resonate across the state if other districts seek to impose a similar, uneven tax. Indeed, some districts in the Bay Area have similar parcel taxes.
As required by Proposition 13 in implementing new taxes or general obligation bonds, voters approved Measure H with a two-thirds majority. But the measure diverged from Proposition 13’s rule that parcel taxes be levied by the same amount regardless of the property’s purpose or size.
“I don’t think any of us are surprised they sent over all of those various parcel tax measures, you know we’ve sort of anticipated that is going to be a battle that gets fought next year,” Hime said.
“It’s hard to separate Prop 13 issues from parcel tax issues when the vote threshold for parcel taxes was set by Prop 13,” he added.