Coupal: The League of California Cities’ war on taxpayers

The League of California Cities has always been biased against the interests of taxpayers. This became especially clear during the historic Proposition 13 campaign in 1978 when the League, along with the rest of the spending lobby, predicted the end of Western Civilization if Prop. 13 passed.

Just how out of touch was the League with the voting public?  Based on election results, the voters approved Prop. 13 in 90% of the cities in California.

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The League of Cities’ conduct during the Prop. 13 campaign was so bad that then Governor Jerry Brown scolded the League for demanding more money and being oblivious to the tax revolt. According to an article in the Los Angeles Times on May 5, 1978, just one month before the vote, “Gov. Brown [was] peppered with demands for more state money from a group of city officials [at a League meeting in San Diego] suggest[ing] they resembled passengers on the Titanic demanding more deck chairs. ‘You, of all people, should realize that a tax revolt is under way’ . . .  Said Brown to a chorus of boos, ‘you’d better wake up to the tax revolt.’”

The League’s intransigent position on tax relief even earned it criticism from Democratic legislative leadership. “Modest cuts in taxes and government spending were proposed and ignored.” Dan Boatwright, chairman of the state Assembly Ways and Means Committee, said, “The League of California Cities and the County Supervisors Assn. lobbied [legislators] to death.”‘

To add insult to injury, all this anti-taxpayer lobbying was paid for with taxpayer dollars.

In addition to advocating against taxpayers, a more recent phenomenon is that many of the League positions are contrary to the interests of cities and the principle of local control. Several municipal officials who are actually concerned about the fiscal health of their cities are growing disenchanted with the League and are moving to distance themselves from League positions and even to leave the League entirely.

This past Tuesday, the Orange City Council voted to leave the League over its support for Proposition 1 – a measure many local officials say could worsen the problems currently associated with group homes. “It should be noted that housing projects funded by this bond would be considered ‘use by right,’ potentially preempting local zoning law for properties with multifamily residential, office, retail, or parking uses,” reads the City of Orange staff report.

The move by Orange comes after Newport Beach and Huntington Beach left the League of California Cities over its support for Prop. 1.  Newport Beach Mayor Will O’Neill stated, “While the League of California Cities has regularly taken positions opposite the interests of taxpayers, the tipping point to leave the League completely came when they advocated for Proposition 1 despite acknowledging the serious and disastrous effects buried in the fine print. Specifically, Prop. 1 will take away local control by requiring cities to approve rehab housing funded with billions of dollars in new bond money. The League is supposed to advocate for cities, but they have actively harmed cities with this overtly political decision. Cities should not fund an organization putting Sacramento’s interests above our residents.”

The most recent target of the League’s hysterical outrage is the Taxpayer Protection and Government Accountability Act (TPA), a proposed constitutional amendment which has already qualified for the November 2024 ballot. It is sponsored by taxpayer and business organizations to restore key provisions of Proposition 13 and other pro-taxpayer laws that give voters more control over when and how new tax revenue is raised.

Although TPA, unlike previous tax reform measures, doesn’t reduce or eliminate any state or local tax, it does impose both enhanced voter approval requirements for fee and tax increases as well as robust accountability and transparency provisions. And yet, even though TPA is relatively modest, the League, once again, is predicting End Times disasters.

For example, the League’s chief complaint about TPA isn’t about TPA at all, but rather a long-standing provision of Proposition 13 requiring a two-thirds vote for local special taxes (taxes for a specific purpose). This 44-year-old requirement was weakened in 2017 by ambiguity in the California Supreme Court’s infamous Upland decision. Lower courts have interpreted the decision to allow special taxes to pass with only 50% plus one vote if the tax was put on the ballot by a “citizens’ initiative.” This has enabled special interests to draft their own tax increases, direct the money to themselves, and get these self-serving measures passed with only a simple majority vote. TPA simply restores the two-thirds vote requirement and closes this costly loophole.

Click here to read the full article in the OC Register

Santa Clara has no money to meet $624 million in infrastructure needs

City officials are recommending a general obligation bond to fix some of the aging infrastructure

Ray Chavez/Bay Area News Group

In the heart of Silicon Valley, a region renowned for its innovation and wealth, Santa Clara has struggled for decades to keep pace with its aging infrastructure.

Many of its city facilities — parks, community centers, fire stations and swimming pools — reached the end of their expected lifespan years ago. But Santa Clara historically hasn’t had the revenue streams to maintain or replace its physical assets, leading to what is now a whopping $624 million in unfunded infrastructure needs, according to City Manager Jovan Grogan.

The ballooning problem came to a head earlier his year when the George F. Haines International Swim Center — a storied facility widely considered to be Santa Clara’s crown jewel — closed over safety concerns following decades of neglect.

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Santa Clara’s plight is not unique. Cities across the Bay Area are grappling with similarly aging infrastructure and significant funding challenges to address deferred maintenance.

“It’s literally the cost of replacing many of our facilities that were built in the 50’s and 60’s,” Grogan said. “Many of them are aging at the same time.”

In neighboring San Jose, the maintenance backlog for the city’s parks alone is more than $544 million, city spokesperson Carolina Camarena estimated. And across the bay in Berkeley, the city’s unfunded infrastructure is expected to be $2.1 billion by the end of this fiscal year.

It’s a symptom of the suburban sprawl that ignited after World War II when the region began to boom and large swaths of single-family homes shot up. Whole neighborhoods of low density housing that stretched far across cities meant more roads, sewer lines and other infrastructure to maintain.

At the time, many cities relied on property taxes to generate revenues, said Michael Lane, the state policy director for urban think tank SPUR. But when California voters passed Proposition 13 in 1978, effectively limiting property tax increases, things changed.

It’s a symptom of the suburban sprawl that ignited after World War II when the region began to boom and large swaths of single-family homes shot up. Whole neighborhoods of low density housing that stretched far across cities meant more roads, sewer lines and other infrastructure to maintain.

At the time, many cities relied on property taxes to generate revenues, said Michael Lane, the state policy director for urban think tank SPUR. But when California voters passed Proposition 13 in 1978, effectively limiting property tax increases, things changed.

Click here to read the full article in the Mercury News

Coupal: Attacks on direct democracy in California have reached a new low

Governor Gavin Newsom and progressive leadership in the Legislature have declared war on California taxpayers. They have filed a lawsuit in the California Supreme Court to have a duly qualified citizen initiative removed from the November 2024 ballot before voters can pass it.

The initiative is called the Taxpayer Protection and Government Accountability Act, so there’s no mystery about why the politicians oppose it.

What’s mysterious, or at least very troubling, is why they think the court should block the power of the people to amend the state constitution through the initiative process.

Over the last three decades, this column has staunchly defended the constitutional rights of direct democracy – initiative, referendum, and recall. These powers have been proven to be effective tools to control indolent or corrupt politicians and are just as important today as they were when they were added to the California Constitution in 1911.

Without the initiative power, California homeowners would never have reaped the benefits of Proposition 13, which has saved California property owners hundreds of billions of dollars since 1978. Direct democracy remains the only avenue for fundamental political reform, tax reform and a host of other important policies that entrenched interests in Sacramento would rather never see the light of day.

Politicians and powerful special interests hate direct democracy and view it as a threat to their political power or, at a minimum, as an intrusion on their legislative responsibilities. It is no surprise, then, that left-leaning legislators repeatedly introduce proposals designed to weaken direct democracy. Recent proposals seek to render the referendum and recall powers wholly ineffective and other bills have made it very difficult to qualify initiative measures. One proposal from 2019 attempted to impose burdensome requirements on those who gather signatures for initiative qualification.

In the legislative session that just ended, Senate Bill 386 became law. Although on its face it appears innocuous, it amended the process by which county registrars verify signatures on initiative petitions in a manner that compresses the time in which to qualify an initiative measure – already a narrow 180 days. This puts initiative proponents at a severe disadvantage.

Another attack on the initiative process affects initiatives that would enact tax reforms. Assembly Constitutional Amendment 13 would require that measures such as Proposition 13 secure a higher statewide vote threshold to pass. This measure is targeted directly at the Taxpayer Protection and Government Accountability Act.

The lawsuit by the governor and the legislature is the latest assault on the initiative process. While the legal claims border on the frivolous and, politically, the action is likely to backfire on the politicians, it reveals in stark terms what these political elites think of ordinary taxpayers. Here’s an excerpt:

“[B]y compelling voters to assume a far more active role in state government, the Measure [TPA] would have sobering implications for the future of governance. Taxation is both highly complex and essential to the adequate functioning of the State. Sound tax policy therefore requires time and expertise.  California’s full-time Legislature has the capacity to implement tax policy because legislators can spend weeks in committees reviewing a law and debating its impact, all while being advised by professional legislative staff. Not so with voters. As it is, voters have neither the time nor resources at their disposal to comprehensively study their crowded ballots.”

Translation: Shut up, you deplorable peasants. Let us, the expert politicians, tell you how much we need and how to spend it.

Click here to read the full article in the OC Register

Michael Smolens:  California Ballot Measures Could Give Republicans Strong Anti-Tax Argument

As California Democrats head into the 2024 election, several things seem to be going their way.

A measure on the ballot defending same-sex marriage could be an added turnout magnet in a presidential election year that already is expected to bring more Democratic-leaning voters to the polls.

Republicans in Congress, despite their current disarray, continue to ponder further limits or a ban on abortion — another Democratic motivator.

And the Republican Democrats love to hate, Donald Trump, may well be on the ballot again.

But California Republicans may have at least one ace in the hole: a potentially compelling anti-tax argument.

Three tax-related measures are targeted for the ballot, though none actually raises taxes.

A Democratic proposal would lower the voter-approval threshold to 55 percent for local taxes and bonds that now require a two-thirds majority to pass.

measure sponsored by the California Business Roundtable would require all local taxes and bonds to be approved by a two-thirds majority, including fees and charges that currently don’t require a public vote. The proposal also calls for voters to approve all state taxes.

To counter that, Assemblymember Chris Ward, D-San Diego, authored a ballot proposition that would require measures raising the approval threshold to be approved by that same threshold. In other words, the business proposal would need a two-thirds majority.

The two Democratic measures were placed on the ballot by the Legislature, while the business proposal qualified through the signature-gathering initiative process.

The support among Democratic lawmakers for the two legislative measures might suggest broad backing across deep blue California.

But support for — or opposition to — tax increases, among other things, don’t always fall along partisan lines. Majorities of California voters in 2020 sided with the GOP rather than the Democratic leadership position on a handful of ballot measures involving property taxes, rent control, criminal justice, affirmative action and the gig economy.

Whether that dynamic spilled over to candidate races, or whether it would next year, is far from clear.

But it certainly gives credence to what some Republican leaders for years have been saying is needed to improve the party’s fortunes in California: focus on pocketbook, quality of life, and state and local issues that cut across party lines, and avoid the divisive culture wars and national politics.

Easier said than done.

That approach was the Republican hope for the 2021 recall election of Gov. Gavin Newsom. But arguments about homelessness, crime and cost of living lost their steam once right-wing lightning rod Larry Elder jumped into the race to replace Newsom, who made Elder the issue and handily defeated the recall bid.

Plus, there’s no getting away from Trump, who can bolster Republican turnout but, more significantly, energize Democrats.

Some frustrated Republicans complain Democrats and the media overly focus on social issues and Trump. But it’s the conservative-dominated Supreme Court that scuttled a half-century of precedent supporting the constitutionality of abortion by overturning Roe v. Wade. And it’s Republicans pushing limits on LGBTQ rights across the nation.

True, Democrats led by Newsom and Senate president Toni Atkins, D-San Diego, did put a successful measure on the 2022 ballot to enshrine abortion rights in the state constitution. A “right to marry” law is planned for the 2024 ballot that would repeal the same-sex marriage ban under Proposition 8, even though the language of the 2008 voter-approved measure was invalidated in court.

But the Supreme Court’s Roe reversal suggests future rulings could override existing abortion protections and reactivate Proposition 8, which remains on the books.

Meanwhile, a move by some Republicans to drop opposition to abortion and same-sex marriage from the California GOP platform was swiftly rejected during the party’s convention last weekend. Granted, not many people pay attention to party platforms, but the short-lived challenge is emblematic of the state party’s struggle to move forward.

Arguments to protect the 1978 landmark tax-cutting initiative Proposition 13 may have lost some resonance over time. But concerns about taxes and economic burdens in general are evergreen political issues.

Democrats contend the high bar to raise taxes is unfair, pointing to numerous measures that were supported by large majorities yet failed the two-thirds test. They contend that has deprived governments of revenue for infrastructure and services desired by the public.

To what degree state and local tax increase proposals will appear on the ballot next year remains to be seen. In April, the governor rejected a state Senate proposal to raise business taxes as part of a budget package.

Democrats and many city and school officials are clearly concerned about the business-backed ballot measure. Last month, Newsom, Atkins and others filed an emergency petition with the state Supreme Court in an effort to keep the proposal off the ballot.

They contend the proposition would illegally revise the state constitution and cripple local government finances, in part because the measure is retroactive to Jan. 1, 2022, and would threaten taxes and fees enacted since then.

Should the current economic discontent roll over into the election year, Republicans may have a strong case for high voting thresholds as a safeguard against over-taxation in already-expensive California, where the cost of housing and gasoline trigger near-constant ire.

Carrying the anti-tax theme a step further, Republicans could point out the business measure also would ban road use charges, also known as vehicle miles traveled fees — which have proved unpopular in some regions.

Such fees are being considered in California and across the country as a replacement for gas tax revenues that are shrinking with the increase of fuel-efficient vehicles and electric vehicles.

A long-range transportation plan drawn up by the San Diego Association of Governments included road charges, but the political fallout jarred supporters.

The SANDAG board, including some Democrats, officially removed the mileage tax from the plan last month.

Click here to read the full article in the San Diego Union Tribune

How Much Do Progressives Hate Taxpayers and Proposition 13?

Last week’s column was entitled, “Legislative session ends with declaration of war on taxpayers.” The war has now gone nuclear. Governor Gavin Newsom and the Legislature just filed a lawsuit, directly in the California Supreme Court, seeking to have the Taxpayer Protection and Government Accountability Act removed from the November 2024 ballot before voters get a chance to approve it.

The Taxpayer Protection and Government Accountability Act (TPA) was written to restore key provisions of a series of voter-approved ballot measures that gave taxpayers, not politicians, more say over when and how new tax revenue is raised. Over the past decade, the California courts have created massive loopholes and confusion in long-established tax law and policy. TPA closes those loopholes and provides new safeguards to increase accountability and transparency over how politicians spend our tax dollars.

After more than a million Californians signed petitions to successfully put TPA on the November 2024 ballot, government officials started talking about this popular taxpayer-protection measure as if it was going to end Western Civilization.

First, the League of California Cities, which never met a tax that it didn’t like, disseminated a “Special Release” claiming TPA somehow restricts the right to vote on tax measures. This was absurd as the whole point of Proposition 13, Proposition 218, and now TPA, was to guarantee the right to vote on taxes.

Proposition 13 requires that a local special tax (meaning for a specific purpose) must receive a two-thirds vote of the electorate in order to pass. In 2017, this clear requirement was weakened by ambiguity in the California Supreme Court’s infamous Upland decision, which has been interpreted to allow special taxes to pass with only 50% plus one vote if the tax was put on the ballot by a “citizens’ initiative.” This has enabled special interests to write their own tax increases, direct the money to themselves, and get these self-serving measures passed with only a simple majority vote. TPA restores the two-thirds vote requirement and closes this costly loophole.

The second attack against the Taxpayer Protection Act was launched by the California Legislature with a late-session gut-and-amend that became Assembly Constitutional Amendment 13. This measure was a cynical attempt to derail TPA by changing the rules for passing certain kinds of constitutional amendments — specifically, initiatives that protect taxpayers by requiring a two-thirds vote to raise taxes.

If ACA 13 is enacted, TPA itself would require a two-thirds vote of the statewide electorate to pass, instead of a simple majority. It would be the first and only constitutional amendment in the history of the state that would be required to reach two-thirds voter approval. Supporters of ACA 13 insist it’s unfair for an amendment (like Prop. 13, for example) to pass with a simple majority if it imposes a higher threshold for passing something else. This argument is at odds with history. In 1879 the Legislature wrote a constitution that required a two-thirds vote to approve bonded indebtedness, then approved the constitution by a simple majority vote. That has always been the law in California.

Perhaps ACA 13, which would have to go on the ballot for voter approval, wasn’t looking like a winning strategy for the tax-and-spend crowd, because on Tuesday, the governor and the Legislature filed their lawsuit to try to knock TPA off the ballot before the election.

This outrageous attempt to block voter approval of TPA may backfire. Now voters will hear even more about the measure’s key provisions, such as requiring all new state taxes passed by the Legislature to go on the ballot for voter approval. Voters will be happy to hear that TPA restores the two-thirds vote threshold for local special taxes, and that it clears up muddy definitions that allow taxes to be mislabeled as “fees.” Voters will also like TPA’s transparency requirement that ballot labels must not only state clearly that a tax increase is a tax increase, but also disclose how the money will be spent.

By filing a “pre-election challenge” to TPA, big spending politicians have revealed themselves as being panicked that it will pass. Polling – both private and public – shows that Californians have about had it with higher taxes, especially when those higher taxes are not accompanied by more or improved levels of public services.

Click here to read the full article in the OC Register

ACA 13 Attacks Both Proposition 13 and Direct Democracy in California

Less than two weeks ago, radical progressives in the California Legislature launched the most brazen sneak attack on California’s iconic Proposition 13 in its 45-year history. Assemblyman Christopher Ward, backed by the new Speaker of the Assembly, Robert Rivas, introduced Assembly Constitutional Amendment 13 (ACA 13). It would amend the constitution to make it easier to raise taxes, by making it harder to pass citizens’ initiatives that seek to enforce Proposition 13’s two-thirds vote requirement for local special tax increases.

The specific target of ACA 13 is a citizens’ initiative backed both by taxpayer organizations and the business community. The Taxpayer Protection and Government Accountability Act (TPA) has already qualified for the November 2024 ballot, and polling shows it to be popular with voters. The TPA closes several loopholes created by the courts that have allowed special interests to work with local governments to raise taxes with a simple majority vote instead of the two-thirds vote required by Proposition 13.

For example, the California Supreme Court’s infamous Upland decision in 2017 turned 40 years of Prop. 13 jurisprudence on its head by suggesting that a citizens’ initiative could raise taxes without a two-thirds vote. The TPA ends that game.

The TPA would also provide unprecedented transparency when tax-hike measures are on the ballot, allowing voters to know what these propositions will cost them. In other words, TPA is a threat to the status quo by effectively restoring taxpayer rights.

This column has repeatedly exposed the legislature’s hostility to the tools of direct democracy. Weakening the recall power, increasing the cost to initiate a statute, changing the meaning of a referendum vote so that a “no” vote means “yes,” are all proposals to deprive citizens of political power. But these direct democracy powers remain popular with the voting public – for good reason.

Since 1911, Californians have possessed powerful tools to control indolent or corrupt politicians. The rights of direct democracy – initiative, referendum, and recall – are enshrined in the California Constitution for reasons that are just as compelling in 2023 as they were more than a century ago.

There are two ways to amend the constitution in California. The legislature can put a proposed amendment on the ballot, or citizens can collect signatures for an initiative constitutional amendment. Either way, once on the ballot, constitutional amendments pass with a simple majority vote, and always have in California, since 1849.

But ACA 13 would change that. Legislative constitutional amendments would still pass with a simple majority, but a citizens’ initiative constitutional amendment that requires a two-thirds vote for tax increases, such as Proposition 13 in 1978, would require a two-thirds vote to pass. Even Prop. 13 itself narrowly missed that threshold.

As noted above, the real target of ACA 13 is the Taxpayer Protection and Government Accountability Act. If approved by voters in November 2024, TPA will restore the original intent of several voter-approved taxpayer protection initiatives including Prop. 13, Prop. 218, and Prop. 26, all of which have been weakened by a tax-hungry legislature and a hostile judiciary.

Because the TPA initiative restores the two-thirds vote protection of Proposition 13, under ACA 13, it would have to be approved by a two-thirds vote of the statewide electorate. That is obviously more difficult to achieve and may leave taxpayers stuck paying the price for courts eroding Proposition 13.

Notably, California’s current Constitution (the California Constitution of 1879), as ratified by the voters on May 7, 1879, by a simple majority vote, contained at least two provisions requiring two-thirds voter approval including the requirement that local bonds be approved by “the assent of two thirds of the qualified electors.”

In fact, if the proposed ACA 13 standard were applied when the current California Constitution of 1879 was put before the voters, California would not have a constitution at all!  So, it is perfectly consistent with California’s constitution and history to have new constitutional amendments pass with a simple majority, even if those amendments require a super-majority vote to raise taxes.

Click here to read the full article in the OC Register

Assembly Constitutional Amendment 13 is an Attack on Uou, the California Taxpayer

Ever since California’s first state constitution in 1849, constitutional amendments have required a majority vote of the electorate.

“If the people shall approve or ratify such amendment or amendments by a majority of the electors qualified to vote for members of the legislature, voting thereon, such amendment or amendments shall become part of the Constitution,” the handwritten document states.

That provision applied to all proposed constitutional amendments. At no time in the state’s history have constitutional amendments had different thresholds for voter approval based on their content.

But the new speaker of the California Assembly, Robert Rivas, has decided this is a problem. He has proposed changing the constitution to impose a higher vote threshold for certain types of amendments proposed by citizen initiatives.

Along with Assemblymember Chris Ward, D-San Diego, Rivas has co-authored Assembly Constitutional Amendment 13, which would make it more difficult to pass constitutional amendments that make it more difficult to raise taxes.

For example, if an initiative constitutional amendment would require that tax increases must be approved by two-thirds of voters, the proposed amendment itself would require a two-thirds vote.

It doesn’t work the other way, though. If a citizen initiative would drop the requirement to pass a tax increase from two-thirds to 55%, for example, it wouldn’t need 55% approval. It would pass with 50%-plus-one-vote, like all other constitutional amendments.

This is nothing more than an effort to prevent citizens from using the initiative process to limit tax increases. Under this proposed amendment, even Proposition 13 would not have passed. California’s iconic taxpayer protection act was approved by 64.79% of voters in 1978. Under ACA 13, it would have needed 66.67%, because it contained a provision that required a two-thirds vote of the electorate to pass local tax increases.

California court rulings have chipped away at Proposition 13’s taxpayer protections. In 1982, the state Supreme Court ruled in City and County of San Francisco v. Farrell that local taxes for general purposes, as opposed to “special” taxes for a dedicated purpose, could pass with a simple majority instead of a two-thirds vote.

In 2017, the state Supreme Court’s opinion in California Cannabis Coalition vs. City of Upland suggested that even “special” taxes might not need a two-thirds vote if they were proposed by a citizens’ initiative, instead of by a city council or other governing body. Cities immediately tested the limits of the court’s language and found appellate courts more than willing to allow tax increases proposed by initiative to pass with a simple majority.

A new initiative that has qualified for the November 2024 ballot contains language that overrides appellate court decisions based on the Upland ruling and restores the two-thirds vote requirement for special taxes regardless of how they are proposed.

ACA 13 appears to be an attempted kill shot aimed at that initiative, which proponents, who include the California Business Roundtable and the Howard Jarvis Taxpayers Association, have titled “The Taxpayer Protection and Government Accountability Act.”

Click here to read the full article in the OC Register

Jon Coupal: Call your California Assembly Representative, Demand They Reject ACA 1

Prior to the successful passage of Proposition 13 in 1978, Howard Jarvis tried several times to bring property tax relief to beleaguered California homeowners. While coming close, it wasn’t until 1978 when voters overwhelmingly passed Proposition 13 over the opposition of virtually every political institution and newspaper in California.

As they say, timing is everything. What changed the political dynamic so abruptly in 1978 was the fact that thousands of California homeowners were being taxed out of their homes. That also explains why, to this day, Proposition 13 retains its popularity even as the state has become more “progressive.”

Last week there were two competing press events over Assembly Constitutional Amendment 1 (ACA 1), a proposal that would erase part of Proposition 13. As the head of the Howard Jarvis Taxpayers Association, I was joined at a news conference on the Capitol’s west steps on Wednesday by several legislators who have unequivocally expressed their continued support for Proposition 13 and opposition to ACA 1. Also present were several representatives of other taxpayer groups as well as business organizations suffering under California’s excessive tax burdens.

ACA 1 is a direct attack on Proposition 13 because it would cut the vote threshold needed to pass local special taxes, dropping it from the current two-thirds vote required by Proposition 13 to only 55%. That change would make it easier for local governments to raise taxes.

Since Proposition 13 was enacted in 1978, voters have continued to support the important two-thirds vote protection. That support was reaffirmed with the passage of pro-taxpayer initiatives in 1986, 1996 and 2010.

Many people may not know that the two-thirds vote requirement did not originate in 1978. It has been in the California Constitution since 1879! For more than a century, local property owners have been protected against excessive bond debt by the requirement that local bonds – repaid only by property owners – need a two-thirds vote of the local electorate.

ACA 1 repeals the two-thirds vote protection for tax increases to support “infrastructure,” a term so expansive that local governments would be able to raise taxes for almost any purpose with a vote of just 55% of the electorate. This is a hatchet that chops away at the taxpayer protections in Proposition 13.

ACA 1 proponents are aware of Prop. 13’s enduring popularity, so not once in their over one-hour press event did they mention Proposition 13 by name. Instead, they talked about “protecting democracy,” “local control,” and taking on “right-wing interests.” (Are Californians “right wing” for wanting to keep their home instead of being taxed out of it?) Nor did the supporters of ACA 1 provide any specific example of exactly what lowering the two-thirds vote would purchase, other than to claim that it was essential to address California’s dual crises of housing and homelessness.

Opponents of ACA 1 have noted that making it easier to raise taxes makes no sense in one of the highest taxed states in America. No other state comes close to California’s 13.3% top marginal income tax rate, and we also have the highest state sales tax in America as well as the highest gas tax, not to mention gas prices. And even with Prop. 13, we rank 14th out of 50 states in per capita property tax collections. Californians pay enough.

This is a critical time. As of this writing, ACA 1 has cleared one legislative committee and may be heard by the full Assembly as early as this week. However, its main proponent, Assemblymember Cecilia Aguiar-Curry, admitted at her press conference that she didn’t quite have the votes yet. For that reason, the time is now for all defenders of Proposition 13 and advocates for limited taxation to contact their Assembly representatives and let them know that a vote for ACA 1 is a vote against Proposition 13.

Click here to read the full article in the OC Register

The Supreme Court’s Warning About Prop. 13

A decision in a Minnesota case revives questions about injustice and California’s tax revolt law.

Late last week, the Supreme Court unanimously ruled that a decades-old Minnesota property tax law was unlawful when it allowed the government to seize wealth from an elderly Black homeowner. The decision in Tyler vs. Hennepin County serves as a warning about legal defects in other property tax laws that unfairly harm communities of color, including California’s own Proposition 13.

The Minnesota case began when Geraldine Tyler failed to pay the taxes on her longtime Minneapolis home. Over several years, the tax debt accumulated to $2,300, exploding to $15,000 when penalties and fines were added. The county seized her condominium and sold it, keeping the entire proceeds — $40,000 — not just the $15,000 she owed.

The Supreme Court proclaimed that this money grab was unjust and unconstitutional under the 5th Amendment’s takings clause. It rejected Hennepin County’s legal reliance on the 13th century Statute of Gloucester, a law that Justice Neil M. Gorsuch characterized during oral arguments as being “about lands owned by the feudal lord and what happens when a vassal fails to provide enough wheat to his lord.”

The court’s determination that what happened to Tyler didn’t meet constitutional standards echoes and revives a concern raised in the 1990s about Proposition 13.

California’s tax-assessment limits demand radically different property taxes from owners of similar properties, based only on their time of purchase. Thirty years ago, Stephanie Nordlinger balked at paying nearly five times in property taxes for her Los Angeles home as longer-settled neighbors. An unmoved Supreme Court majority held that the differential treatment had a rational basis, but Justice John Paul Stevens disagreed.

In his dissent, Stevens concluded that Proposition 13 created “a privilege of a medieval character: Two families with equal needs and equal resources are treated differently solely because of their different heritage.”

The Supreme Court’s blessing in Nordlinger vs. Hahn upheld Proposition 13’s legality and established its feudal — and unfair — nature.

Proposition 13 raises race discrimination concerns. Assessment caps benefit long-standing homeowners — who are often white — at the expense of their more diverse neighbors who arrive later. The effects of such property taxes on homeownership’s demography suggest violations of the 1968 federal Fair Housing Act. Recent estimates show that Proposition 13 gives the average homeowner in a white neighborhood of Oakland, for example, a tax break of nearly $10,000 each year — more than triple the break provided to average homeowners in Latino neighborhoods, and about double those in Black and Asian neighborhoods in Oakland.

Ironically, people just like Tyler were the original faces of the battle to enact Proposition 13 in California and similar measures around the country. Activists in the 1970s and 1980s invoked stories of elderly widows losing their homes to convince voters that property taxes should be based on a home’s purchase price and allowed to rise just 2% a year from there, regardless of market value.

But such assessment limits have not lived up to their promise to protect homeowners. Michigan also limits the amount that an owner’s assessment can rise. Yet as real estate values declined in Detroit, those limits did not ensure that assessments fell to match, leaving low-income Black homeowners with inflated, unaffordable taxes. Like Tyler in Minnesota, many residents were forced out of their homes through tax foreclosures.

In California, Proposition 13’s overbroad system protects the propertied at a high cost to more diverse, first-time buyers. People may stay put to hold on to a tax advantage, limiting inventory and driving up home costs. Parents can also pass low tax assessments on to their children, exacerbating the problem.

The California Housing Finance Agency notes that “for the entire 2010s, California’s Black homeownership rate has been lower than it was in the 1960s, when it was completely legal to discriminate against Black homebuyers.”

While Proposition 13’s precise inequitable effects are complicated, more inclusive and less legally tenuous alternatives exist.

There are other tax reforms that could protect low-income and elderly homeowners without hamstringing cities’ tax bases and enriching wealthy owners.

Philadelphia allows low-income senior citizens to freeze their property taxes, and low-income families to spread rapid assessment increases over several years. In Massachusetts and some Connecticut towns, low-income homeowners can defer part of their property tax bill, which is paid off upon the home’s sale. California has its own property tax postponement program, which it should expand, instead of relying on Proposition 13.

The Supreme Court’s rejection of Minnesota’s greediness reminds us that the courts are watching as states tighten the vise of property tax systems on the poor and racially diverse. To be sure, Proposition 13 does not result in unconstitutional “takings.” But the concerns that motivated the court in Tyler vs. Hennepin County also apply here. And given the court’s willingness to reverse long-held constitutional precedent, perhaps the Nordlinger decision itself will be due for reconsideration.

Click here to read the full article in the LA Times

Ignore the Naysayers, Proposition 13 is Still Working After All These Years

In most of America, one of the worst impacts of high inflation is a sharp rise in property taxes. But that’s not the case in California.

True, housing prices are some of the highest in the nation, due mostly to government policies restricting supply. But existing homeowners are protected by Proposition 13’s cap on annual increases in assessed value of 2%. According to the California Taxpayers Association, Californians would have seen their property taxes increase more than 7 percent this year without Prop. 13.

It is understandable why the political left – which wants all your money – has it in for Proposition 13, but we were surprised when the normally credible Tax Foundation, based in Washington, D.C., fell for some of the same falsehoods advanced by the “tax-and-spend” crowd. The Foundation is advising other states not to adopt Prop. 13-style reforms. We disagree and believe all states currently struggling with out-of-control property taxes should take a good, long look at California’s system based on acquisition value. It is vastly superior to one based on market value.

While the Tax Foundation admits that “Proposition 13 and other property tax assessment limits have done their job, keeping incumbent property owners’ taxes in check,” they assert that those systems result in “hidden costs.”

One clearly false claim is that assessment limits “discourage homeowners from renovating or adding onto their homes, for fear of incurring a dramatic tax increase.” In general, remodeling and repairs that are part of normal maintenance or cosmetic are not considered assessable. New additions that increase the square footage of a home or add new improvements that didn’t exist before are assessable—but that’s true everywhere. The difference is that in California, the reassessment is limited to the value added by the addition, with the rest of the assessment unchanged. So what you would pay under Prop. 13 is still less than what you would have paid in a market-based property tax system.

Next, the Tax Foundation claims that property tax assessment limits “make it less attractive for growing families to move past their starter homes or for empty nesters to downsize.” This isn’t true in California. Older homeowners (age 55 and up) can move and take their Prop. 13 base-year value with them to a new home. For younger homeowners, moving to a larger and more expensive home means higher property taxes — but again, that’s true everywhere. All homeowners benefit from Proposition 13, which capped the tax rate at 1%. Before Prop. 13, the statewide average tax rate was 2.67%, applied annually to the current market value. That means a young family’s property tax bill would be more than double in the first year of homeownership without Prop. 13.

Next, the Foundation states that assessment limits “interfere with efforts to change a property’s use.” That’s a polite way of saying that the land upon which your home rests is being “underutilized.” Does this mean you should be taxed out of it so it can be sold to someone who can build something deemed a better use, like a sales-tax-revenue-producing used car lot? No thanks.

Another myth is that acquisition value systems gradually “shift costs to newer, younger homeowners — the rising generation that [state] lawmakers want to keep in-state.” But under Prop. 13, all homeowners are taxed according to what they voluntarily pay for their property. The worst thing that could happen to a young family is to be taxed out of a home they just purchased because their tax bill is based on the vagaries of the real estate market. Prop. 13 gives new homeowners the predictability of knowing what their tax bill will be years into the future as well as a reasonable 1% rate cap.

And the real surprise of Proposition 13 is how it helps local government. Because Prop. 13 allows increases in assessed value of 2% per year and requires reassessment of property when it changes hands, it provides a stable, predictable and growing source of tax revenue to local governments. Property tax revenue in the Golden State has grown virtually every year since 1978 in percentages that exceed both inflation and population growth. Moreover, Prop. 13 provides a “shock absorber” effect during recessions when market values fall precipitously but assessed values – in the aggregate – fall slightly or not at all.

Click here to read the full article in the OC Register