Davis passed its parcel tax on May 4 with a bare supermajority of 67.2 percent of the vote. They were not alone, as Dan Walters reports this morning, “Earlier this month, voters in 13 Northern California school districts passed judgment on proposed ‘parcel taxes’ – a form of property taxes not based on value.”
Mr. Walters continues, “The outcomes were not surprising. All of the districts were in relatively affluent communities that tend toward liberal politics. Their voters decided that enhancing education for their children, grandchildren and neighbors was worth taxing themselves.”
“Proposition 13 prohibits parcel taxes from being based on a property’s value or on an individual’s income.” We can add, “State law does not permit parcel taxes to be waived or reduced based on property owners’ income or financial resources, but it does permit school districts to provide an optional parcel tax exemption for senior citizens (age 65 or older).”
The parcel tax, thus, is a horribly regressive tax, but there is no alternative for the school district.
California Government Code section 50079, subsection B defines special taxes: ” ‘Qualified special taxes means special taxes that apply uniformly to all taxpayers or all real property within the school district, except that ‘qualified special taxes’ may include taxes that provide for an exemption from those taxes for taxpayers 65 years of age or older or for persons receiving Supplemental Security Income for a disability, regardless of age.”
State law does not permit school districts to raise money in any other way locally. Under Article XIII-C of the California Constitution, “All taxes imposed by any local government shall be deemed to be either general taxes or special taxes. Special purpose districts or agencies, including school districts, shall have no power to levy general taxes.” Thus, a school district cannot impose an income tax.
That could all change if SB 653 becomes law. Earlier this week, we reported on Senate Leader Darrell Steinberg’s efforts to change the way we do taxation.
Senate Bill 653 would allow local governments, such as counties and school districts, to adopt a wide range of taxes including income, vehicle, alcohol, cigarette and oil severance taxes, with the approval of a supermajority of voters.
Senator Steinberg argued that the bill would give local governments more flexibility to fund key services like schools and public safety if lawmakers are unable to reach a budget solution that includes a statewide revenue stream.
“We cannot leave our communities with just one uncertain option when it comes to closing the 2011-12 budget and putting this fiscal crisis behind us,” Senator Steinberg told the Senate Governance and Finance Committee a week ago before the committee approved his legislation on a strict party line vote.
The opposition is brewing against this. The League of Cities blog reported earlier this week that “the group Californians Against Higher Taxes has already released a radio ad telling voters that the last thing the state needs is more taxes. The coalition has indicated that if the bill continues to move forward in Sacramento, its ads will heat up and become more aggressive. Opponents of the bill are concerned that it will create too many taxing authorities.”
The Bee reported, “Gina Rodriquez of the California Taxpayers Association warned that the bill would create more than 1,000 separate taxing authorities, what she characterized as a fragmented revenue structure that pits “county against county, school district against school district.””
“(The Legislature) should be responsible for what the state looks like as a whole,” she said.
The ads, as Mr. Walters reports, describe SB 653 as a “dangerous bill” that “must be defeated” because it “opens the floodgates for politicians to invent entirely new local taxes on products and services like gasoline, groceries, cars – even doctor appointments.”
“[SB 653 gives] local communities another option besides hoping that the minority party supports the Governor’s budget proposal,” Senator Steinberg countered. “I believe the sponsors of this scare tactic would better direct their resources and efforts to convincing enough Republican legislators to vote for the state revenue necessary to save education and public safety.”
Dan Walters, however, does not understand the virulence of the opposition.
Mr. Walters writes, “Steinberg more or less acknowledges that his motive for the bill is to create the specter of local tax increases to ramp up pressure from the business community on Republican lawmakers so that a few of them would vote to extend some temporary state taxes that are now expiring.”
However, he called SB 653 “good policy unto itself.”
“California’s experiment in centralized budgeting, the unintended consequence of Proposition 13’s approval in 1978, has been an abject failure,” he writes. “California is simply too diverse for one-size-fits-all decision making from Sacramento, especially when the Capitol can’t even decide what that size should be.”
“If enacted, SB 653 would allow local officials and voters to assess local needs and levy local taxes to meet them, as they did before Proposition 13 – which caps property taxes – was enacted,” he added.
Moreover, he argues the opposition is misplaced. “The campaign sidesteps the fact that local voter approval would be required for such taxes, which means some liberal communities might adopt them while conservative communities might not, thus setting up a healthy competition between tax burden and public services that would be played out across the state.”
“It’s as American as apple pie,” Mr. Walters concludes.
Indeed, it would be a game changer that could save Sacramento from itself by allowing local communities to raise their own revenue. Sacramento could then ease back on providing to schools and counties and let local communities decide the level of education and the level of social services they want.
But perhaps this isn’t about policy at all or making things work. Perhaps this is all about scoring political points for the anti-tax folks.
—David M. Greenwald reporting
Two observations:
1. This is likely to increase the gap between the haves and the have nots–affluent areas are more likely to find ways to raise revenue (possibly even in Republican areas). [i]Serrano[/i] is dying.
2. The most popular types of taxes are often those that can be imposed on non-residents (e.g., an income tax on people who work in the city where many people commute) since people are voting essentially to tax someone else.
Excellent observations Dr. Wu.
[quote]Senator Steinberg argued that the bill would give local governments more flexibility to fund key services like schools and public safety if lawmakers are unable to reach a budget solution that includes a statewide revenue stream.[/quote]
So does this tax only kick in if “if lawmakers are unable to reach a budget solution”? And exactly how would that be determined?
[quote]Indeed, it would be a game changer that could save Sacramento from itself by allowing local communities to raise their own revenue. Sacramento could then ease back on providing to schools and counties and let local communities decide the level of education and the level of social services they want.[/quote]
Think about this. Now the state can sit back, keep all its state revenues to itself to balance its budget. It can cut back on how much it gives to schools, bc local gov’t can impose their own taxes to provide for education. Additionally, isn’t keeping up with the Jones (worrying about what other cities were doing) when it came to salaries for public safety employees how cities in CA got into fiscal trouble? Imposing local taxes is fraught with all sorts of problems when it comes to competing with other cities. Businesses/customers could elect to go away from high taxed areas, killing jobs; wealthier enclaves can provide better for their services while poorer communities become worse, and the list goes on.
[quote]But perhaps this isn’t about policy at all or making things work. Perhaps this is all about scoring political points for the anti-tax folks.[/quote]
Or maybe this is about Darrell Steinberg putting political pressure on for Gov. Brown to get his tax extensions passed…
There are many California public organizations that can already raise their fees without legislative approval or even a public vote. For example the University of California and local water and sewage agencies. I find it amusing that many of those who see higher local taxes via SB653 as good public policy are apoplectic over higher fees by the University and these other agencies.
[quote]I find it amusing that many of those who see higher local taxes via SB653 as good public policy are apoplectic over higher fees by the University and these other agencies.[/quote]
Excellent point.
I’m not sure I get “apoplectic” over higher university fees, but I do have a problem with taxes that accrue to the general good being borne by a minority of the taxpayers. Ensuring that every individual who has the intelligence and drive to graduate from UC is, in my view, in the common good. If California is to prosper in the future, it is going to need every educated resident it can find. Currently, the working class is being priced out of UC. (There is still plenty of aid for the poor, and the rich can afford it. Tuition is now about $11k, and scheduled to rise up to $25k. That plus housing just isn’t doable for more and more people.) For what it’s worth, although I support assistance for those suffering with mental health issues, I thought it was wrong to tax only the wealthy to pay for it. Finally for those of us who subscribe to local control, isn’t it better for each community to decide what services it wants or doesn’t want to support? Davis voted for Measure A, Woodland may or may not vote for similar measure. I would think conservatives would see this as a good thing.
SB 653…Great idea
I say the first tax we should shoot for would be a renters tax. Renters share in all the city has to offer but for the most part manage to escape parcel taxes. I’m sure we could muster up a super majority if all the homeowners band together and get renters to pay their fair share. So what do you think, $200 per renter household? It will be a blast to vote in a tax on someone else that I don’t have to pay.
[i]”I find it amusing that many of those who see higher local taxes via SB653 as good public policy are apoplectic over higher fees by the University and these other agencies.”[/i]
This fits me to a bill. I get apoplectic over ever-increasingly high fees being charged to attend a public university. I think it largely defeats the point of why we have a public university system–to provide a high quality college education at a low or affordable price. It is my view that UC and to some extent CSU, when they were much more affordable, allowed people (like me) who came from no money to get a good education without becoming terribly indebted.
As to the second part of the equation, I agree with it. I think local agencies need to have more options (upon voter approval) for raising revenues than they now have. It won’t change (AFAIK) with SB 653, but to my mind I would be much more comfortable having things like parks taxes based on the benefit to the property owners, which is now illegal.
Ahhh, I can see it now. The citizens of Davis could impose a corporate tax on all businesses within the city limits. Then the county could impose a county corporate tax on all businesses within Yolo County!!!
Oh, and let’s not forget all the School Districts, Water Districts, Fire Districts and all the other districts within Yolo County. They could all impose income taxes on people who work and do not reside within their perspective district lines.
Oh, and one more idea. The Banana Republic of Davis could stop all trains entering or exiting the city limits and impose an entrance and exit tax on all Amtrak passengers.
This has all the markings of the Law of Unintended Consequences…
rusty49: [i]I say the first tax we should shoot for would be a renters tax. Renters share in all the city has to offer but for the most part manage to escape parcel taxes. I’m sure we could muster up a super majority if all the homeowners band together and get renters to pay their fair share. So what do you think, $200 per renter household? It will be a blast to vote in a tax on someone else that I don’t have to pay. [/i]
Renters already pay $180 for school parcel taxes. Does that mean you’re advocating a slight adjustment up to $200/unit?
“This has all the markings of the Law of Unintended Consequences…”
You point this out every time that we have a system clearly not working and someone makes a change. The obvious answer is that every change has the possibility to have unintended consequences, some of them negative. But if you are too afraid to make changes, then you get polarized and locked into a system that does not work.