Commentary: Parcel Tax and the Reality That School Budgets Are Not Likely to Improve Any Time Soon
Written by David Greenwald Sunday, 21 August 2011 07:05
Last week the Davis School Board continued preparations for a renewal of their parcel taxes that are set to expire at the end of 2012. These parcel taxes, passed by the voters in 2007 and 2008 in Measure Q and Measure W, provide the district with 320 dollars per parcel. That is in addition to the two-year emergency parcel tax, Measure A, that was very narrowly passed by the voters in May.
The problem that we face, as we explained a few weeks ago, is that the state budget - despite everything that the Governor said - was really passed with a hope and prayer. He did not have a lot of choice in the matter, but only hope that the economy would improve and eliminate the need for further cuts.
What makes this budget different from all other budgets is that it actually contained within it the antidote to its own shortcomings. If revenue does not come, and we need to understand that is really not in question at this point, cuts will automatically be triggered and we know what these cuts are.
So, an overly-rosy budget under these conditions merely forestalls the inevitable. That makes it very different from the Schwarzenegger-era budgets which were passed with voodoo and witchcraft, and forced the legislature to come back in four to six months to cut some more.
The bad news is that we now know exactly what the district loses if the "trigger cuts" kick in - and the trigger cuts hammer education and hammer it hard. The district loses $2 million in the middle of the term.
Moreover, last year we talked about the fact that the state was ending deferrals of their payments. That is now done. Currently, according to numbers put forth by Bruce Colby, about 38 percent of the money the district gets from the state has been deferred into the future. The state is currently about four months behind in sending district money that they would normally expect to receive.
It means there will be another cash flow crisis and it means more borrowing by the district to meet payrolls, which means they have to pay it back with a small amount of interest.
So, here's the bottom line for Davis residents. In the spring, they will be asked to renew Measures Q and W. If it is a straight renewal it will be a $320 parcel tax. If they attempt to bridge that $2 million, that price tag could rise
I have said this before each parcel tax, and each parcel tax has ended up passing, the district has to start looking at other ways to do this. At some point the voters are going to say, "No Mas."
And it may be sooner than later. Measure A barely passed. I mean barely. I mean 67.2% to 32.8% when they need roughly 66.67%. How close is that? It means if 116 people flip their vote, it does not pass.
We can run down the litany of things that went wrong, from the firing of a popular basketball coach to the bad publicity following the mailing a senior letter to the one-sided League of Women Voters event.
The fact is, the supporters of Measure A ran a poor campaign, the type of campaign they have always run, and they still won. So it stands to reason with a more professionalized campaign that anticipates opposition next time, they would have a better chance.
On the other hand, there are other factors working against them, including the water rate hike if it gets implemented. That will take money away that might have been used to pay for the parcel tax.
The fact that the economy is not improving, like everyone expected and hoped, will also play a role.
Times are tough. People are having to hold onto their money more tightly due to uncertainty in the markets and the future.
The school district has fought very hard to preserve core programs, to keep Davis schools great, to keep programs that other school districts have long ago cut - music, art, counselors, seven periods, etc.
I have a personal stake in all of this. Our nephew, who is living with us, is a student at Patwin Elementary. He is a special needs kid. He needs these programs. One of the county-based counselors that works with him and other students at Patwin is just blown away by not only the resources Davis schools still have but the commitment by the school to help these kids.
This is huge for his future. He does not get to be eight years old again or go into second grade. If these programs get cut, there is a good chance he might not make it. He might end up on the other end of the system, despite our best efforts. In the long run, that will cost the taxpayers far more.
Across the state, districts have had to make these painful cuts, and you know it is literally going to kill or permanently impact the lives of not only troubled or at-risk kids, but everyone whom their lives intersect with and impact.
By the same token, just as I have argued that the era of business as usual is over for the city, the school district has to look at it in the same light.
Unfortunately, we do not have more fat to cut here or anywhere else. We have to cut bone now. We have to cut vital organs. And that is going to hurt.
The question is, who will that hurt the most and the answer is the kids that can least afford to be hurt.
They are the ones who will have their programs cut first, and they are the ones who will lack the advocates marching on the school district and flooding the community chambers with signs, waiting patiently to speak out.
That is our future. This Great Recession and the state's refusal to find ways to raise revenue are going to ruin the lives of thousands of children who will never get the chance to succeed.
At the local level, the combination of past parcel taxes, increasing animosity and the water rates will likely do the same.
The future is bleak. There is no end to this in sight. Jobless rates are up in the state and projections have them holding at current levels until at least the end of 2013 and probably longer.
---David M. Greenwald reporting
Sorry to be so blunt everyone, but its a Depression.
Not a double dip, not a 'recession', but a full blown disaster.
Its time to wake up and stop paying the administration of the school system such astronomical incomes !
Were a nation of deniers and can-kickers.. bankruptcy is the new reality.
I understand your concern... you have called for a 10% reduction in city employees' total compensation (if the total comp exceeds 100k/year), in order to make it more likely that the parcel tax measures pass... are you prepared to ask the same of all DJUSD administrators, teachers, etc.? You say that you are a caretaker for a special needs child... are you (or the 'natural' parents) willing to make a special contribution to whatever incremental cost (if any) to educate that child that is greater than the cost for the "standard" child? Do you understand that there are city employees making over 100k in total comp who have special needs children? Will you, as a renter pay for the increase in parcel tax, if any ... or will your landlord absorb it? Did your rent go up with the most recent 'emergency' parcel tax? I think you need to be a little more "transparent", David.
I think most observers expected the economy to have turned around by now.
Most observers thought the economy was going to turn around quickly? I don't think many citizens thought so! Many commenters on this blog didn't.
The problem that we face, as we explained a few weeks ago, is that the state budget - despite everything that the Governor said - was really passed with a hope and prayer. He did not have a lot of choice in the matter, but only hope that the economy would improve and eliminate the need for further cuts.
The Governor used the same old smoke and mirrors he promised he wasn't going to do, w an added dose of "leverage" - the threat to cut education drastically if the revenue projections didn't materialize. I would argue he knew quite well they were not likely to materialize - that he was just kicking the can down the road for a bit to minimize squawking and as political cover at what he knew he had to do. And trust me, it will be another round of "blame the Republicans" when the cuts kick in. The economy is grim, and the states are bearing the brunt of the bad economy. The only ones to blame here are the rogue banks, and the federal regulators who failed/are still failing to oversee those rogue banks. The same old bad mortgage practices are still going on. Arggggggghhhhhhhhhhhhhhhhhhhhhhhhhh!!! A pox on both houses for not putting a stop to it...
Also, Measure A was a bit different - it asked for money above and beyond the existing parcel taxes, at a time when everyone was having it rough and taking pay cuts/furlough days, etc. Extending the existing school taxes is probably more defensible. However if the school district decides to up the ante and increase the extensions above what they are now, they could have a problem getting the extensions w increases passed. Probably a poll taken beforehand would be useful to gauge the mood of the community...
For those of you whose plan would be to vote against a parcel tax increase and/ or extension, are you willing to volunteer in the schools to help
Mitigate the damage this will inevitably do the the education of the current students who have done nothing to create this mess ?
Sorry to be so blunt everyone, but its a Depression.
There isn't really a formal definition of "depression."
Believe it or not the term was originally coined because it sounded better than "crisis," but now the word obviously has other connotations. Economist Robert Barro defines a depression as a fall in real GDP of 10% from peak to trough. We will probably avoid this, but only because of heavy intervention by the Fed and a moderate stimulus package. However it feels like a depression for many and for State and local governments it certainly is one. So I think justoutsidetown's (El Macero?) point is well taken.
However, its also worth noting that entitlements to the elderly (Social Security, Medicare) are not depressed. Military spending is also very high. But somehow schools do not have the same priority level despite the fact that nearly all politicians in both parties pay lip service to education.
THe future in Davis will have to be more fund raising--taxpayers are probably not going to pony up much more. I also have a stake in this since I have a child in one of Davis' public schools.
@medwoman... YES... and I believe I can teach trigonometry, geometry, and show how that knowledge is extremely useful in the workplace, ending up in higher salary in careers... and I strongly believe that I could do so much better than ANY existing teacher in the Davis district... however, I'd need a "waiver" because the teacher's unions have required an "education" degree to get a teaching certificate. This, despite my credentials (pun intended) as a teacher & mentor for over 20 years. Are you prepared to 'come to the plate' medwoman, or do you just want others to pay for what you expect?
You say that you are a caretaker for a special needs child... are you (or the 'natural' parents) willing to make a special contribution to whatever incremental cost (if any) to educate that child that is greater than the cost for the "standard" child?
Special Ed is what is known as a "categorical." The money each district receives for its special ed students is not tied to ADA funding. So if ADA funding falls, Special Ed is not affected. I am not saying that the funding has not fallen for Special Ed. (I don't know.) But it is the case that from federal and state programs, the DJUSD receives much more money to fund the education of special needs children than it does all others.
"Believe it or not the term was originally coined because it sounded better than "crisis," but now the word obviously has other connotations."
Here is an explanation of how the word depression came into its current usage for a really bad recesssion:
... Herbert Hoover deliberately chose to use the word “depression” when discussing the economic situation of the time. Although similar economic downturns in American history had been referred to as panics or crises, Manchester explained that Hoover believed that the word depression sounded less alarming.
... (Hoover) was not the first president to use the word "depression." Preceding presidents had long used the word depression in reference to a slumping economy. Particularly noteworthy are instances in which presidents used the word “depression” during periods of economic turmoil that were later remembered as “panics.”
James Monroe, for example, during the Panic of 1819, referred to the onslaught of bank failures and a depreciating currency as “the depression.” In 1874, during the Panic of 1873, Ulysses S. Grant expressed his concern over “the depression in the industries and prosperity of our people.” Rutherford B. Hayes similarly remarked during his inaugural address in 1877, that “the depression in all our varied commercial and manufacturing interests throughout the country... still continues.”
hpierce
You do not need a waiver to volunteer your services. I know because I have 15 years experience volunteering in the Davis public schools.
I volunteered in the areas of reading and composition because the parents, not the teachers, would not let me instruct in my own field, human sexual health and reproduction. my children are now in college, but I will be volunteering again if further cutbacks occur.
I consider this degree of volunteering being "at the plate". Perhaps you do not.
"Will you, as a renter pay for the increase in parcel tax, if any ... or will your landlord absorb it? Did your rent go up with the most recent 'emergency' parcel tax? I think you need to be a little more "transparent", David. "
HP, one thing I like about you is that, while you clearly have a strong point of view, you are unfailingly fair and polite. At least every time you address me, you are, even when you think I am a numbskull.
However, I think your comment today against David is really unfair in this respect: it comes across as a personal attack. Your argument seems to be about how he will personally be affected by a parcel tax or how his child will be affected. I presume he does not know who you are, where you live, what your job is, how many kids you have, etc. So he has no way to come back at you.
If you think he is being inconsistent, that seems fair to attack. But to question his position on a public policy issue due to his family status strikes me as out of bounds and not up to your normal standard of making an argument based on your extensive knowledge. (I should note that in arguing with you, you have taught me many things and I appreciate your correcting my errors.)
Vang: " Probably not. More likely is that the economy will continue to sputter along with very low but positive economic growth for the next few years."
I doubt that. What is going to happen and indicators are showing is we are not out of any recession. it is going to get worse.
Vang: " The fact that the economy is not improving, like everyone expected and hoped, will also play a role."
Speak for yourself. I hoped but I sure as hell did not "expect" a turn around. It was wishful thinking on Obama's part to save his political butt.
"The school district has fought very hard to preserve core programs,"
bull. The district fought very hard to build a new stadium. THat was at the top of their priorities list.
Vang: "That is our future. This Great Recession and the state's refusal to find ways to raise revenue are going to ruin the lives of thousands of children who will never get the chance to succeed."
how is the state supposed to raise revenue? Increase taxes? Increase spending with money that does not exist?
91 O: how is the state supposed to raise revenue? Increase taxes? Increase spending with money that does not exist?
Brown ran on a plan of balancing the budget through cuts and extending taxes (if the voters approved it). The legislature (and Republicans, specifically) didn't give him the option to extend taxes, so we are dealing with the consequences of an all-cuts budget. Taxes expired on June 30. I'm looking forward to seeing the Laffer curve work its magic; at least that's what the conservatives are telling us.
"The legislature (and Republicans, specifically) didn't give him the option to extend taxes, so we are dealing with the consequences of an all-cuts budget. Taxes expired on June 30."
WDF: didn't Jerry Brown have the option of going around the GOP legislators? That is, did he not choose to go directly to the voters with ballot initiatives (for which he could have gathered the signatures, as Arnold did one year when the legislature was against him)?
I don't mean to absolve the Republican officials who blocked Brown in the Legislature. But it does seem like Brown's tactic was flawed from the start. He ought to have known that the Republicans would do everything they could to thwart the tax extensions. And thus, knowing that route was blocked from Day 1, don't you think he should have pursued and end around with referendums?
@ medwoman, I know elementary science teachers that would use you in a second during family life section of the 5th and 6th grade science lessons.
@ hpierce, I use retired math profs in my classroom for years...They help with the remediation of students plus I let them do problem solving and advance math with those students who are ready for calculus and other advance math that long ago I have forgotten. So to say that you can do it better than any teacher....I'm sure you could but also being a good teacher is knowing when to get someone in there to help the students.....
At least every time you address me, you are, even when you think I am a numbskull.No... if I have ever come across as doubting you intelligence, my bad... I have often questioned your and/or David's facts... I respect David as well...
@ David: it was not meant personally... I do rail against inconsistencies in logic... I support societal care for those who have special needs... maybe you'd be surprised what level of charitable giving that public employees do... particularly those who make $100 k or more per year... but they are regularly demonized, particularly on this blog... I have a co-worker who has a child who is dealing with "special" issues... my co-worker does not expect that the general public should bear the cost of the additional support for that condition. Let's be civil.
Rifkin:" didn't Jerry Brown have the option of going around the GOP legislators? That is, did he not choose to go directly to the voters with ballot initiatives (for which he could have gathered the signatures, as Arnold did one year when the legislature was against him)? "
But Arnold lost everything he put on the ballot in a special election except for himself. Jerry Brown astutely knew not to try to raise taxes in a special election and instead allowed the GOP to alienate most of the state with their intransigence on taxes softening up the state for changes in 2012.
@ A Classroom Teacher
It may be that things have changed over the past few years while my children were in high school. The last time I offered to help with this unit was about five t six years ago. At that time, the answer was what it had been all along. The teachers said that they would welcome the help, but that the parents were not receptive to having a gynecologist present this information. While it is true that I don't know how they formed this opinion, I think it has some support from the experience I had with my daughter's Girl Scout troop where some of the parents were comfortable with me teaching first aide, but not a unit on reproductive health and withdrew their daughters. I remain open to this possibility.
" Jerry Brown astutely knew not to try to raise taxes in a special election ..."
Fair enough. I think the intention, though, was not to raise taxes per se, but to retain the increases Arnold secured his last year in office. But, as you imply, a ballot move would have been portrayed as "raising taxes."
"... and instead allowed the GOP to alienate most of the state with their intransigence on taxes softening up the state for changes in 2012."
The GOP is dying on the vine in CA. But I think half of the equation is the large demographic change in our state. The other half, in my view, is not intransigence so much as it is that the CA GOP follows the same game plan as the Republican parties do in states like Kansas or Utah or Alabama or South Carolina. The difference is that those states have half or nearly half their populations made up of social conservatives. We don't. We never have (in my lifetime). So the Republican Party of California needs to change its platform, at least on some issues which play nationally but fail here.
My hope is that the new primary voting system will help moderates in both parties gain some power.
"Most observers thought the economy was going to turn around quickly? I don't think many citizens thought so!"
I'm not so sure of this Elaine. Obama came out saying that he would boost the economy with a trillion in stimulus so the unemployment rate would not exceed 8%. Most of the people blogging here voted for him and still support him.
The fact is that the Obama administration and Congress have screwed up the economy at a time when we needed to reassure businesses to invest. The government is now desperate and out of options. The Democrat's last gasp with their head below water is claiming the extension of unemployment benefits as economic stimulus for job creation. LOL.
”However, it’s also worth noting that entitlements to the elderly (Social Security, Medicare) are not depressed. Military spending is also very high”
Here is a graph of our defense spending including the war-related spending increases: 
As a percent of GDP, defense spending has decreased since after the Vietnam war. 
As a percentage of outlays, defense spending has fallen to point of almost being inconsequential in the deficit reduction challenge: 
It is entitlement spending that has exploded and threatens to bankrupt us: 
With respect to education funding, it is clear that we have reached a crucible. Left-leaning folk tend to see the problem as simply a need to extract more money from taxpayers. This view misses the bigger root cause picture: that education and all other government services are being wiped out by entitlement spending. Public education spending is in fact competing with entitlement spending, and entitlement spending is inflated mostly because of run-away healthcare costs and too-generous social services to those we define as poor and elderly. Education is losing this competition. So is the middle class.
We cannot solve a problem if we are not first knowledgeable and honest about that root cause.
Rich: " So the Republican Party of California needs to change its platform, at least on some issues which play nationally but fail here."
At the national level, we know entitlements are killing us. The main culprits are Medicare and Medicaid. House Republicans are going after them with reform ideas even though doing so risks their re-election prospects. Democrats do nothing and will, of course, use the GOP actions as opportunistic campaign weapons to enflame seniors. I think it will not work this time.
Like most states, California's elections will be decided by moderates and independents and not liberals and conservatives. California's center leans more left than all other states. Much of that is just sun-baked ignorance. The GOP strategy is to be patient for the required learning moments to happen... not to give up on conservative principles.
JEFF: "Most of the people blogging here voted for him and still support him. The fact is that the Obama administration and Congress have screwed up the economy at a time when we needed to reassure businesses to invest."
Here is a bit of what I wrote in my Enterprise column in February, 2009, regarding the stimulus plan:
President Obama is off on the wrong foot, only weeks into his presidency. Betting our future on the terribly misguided stimulus bill, which passed the House last week on a party-line vote, will doom him to four years of failure.So far, I look prophetic.
That gigantic package of pork is not change Americans should believe in. In fact, it's not change at all. It's more of the same mistakes we've been making for a long time.One thing I missed: American savings rates have increased over the last few years, as the economy has performed as poorly as I thought it would.
Americans borrow and consume too much and save and invest too little. The American Recovery and Reinvestment Act of 2009 will worsen that reality without stimulating the economy.
The delusion is that we need a big-spending bill at all. That Keynesian diagnosis for what ails us is entirely, patently and obviously wrong.7.7 percent unemployment sure sounds good about now.
If massive government deficits were the answer to fixing our economy, then we wouldn't be in this mess today. Even without HR1, the federal deficit this year is projected to be $1.19 trillion. The national debt has increased on average $3.31 billion per day for the past 18 months. Where has that stimulus gotten us?
GDP declined at an annual rate of 3.8 percent in the last three months of 2008, our worst quarter in 26 years. Last week, the Labor Department reported that 4.78 million Americans are claiming unemployment, the most since records began in 1967. The official unemployment rate is 7.7 percent and rising fast.
President Obama needs to take a step back and think about what is broken in our economy and fix that.Greece? Portugal? Spain? Italy?
There is nothing he can do in the short term to solve our indebtedness, but he should know it's a mistake to increase our liabilities even more. Including the unfunded portion of Social Security and Medicare, government debt is greater than 400 percent of gross domestic product. History is replete with nations that drowned with lesser burdens.
What the president needs to focus on immediately is solving the credit crunch. If banks start lending again to the private sector, money (which is the lifeblood of our economy) will start circulating, businesses will invest, jobs will be created, consumers will spend and tax receipts to government at all levels will increase.I find myself in strong agreement with Rifkin.
The heart of the credit crunch is the unresolved mortgage meltdown. There were 3.16 million foreclosure filings reported on U.S. properties during 2008. That's an 81 percent increase from 2007 and a 225 percent increase from 2006. Foreclosure filings in December 2008 were up 41 percent from December 2007.
Even though fewer than 2 percent of all U.S. properties are now in foreclosure, the growing number of defaults has drained confidence from our economy, depressed demand for housing and commercial real estate and made bankers, after being overly lax in handing out high-risk loans during the bubble, wary of awarding credit to any new buyers.
The solution to this is not hard to figure out: We need to dramatically increase demand for housing, especially for properties in foreclosure or on the precipice.That remains the best solution to our economic quagmire.
How can we do that? My suggestion is we eliminate all capital gains taxes for investors who purchase a foreclosed property in the next three years and award a federal tax credit to them equal to the amount they pay in property taxes for five years.
If someone then buys a foreclosed house for $150,000 and sells it five years later for $450,000, the $300,000 capital gain would be tax-free. For the time the investor owned the house, Washington would effectively pay his property tax.Perfect solution.
In short order, wealthy investors would buy up all foreclosed properties in the U.S., banks would have those bad debts off their books, the prices of all housing would stop declining, tax receipts to local and state governments would go up and the credit crunch, which now has a brake on our economy, would be solved.
That still does not fix our long-term addiction to debt. But it would do much more to stimulate our economy than the wrong-headed bill that came out of Congress last week.I was right.
Rifkin:
How can we do that? My suggestion is we eliminate all capital gains taxes for investors who purchase a foreclosed property in the next three years and award a federal tax credit to them equal to the amount they pay in property taxes for five years.
I have come to agree with this strategy.
Somewhat related... did you know that HUD acquired residential properties cannot be initially sold to investors. They go to firt-time home buyers first... and only if there are zero qualified of these buyers can investors step to the plate. The problem here is that a first-time home buyer will generally be a highly leveraged borrower and a greater credit risk. Also, since the initial competition for bids excludes investors (including second home buyers), the bid prices are depressed. I have to ask the question since this is taxpayer money. Why should it matter? Let the bidding begin on ANY buyer that has the cash to purchase the property. Who cares that investors will buy up these properties. The goal is to recover from the loss, right? Or, is the goal to have another social program to provide poor people with under-market housing options?
