THE ATTACK ON PROP. 13 THAT WON’T DIE
A lot of bills come and go every legislative session. Most fail to get signed into law. Some die before they even get a hearing, others die in committee, others die on the Assembly or Senate floor and some die by the governor’s veto.
And then there are other bills that just will not die.
Take, for example, what seems to have become a perennial thorn in the side of homeowners and taxpayers, Assembly Constitutional Amendment 1 by Assembly Member Cecilia Aguiar-Curry, D-Winters (HJTA Legislative Report Card grade: 28.13 – F). ACA 1 repeals one of the most important protections in Proposition 13 by lowering the existing two-thirds vote threshold for both local bonds and special taxes to just 55 percent if those bonds and taxes are for “infrastructure” and certain types of housing.
If that sounds familiar, that’s because it is the same bill we warned you about last session. That is when ACA 1 was defeated on the Assembly floor by a wide margin thanks to unified opposition from both homeowners and the business community.
If that sounds even more familiar, that’s because it is the same bill we warned you about the session before that. That time, it was Assembly Constitutional Amendment 4, and it died in the Assembly Local Government Committee.
The reasons why are easy to understand. While everyone pays sales taxes, only property owners pay local bonds and parcel taxes. The latter of the two is particularly regressive in that each property owner typically is required to pay the same amount regardless of the size of their home or business.
As such, the intent of the two-thirds vote is to ensure a broad community consensus before government exercises this power to tax. That has been a bipartisan view for a long time. The special tax threshold, which includes sales and parcel taxes, has been in place since 1978, while the two-thirds vote requirement for bonds has existed since the late 1800s.
Proponents claim the taxes raised through ACA 1 are needed to pay for essential infrastructure and affordable-housing projects. Do not be fooled. While politicians claim that government doesn’t have enough money to fulfill basic functions such as infrastructure, California’s budget reserves stand at $22 billion plus a rainy-day fund of $15.6 billion, and the state is expecting a tax windfall of $15.5 billion from a pandemic-defying stock market.
The reality is that ACA 1 is a direct attack on Prop. 13. It is the camel’s nose under the tent and part of a long-term strategy to strip away all the two-thirds protections on tax increases. And we should know — we have been here before.
I doubt you need to be reminded of the $5 billion gas tax of 2017. But what about Proposition 39 of 2000? Prop. 39 was dubbed the “Smaller Classes, Safer Schools and Financial Accountability Act.” Voters were told our schools were falling apart and that the two-thirds requirement for school bonds was too steep. Voters bought it. Since 2001, under the 55 percent threshold, school bonds have passed at a rate of 84 percent. Yet, every election we are asked to approve more bonds for those schools they say are still on the brink of collapse.
These exactions can last 30–40 years, well after the municipal officials who put them on the ballot have termed out of office.
It is not impossible to meet the two-thirds threshold to approve special taxes if voters are persuaded that the money is needed and will be well spent. Dozens of such measures have been approved over the last decade. It isn’t necessary to make it easier to raise local taxes, and it isn’t a good idea.
If local governments put new taxes and bonds on the ballot in every election, potentially adding hundreds of dollars a year to property tax bills over and over again, it will become even more difficult for Californians to afford a home, and it will not make it easier for renters, a third of whom spend half their take-home pay on rent, to be able to save. Plus, while the taxes raised from ACA 1 may slightly increase the affordable housing stock, it will also have the perversely negative effect of increasing the overall cost of housing dramatically.
Nationwide, according to the National Association of Home Builders, an increase of just $1,000 in the new median home price knocks 158,857 potential buyers out of the market. The median price of a home in California is already over $700,000. California ranks 20th in per capita property tax collections, even with Prop. 13. Government does not need more of your money.
The taxpayer protections enshrined in Prop. 13 are an important reason that Californians are able to keep their homes instead of being taxed out of them. The problem in California isn’t that it’s too hard to raise taxes. The problem is that our government believes you are a limitless supply of cash.
We believe you are taxed enough, and this year, we hope to see ACA 1 dead and buried.