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By Scott Kaufman, Legislative Director

Gideon J. Tucker once said that “no man’s life, liberty or property are safe while the Legislature is in session.” Well, the Legislature is back in session! And, while it takes time for a thousand or more bills to appear in print, there are already several that are a major concern to taxpayers and even a few that are direct threats to Proposition 13.

Here are the two major threats to Prop. 13 introduced in the Legislature already:

Assembly Constitutional Amendment 1 is a perennial attack on Proposition 13. Every year it is introduced and every year we beat it back. However, that doesn’t mean that we shouldn’t be worried. Bad bills pass all the time. You never know when some deal may be struck that sees ACA 1 sail through. That is especially true in this new legislative session — with so many newly elected legislators, we have some work ahead of us to educate them about the importance of Proposition 13 and why they should vote no on proposals that attack it.

Why is ACA 1 such a concern? Well, it would make it easier to raise taxes by lowering the voter approval requirement for local bonds and tax increases from two-thirds to 55 percent if the money would be used for “public infrastructure” and certain types of public housing projects. Proposition 13 mandates a two-thirds vote requirement for all special taxes, but ACA 1 would wipe out that protection for nearly all local taxes because the category of “infrastructure” covers almost anything.

In 2000, voters lowered the threshold needed to approve school bonds from two-thirds to 55 percent. This has led to many more charges on property tax bills to pay for these debts. ACA 1 seeks to expand this lower vote threshold to help even more tax increases pass.

This would apply to sales taxes paid by everyone, but also to local bonds and parcel taxes that are paid only by property owners. These are the kinds of extra charges that can be seen on property tax bills below the line, in addition to the tax due under Prop. 13’s one percent cap. That’s why Prop. 13’s two-thirds vote requirement for all special taxes is so important. It protects property owners, and it must stand.

Assembly Constitutional Amendment 3 is part of a new “wealth tax” proposal, and it would gut Proposition 13. It would allow the Legislature to raise taxes statewide with a simple majority vote instead of the constitutionally required two-thirds vote established by Prop. 13. It also would allow the Legislature to define “wealth” to include unrealized capital gains in real estate, meaning the government would be empowered, by a simple majority vote, to create a new annual tax on the current market value of a home or other property.

While the “whereas” clauses in the preamble of ACA 3 recite talking points about rich people escaping taxation and claim that a new tax on “extreme wealth” will restore fairness to the state’s tax system, nothing in this proposed amendment to the state constitution — which would change Proposition 13 — limits the Legislature to taxing only rich people or “above-average” wealth.

Under the current state constitution, the government’s authority to tax property is limited to “personal property” that is “tangible.” ACA 3 would remove both of those limits and would authorize “the taxation of all forms of…wealth, whether tangible or intangible.”

That means the Legislature could define “wealth” to include equity in real property that is not fully taxed through property taxes due to Proposition 13. The Legislature could also define “wealth” to include equity in investment securities, based on their current market value, which today would not be taxed until a capital gain is realized upon sale. Anyone who owns a home or has a retirement account is threatened by ACA 3.

ACA 3 also removes another important taxpayer protection known as the Gann Limit. This voter-approved limit on the growth of spending by state and local governments would be defined out of existence. The Gann Limit generally requires government entities to restrain their spending to conform to the growth of inflation and population. It was intended to prevent runaway government spending.

Don’t be fooled. Although proponents say ACA 3 is part of a new “wealth tax” on the super-rich, and its companion legislation, Assembly Bill 259, affects only the very wealthy, ACA 3 contains no such limitation. The Legislature could move those brackets down to hit average California homeowners at any time — and they will.

As always, we will fight these attacks on Prop. 13 along with anything else that comes our way this session. Thank you for your support, for signing petitions to the governor and the Legislature and for your generous contributions. We couldn’t do it without you. Please write to me at
scott@hjta.org if you have any questions or concerns about pending bills.