Howard Jarvis

ACA 13 Attacks Both Proposition 13 and Direct Democracy in California

August 27, 2023 By Jon Coupal 3 Comments

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

Filed Under: Trending News Tagged With: California Politics, Howard Jarvis, Prop 13

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

February 6, 2023 By Jon Coupal 5 Comments

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

Filed Under: Top Stories Tagged With: Howard Jarvis, Prop 13, Property Tax

HJTA’s 2018 scorecard identifies taxpayer allies, foes

December 3, 2018 By Jon Coupal 3 Comments

In 2018, perhaps scared off by the specter of an upcoming election and the recall of state Sen. Josh Newman, D-Fullerton, the California Legislature approved no new taxes for only the second time in the last six years. This was a radical departure from a year earlier, when three new taxes were approved.

However, that’s not to say that the Legislature didn’t try. New taxes on a host of items, including guns, fireworks, water and a sales tax on services were introduced without success. Next year, with tax-and-spend politicians holding a commanding two-thirds supermajority in both houses of the Legislature, the pressure to cave on new taxes will be even greater.

Considering what the future may hold, it is easy for taxpayers to question whether legislators will ever be held accountable. However, a useful tool to assist taxpayers is the annual legislative Report Card published by the Howard Jarvis Taxpayers Association. Introduced back in 2007, the purpose of the report card is to document how lawmakers have voted on those issues most important to taxpayers.

Lawmakers tend to hide behind statements, sometimes of questionable truth, to justify their votes. The report card sets aside motives, back-room deal negotiations and party affiliations to focus on the one question that matters: did legislators stand up for the interests of taxpayers? While politicians may waver in their allegiance, the numbers don’t lie.

To read the entire column, please click here.

Filed Under: Top Stories Tagged With: California legislature, HJTA, Howard Jarvis, Jon Coupal, Supermajority, taxes

Proposition 5: The Property Tax Transfer Initiative

August 8, 2018 By John Paul Ledesma 8 Comments

Proposition 5 will be on the November 6, 2018 statewide ballot and could provide you property tax relief if you are a qualified California homeowner.

If passed, Proposition 5 will extend Proposition 13 property tax benefits.

First, a brief history of property tax propositions:

Proposition 13 passed in 1978 making base property tax 1%, with 2% maximum annual increases.
Proposition 60 authorized seniors a one-time move of the property tax to another property. In the same county if the new home’s purchase price is equal to or less than the sold dwelling.
Proposition 90 allowed counties to accept Proposition 60 property tax basis from a home sold in a different county to be applied to those that accept low property tax transfers. 10 counties have opted into accepting these transfers.

What is being considered today:

If passed, Proposition 5 will make it so that those 55 and older will be able to move their Proposition 13 tax benefit to a home of any value, anywhere in California any number of times. Plus, Proposition 5 adds two addition categories of persons: those that lose their home to natural disasters and the permanently disabled homeowners of any age.

If you are thinking of moving call me at 949-616-2988 to discuss your particular circumstance.

Note: this article is not tax or legal advice.

For further details about Proposition 5 and how it may affect you read the information below.

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The California Association of Realtors sponsored the initiative and referred to it as the “People’s Initiative to Protect Proposition 13 Savings.” The California Attorney General describes Proposition 5 as “Changes Requirements for Certain Property Owners to Transfer their Property Tax Base to Replacement Property. Initiative Constitutional Amendment and Statute.”

Starting January 1, 2019 three segments of the population would be enabled to benefit from the passage of Proposition 5, they include: 1) homeowners over 55 with their primary residence in California, 2) homeowners that have had their primary residence substantially damaged or destroyed by a disaster, as declared by the Governor and 3) any homeowners that are a severely and permanently disabled person.

To fully understand the significance of the 2018 Proposition 5 you will need to have a basic understanding of the Howard Jarvis’s lauded Proposition 13, passed in 1978, along with Proposition 60, passed in 1986, and Proposition 90, passed in 1988.

Proposition 13 made it state law that property tax base rates are 1% of the full cash value, usually the purchase price, (minus the $7,000 homeowners’ exemption) and that the property tax may only increase a maximum of 2% per year. Proposition 13 defined “full cash value” as the county assessor’s valuation of real property as shown on the 1975-76 tax bill under “full cash value” or the appraised value of real property when purchased, newly constructed, or a change in ownership that occurred after the 1975 assessment.

Proposition 60 allows seniors a one-time opportunity to use the Proposition 13 benefit of having their lower property tax basis transferred to a newly purchased replacement dwelling. Seniors are defined as any person over the age of 55 years and includes a married couple one member of which is over the age of 55 years. The current law in place is that the replacement dwelling must be of equal or lesser value than the dwelling to be sold. Proposition 60 only applies to intra-county primary residence replacements and was enhanced with the passage of Proposition 90.

In 1988, Proposition 90 was passed and enhances the Proposition 60 benefits by allowing counties to opt into allowing Proposition 60 transfers of property tax basis from other counties. Only 10 counties in California have chosen to accept this inter-county property tax bases, they include: Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara and Ventura counties.

Proposition 5 would enhance Propositions 60 and 90 by allowing homeowners 55 years of age or older to transfer their Proposition 13 tax basis to a home of any price (proportionally), located anywhere in the state, any number of times. Let me provide a hypothetical example to explain by what I meant by proportionally. Say you purchased your home 21 years ago for $200,000, with a property tax basis of $2,000 and with compounding your property tax basis is now $3,000 and your home is now worth $900,000 and you want to purchase a home for $1,200,000. You sell the less expensive home and purchase the home that costs $300,000 more, your property tax basis from the original home would move with you for the first $900,000 in value and your property tax basic 1% levy would only increase by the difference in the full cash value. Your new property tax would be the $3,000 moved basis plus an additional $3,000 for the property tax on the increased value. Therefore, your property tax base would be $6,000 instead of $12,000 (see Figure 1).

Figure 1, Buy Up Example

If you want to buy a less expensive home, your property taxes will be reduced proportionally equal to the original home. Any replacement property of equal or lesser value purchased or newly constructed by a person eligible to transfer the base year value of his or her original property, the base year value of the replacement property will be calculated by dividing the base year value of the original property by the full cash value of the original property, and multiplying the result by the full cash value of the replacement property. If in the same scenario as above, you sold your $900,000 property and purchased a $450,000 home the new property tax would be half of the new sale price or $1,500 per year (see Figure 2). The buy down is a little harder to follow so let me provide a second example. If your existing home sells for $600,000 and your property tax is $2,000 and you purchase a home for $400,000 your new property tax basis would be 1% of one-third of $400,000 or about $1,333.33 per year (see Figure 3).

Figure 2, Buy Down Example 1

Figure 3, Buy Down Example 2

The benefits to those that have suffered from having their primary residence substantially damaged or destroyed by a disaster, as declared by the governor, applies to replacement properties that are comparable to the home that was damaged or destroyed without regard to the age of the owner(s). This is explicitly for a replacement property that is located intra-county. Proposition 5 has language indicating that the state Legislature may authorize each county board of supervisors to adopt, after consultation with affected local agencies within the county, an ordinance allowing the transfer of the base year value of property that is located within another county in the State.

The third category of persons that may benefit from the passage of Proposition 5 include any severely and permanently disabled person, who resides in a property that is eligible for the homeowners’ exemption. The property tax base year transfer is also applied to replacement dwellings that are purchased or newly constructed on or after June 6, 1990. The benefit would be in place regardless of the number of prior transfers, the value of the replacement home or whether the replacement dwelling is located within the same county. There are other details, but this gives you a general overview of the three classes of persons that may choose to benefit from the passage of Proposition 5.

The California Association of Realtors believes that if Proposition 5 is approved by California’s voters it would make moving between counties once again aﬀordable for California’s retirees, help victims of officially recognized natural disasters and provide relief to the severely disabled. These property tax benefits would result in the freeing up of home inventory and encouraging home ownership. If you are considering moving contact me to discuss your unique real estate needs, (949) 616-2988.

John Paul Ledesma, GRI | Broker Associate | HomeSmart Evergreen Realty| DRE 01810644

www.MissionViejoREDispatch.com

Note: this is not tax or legal advice.

Filed Under: Blog Tagged With: Howard Jarvis, Prop 13, Property Tax, Proposition 13, Proposition 5

After all these years, liberals are still wrong about Proposition 13

June 11, 2018 By Jon Coupal 2 Comments

Forty years ago this week, California voters began the modern tax revolt movement that spread across America like wildfire. The idea that citizens could take back control from an overreaching government helped to propel Ronald Reagan to the presidency. Reagan, who had a close friendship with Howard Jarvis, took his message of limited government to Washington and his message of freedom to the world.

Proposition 13 cut property taxes, put limits on their rise, and toughened the requirements for passing other tax increases. It passed overwhelmingly in June 1978, and ever since, liberals have failed to acknowledge how wrong they were about it — both in terms of politics and policy.

Two months before the vote, California’s then Gov. Jerry Brown (version 1.0), was quoted in the New York Times as saying “I don’t think there is one credible observer who thinks Proposition 13 will endure over the long period.” Forty years later, it’s Brown who is heading into the political sunset while Proposition 13 continues to protect grateful California taxpayers.

So-called “experts” were also wrong in their dire predictions about the harm that would be inflicted on California if Prop. 13 were to pass. One of the TV commercials run by the well-funded opposition campaign featured a doom-saying UCLA economist who predicted that California would be plunged into a deep recession if voters approved the measure. But in the years immediately following passage, California had an extraordinarily booming economy.

Progressives like to perpetuate another falsehood about Prop. 13 in their ceaseless efforts to divide and conquer the taxpayer coalition that supports the law. They seek to target the owners of business properties who, like homeowners, benefit from predictable taxes under Prop. 13. A false argument is advanced that during the 1978 campaign, voters weren’t told that Proposition 13 protections would be extended to business properties as well as homes.

This simply isn’t true. The opponents of Prop. 13 themselves repeated that fact throughout the campaign and, specifically, in the official ballot pamphlet.

Perhaps the granddaddy of all lies about Proposition 13 is how it “destroyed education” in California. This falsehood is repeated so often and with such vigor that it is accepted as established fact by liberal elites and mainstream media. For example, just a couple of weeks ago, Sacramento mayor and former Senate leader Darrell Steinberg blamed Prop. 13 for “years of cutbacks to arts funding in public schools.” This despite record revenues being pumped into education. …

Click here to read the full article from the L.A. Daily News

Filed Under: Top Stories Tagged With: Howard Jarvis, Jerry Brown, Jon Coupal, Prop 13, Tax Revolt, taxes

Proposition 13 is the original victim of ‘fake news’

March 21, 2017 By Jon Coupal 4 Comments

As Proposition 13 approaches its 39th birthday, it is still subject to the same dishonest attacks in the media that were used against it when it was on the ballot in 1978. Proposition 13 was one of the first victims of “fake news.”

“The bigwigs in labor and business went all out to defeat 13,” said its principle author, Howard Jarvis. “They tried to outdo one another in issuing doomsday prophecies about what passage of 13 would mean.” The media slavishly supported the exaggerated and dishonest claims, often endorsing them through editorials and by giving prominent placement to negative stories on the tax revolt.

The politicians, including Gov. Jerry Brown, and government agencies from top to bottom weighed in. Here is a typical example: Before the election, Alameda County Transit told the public that passage of Prop. 13 would result in the termination of 80 percent of its 2,000 employees. Two months later, the Fremont-Newark Argus reported on the aftermath of the passage of Proposition 13, “To date, no one in the district has been laid off and officials now believe there will be no massive layoffs.” The paper added that three local fire districts that anticipated losing one-half to three-fourths of its staff, had not lost a single firefighter to Prop. 13.

To read the entire column, please click here.

Filed Under: Top Stories Tagged With: HJTA, Howard Jarvis, Jerry Brown, Jon Coupal, Prop 13

California Special Districts: Hiding in Plain Sight

August 30, 2016 By Jon Coupal 5 Comments

Special districts in California are the unnoticed variant of local government entities. Although they spend over $42 billion annually, most taxpayers don’t give these ubiquitous agencies much thought. They vary from modest vector control districts to behemoths like the Los Angeles Metropolitan Transit authority, an agency that has a billion-dollar budget and, despite declining ridership, continues efforts to suck ever more pennies from every dollar spent in Los Angeles County.

The problem with these semi-autonomous agencies is that it is extremely difficult to determine whether or not taxpayers are receiving good value for every one of the billions of dollars being spent by agencies that, in many cases, are governed by unelected political appointees. Even when these boards are directly elected, many special districts do not receive the same level of scrutiny as do city and county governments.

Most taxpayers support local control, but they also want to see local governments and special districts maintain maximum transparency, follow the Brown Act and post important fiscal information on their websites. This information is a valuable asset to those who want to look over the shoulders of elected officials and bureaucrats to make certain that funds are appropriately spent. Sadly, this information is not always readily available and accountability is lacking.

While some agencies may willfully violate the law, in many instances, illegal actions are simply oversights. But because these districts tend to operate “under the radar” improper procedures may be overlooked for years. For example, in 2014 it was discovered that a fire district was illegally collecting tax proceeds from property owners outside the district boundaries and that practice had been ongoing for several years. It took a special act of the Legislature to reimburse property owners for the illegal taxes they had paid. With greater transparency, this problem would likely have been avoided.

In addition to errors that go uncorrected due to secretive management practices, many of these agencies are hoarding vast quantities of cash. The large reserves are often in amounts that are in multiples of a district’s annual budget and not justified by serious plans for major capital investment with a realistic timeline for construction.

Adding insult to injury, despite the fact that most are in a solid financial position, special districts have been uniting to lobby for higher taxes. The California Special Districts Association, as well as other local government associations, has ramped up efforts to eliminate Proposition 13’s two-thirds vote requirement for approval of new taxes for infrastructure improvements.

Clearly, special districts deserve to be noticed both for the worthwhile services they provide as well as their potential for mischief at taxpayers’ expense. No longer should these agencies be allowed to hide in plain site.

In dealing with special districts, good, bad and indifferent, taxpayers’ and service users’ most powerful tool is awareness. These agencies control billions of dollars and taxpayers have the right to demand accountability. While local control should remain the objective, the Legislature can help by strengthening guidelines on the maintenance of reserve funds, which for many districts greatly exceed any potential need, as well as mandating periodic reporting and publication of financial reports on line.

Taxpayers should also take heart from knowing that special districts are getting renewed scrutiny from oversight agencies. Last week, the California Commission for State Government Organization and Economy, also known as the Little Hoover Commission, held hearings on some of the perceived abuses by California’s myriad special districts. The Commission specifically requested testimony from the Howard Jarvis Taxpayers Association on several issues including the practice of many districts to hoard taxpayer dollars.

Enhanced oversight of special districts can deter some of the well documented instances of bad behavior reported by the Little Hoover Commission and other investigative interests. Whether that oversight comes from taxpayer groups, government oversight agencies, the media or individual taxpayers, it is especially important to drag these often unknown agencies into the sunlight so that citizens can more clearly see what they are doing and how they are spending our money.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

This piece was originally published by HJTA.org

Filed Under: Top Stories Tagged With: HJTA, Howard Jarvis, Jon Coupal, Los Angeles County, Los Angeles Metropolitan Transit

Pay Attention, Taxpayers – Local Officials Are After Your Wallets

August 3, 2016 By Jon Coupal 1 Comment

If public attention is being drawn to national politics and the presidential race, there is a group of local officials who are thrilled. They have plans for the contents of taxpayers’ wallets and they would prefer to fly under the radar. The less voters pay attention, the greater the chance they will be able to pass local school bonds, which raise property taxes. Voters need to be alert. If past general elections are any indication, we will be facing several hundred local school bonds and additional tax measures in November.

August 12 is the deadline for officials to approve local measures for the November ballot. Consultants — usually paid by firms that expect to do business with the school district once a new bond is approved — advise local education officials not to publicize the bond election to the entire community, but to target only their supporters. This means running a stealth campaign, communicating only with administrators, the local teachers union, the PTA, and parents who have children in school. Part of this strategy is waiting until the last possible minute to approve the new bond measure, giving potential opponents less time to organize and respond.

Once a bond measure is approved, critics may have no more than a week to submit an argument in opposition. And this timeline is critical because the number one tool for defeating a bond measure is the argument against that will appear in the ballot pamphlet.

It is somewhat ironic that school boards work so hard to keep voters in the dark when the vast majority of taxpayers are supportive of education and favor students having decent facilities in which to learn. However, ever since a handful of Silicon Valley billionaires got together in 2000 and spent almost $35 million on a successful campaign to pass Proposition 39, which lowered the longstanding requirement of a two-thirds vote to pass school bonds to just 55 percent, the goal of providing good value for taxpayers’ dollars has all but disappeared.

In spite of, and perhaps because of, efforts by the wealthy elite to stack the deck against local taxpayers, these bonds deserve to be carefully evaluated, and if they fall short, opposition is justified. Voters have a right to know that a bond will place a lien against homes for as long as 40 years to guarantee repayment that, once interest is calculated, will cost at least double its face value.

HJTA recommends determining in advance if your school or community college district is considering placing a bond on the ballot by calling school district administrative offices. They should be able to tell you the agenda for upcoming board meetings. Upcoming board agendas should also be posted on the district website.

If you learn that a bond will be considered, alert friends and neighbors to the fact that property taxes may be going up and encourage them to join you in attending the local board meetings at which the bond is discussed. Take advantage of the public comment portion of the meeting to express your concerns and objections.

If your school district decides to place a bond on the ballot, start by contacting the clerk of the school board to obtain the written rules covering requirements for submitting ballot arguments for publication in the voter information pamphlet that will be sent to all voters in the district. This argument should focus on the facts, including the total cost of the bond and the fact that it will raise property taxes for homeowners, and renters are likely to see increases in rents if the measure passes. It is certain that this is information that will go purposely unmentioned by bond promoters.

Once an argument has been submitted, taxpayers can begin work on getting the word out to voters in the community. These measures can be defeated and hard work pays off.

For more information on opposing local bond and tax measures, please visit the Howard Jarvis Taxpayers Association website.

This piece was originally published by HJTA.org

Filed Under: Top Stories Tagged With: HJTA, Howard Jarvis, Jon Coupal, PTA, School Bonds, taxes, Taxpayers

Concealed Transparency: Legislature Tries to Fool the Public Again

June 21, 2016 By Jon Coupal 4 Comments

You might have heard some news lately about legislative transparency, referring to efforts to subject what goes on in the California Legislature to meaningful public scrutiny. One headline actually read “California Senate Approves Measure Requiring More Transparency.” While an average citizen might rejoice at this news, they should be cognizant of what Paul Harvey used to characterize as “the rest of the story.”

Fact is, the California Legislature has absolutely no interest in exposing to public scrutiny how it does business. Indeed, the only reason lawmakers have introduced Senate Constitutional Amendment 14 is to try to force the proponents of a much stronger ballot measure to the bargaining table in an effort to dilute the impact of this genuine reform. It is our hope that the proponents of the real transparency measure, the California Legislature Transparency Act, decline the invitation.

On the surface, lawmakers’ SCA 14 doesn’t look too bad. It would require that bills be publicly available for 72 hours before they can be taken up for a vote and that visual recordings of all legislative proceedings be posted online. These are reforms that Californians have wanted for a long time.

So what has spurred the Legislature to pursue this needed reform? Have they suddenly turned a new leaf and actually desire to disclose to Californians what has, up to now, been transacted in secrecy and obfuscation? Hardly. They are looking down the gun barrel of a proposed initiative which gathered more than a million signatures and is on the verge of qualifying for the November ballot. Sponsored and financed by wealthy reformer Charles Munger, Jr., its requirement that bills be in print for 72 hours is airtight while the Legislature’s proposal has so many holes it resembles Swiss cheese.

We’ve seen the drill before. Citizens will clamor for reform but be rebuffed repeatedly by the Legislature. Then, someone puts a proposition on the ballot to achieve the desired results. Only then, does the Legislature find religion and admit there’s a problem.

Recall 1978. With homeowners angry, frustrated and scared of being taxed out of their homes, Howard Jarvis proposes real property tax reform in the form of Proposition 13. At first, the Legislature derides the effort and can’t fathom the notion that voters actually would support it. That is, until they start hearing from their constituents and seeing the polls. Only then did the California Legislature hurriedly place a very weak alternative (designated as Proposition 8) on the ballot. But voters would have none of it. By a 66 percent margin they effectively told the Legislature thanks, but no thanks.

We strongly suspect that a similar message will be sent to the Legislature in the event that two competing transparency measures appear on the ballot this November.

This piece was originally published by Howard Jarvis Taxpayers Association

Filed Under: Top Stories Tagged With: Charles Munger, Howard Jarvis, Jr., Legislature, SCA 14, transparency

Budget Deception: Weird Accounting Diminishes Accountability

June 14, 2016 By Jon Coupal Leave a Comment

This week, after reaching agreement with Gov. Brown, the California Legislature will pass the state budget for the 2016-17 fiscal year. In so doing, it will meet its Constitutional deadline of June 15th.

A few weeks ago, this column attempted to provide some clarity to ordinary citizen taxpayers on basic state budget issues. This included an explanation of the difference between “general fund” expenditures and “special fund” expenditures. The column also reviewed California’s higher than average level of taxation and its legendary wasteful practices.

Those budget issues are confusing enough but there is something else going on that confounds even those of us who have at least some familiarity with government finance. Specifically, California has manipulated accounting rules that are, at best, confusing and, at worse, intended to conceal the true condition of state finances.

For most folks, figuring out the family finances isn’t all that difficult. Most people have a relatively stable and predictable amount of income they can spend and, on the flip side, they have a pretty good grasp of their expenses. Of course, even the best laid plans can be thrown off with the layoff of a breadwinner or, on the positive side, an unexpected bonus or inheritance.

But with government, predicting revenue can be tricky. Given this unpredictability, one would think that the state would want to base its accounting decisions on best practices. But that isn’t the case at all. Without going into all the wonkish details, the Department of Finance uses various “accrual” techniques to attribute revenue, not to the year in which it was received, but rather to a previous or future fiscal year depending on what political ends the administration seeks to achieve. Venerable Sacramento Bee columnist Dan Walters calls this “hide the pea” accounting and even the Legislature’s own Legislative Analyst has criticized the practice.

For all the funky accounting on the revenue side, it is much worse on the spending side. Here, under proper “accrual” rules, California should be counting the massive amount of debt we’re racking up differently. But with manipulative accounting, the state can actually spend more money than it receives in a given year and still report a budget surplus. This debt, as it relates to public employee pension obligations, is nothing more than spending tomorrow’s money today. But if it is spending money today, it should be counted as such.

David Crane is a Lecturer in Public Policy at Stanford University and president of Govern For California who has written extensively on California’s deceptive accounting practices. He points out that proper accounting could have stopped the largest non-voter-approved debt issuance in California history. That 1999 debt was not a bond. Rather, it was retroactive pension increase for state employees. Had that cost been “booked” the way businesses account for future liabilities, the legislature may very well have thought twice about undertaking such a huge financial burden.

The good news is that the days of deceptive government accounting may be numbered. The Governmental Accounting Standards Board has, for the last several years, been forcing government entities to finally begin reporting pension obligations and “Other Post-Employment Benefits” in a way that is both more honest and transparent. Also, the California Legislature now has as a member Senator John Moorlach, a no-nonsense accountant who predicted the Orange County bankruptcy several years ago. He, like Crane, is shining a light on California’s budgetary shenanigans. With a looming downturn in the economy, this enhanced transparency will be critical.

Filed Under: Top Stories Tagged With: budget, HJTA, Howard Jarvis, Jerry Brown, John Moorlach, Jon Coupal