Why raise property taxes when revenues are way up?

During this past summer there were dozens of media stories about big increases in property tax revenues. Orange County was typical. The taxable value of real estate went up $33 billion to over $600 billion. Assessments increased in all of Orange County’s 34 cities.

Further north, San Mateo County saw a 7.1% increase in its assessment roll for 2019-2020, the ninth consecutive year of increases. County Assessor Mark Church, in a press release, said there was record growth in commercial and mixed-use development which helped to push the total roll value to a new high.

Other counties showed similar gains: Santa Clara County, up 6.79% to $516 billion; Sacramento County, up 6.53% to $179 billion; Alameda County, up 7.13% to $321 billion; Fresno County, up 5.84% to $90.46 billion; and even Sonoma and Napa Counties saw big increases in assessed values notwithstanding losing over 5,600 structures to the horrific fires of 2017.

All told, statewide assessable property is now worth $6.5 trillion with just last year’s increase resulting in $75 billion in revenue, a 15-fold increase since 1978. All these increases belie the argument advanced by progressives that Proposition 13, which limits increases in taxable values and caps the property tax rate at one percent, has somehow “starved” local governments and schools for revenue.

While Prop. 13 has been successful in its primary mission of allowing people to stay in their homes, it has scarcely limited the growth of government due to big tax revenue increases from all sources. (California has the highest income tax rate in America as well as the highest state sales tax rate and gas tax).

The huge increase in property tax revenues since 1978, a result of high property values and new development, renders California a relatively high-tax state even with Prop. 13. We rank 17th out of 50 states in per capita property tax collections.

All this compels a simple question: With property tax revenues at an historic high in California with consistent year-over-year increases, why would we even consider tax hikes? And yet that is precisely what the powerful public labor interests which feed off of taxpayer dollars are now attempting. They are proposing to strip Prop. 13 protections away from owners of business properties with their “split roll” initiative.

That proposal, entitled the “California Schools and Local Communities Funding Act of 2020,” is currently in the signature gathering phase, facing a mid-April deadline to secure nearly one million valid signatures.

As for the stated justification for higher taxes, there is a fake reason and a real reason, neither of which is particularly compelling. The fake reason is that government needs the additional funds for critical programs. Given the inordinate amount of existing revenue coupled with waste in government, taxpayers would rather see elected officials prioritize the revenue we already give them.

But the real reason, which the unions backing this initiative don’t like talking about, is to expand the pay, benefits and pensions they already receive. Split roll proponents are well aware that this reason is very unpopular with voters, many of whom can only dream of the Cadillac compensation packages our public employees receive.

For those who foolishly believe that the split roll proposal only concerns commercial real estate and making businesses pay their “fair share,” the proponents of the measure have made it clear that their ultimate objective is the full dismantling of Prop. 13, even for homeowners. So if the question is how much more can taxpayers afford to pay, the proponents’ response is simple: How much do you have?

Jon Coupal is president of the Howard Jarvis Taxpayers Association (hjta.org).