Big Change in Proposition 13 Could Be Headed To Ballot

Voting BoothsCalifornia’s largest companies could find themselves paying an additional $11 billion a year in property taxes under a ballot measure that would dramatically revise the state’s tax-cutting Proposition 13.

Schools and Communities First, a wide-ranging group of community organizations, education advocates, unions and foundations, turned in 860,000 signatures Tuesday that would put that initiative on the November 2020 state ballot.

Under Prop. 13, all California property, residential and commercial, is reassessed only when it is sold. Houses and condominiums, however, can turn over every few years, while many large businesses occupy their land for decades — meaning some have not had property reassessed since Prop. 13 passed 40 years ago.

The proposed ballot measure calls for a split tax roll that would require commercial and industrial property — but not homes and small businesses — to be regularly reassessed and taxed at their full value. …

Click here to read the full article from the San Francisco Chronicle

Tightening the Law on Civil Asset Seizures

Asset forfeitureFew nightmares can be more frightening to conservatives than the image of government agents running amok and seizing citizens’ property without due process. We like to think it can’t happen here.

But it can happen. And it is happening – on a regular basis.

Civil asset seizure without due process is taking place today across America, to the tune of  $2.5 billion in assets taken by the government over the past 15 years.

The reason why Republicans haven’t made this legalized smash and grab an election issue is simple – government agents claim they are grabbing the assets of drug dealers. It’s the perfect cover. 

Nobody wants to support drug dealers. The problem is, under federal law, government agents get to define who fits under the drug-dealer label. Agents can take first and ask questions later.

Under current rules of asset seizure, federal agents are asked to produce “clear and convincing” evidence that the assets are tied to drugs. But the evidence isn’t necessarily subject to a jury’s verdict. No judicial finding of guilt is required for federal agents to take your house, car and bank accounts.

Due process is short-circuited. Rule of law is deployed at a minimum threshold.

In other words, citizens can only hope the government gets it right when it comes to civil asset seizure. How comforting is that?

A national movement has begun to tighten the rules and bring due process into the practice. Many conservative organizations, including the Institute for Justice, Heritage Foundation and the Koch Institute, support legislation to bring stronger legal protocols to asset seizure.

In California, the State Legislature can introduce some accountability to the free hand created by federal rules on asset seizure.

Senate Bill 443, introduced by State Sen. Holly Mitchell (D-Los Angeles), would require California law enforcement agencies to bring or obtain a criminal conviction before they seize someone’s assets. The proposed legislation has bipartisan support but needs all the help it can get.

The bill would keep asset forfeiture cases in California courts, rather than handing them over to federal jurisdiction. This is important, and it’s why SB 443 is opposed by many local law enforcement agencies.

Under current rules, local agencies can circumvent California law and send seized assets to the feds for “adoption” under loose federal rules. The feds typically take a 20 percent cut for “adopting” the case. SB 443 would end the dubious practice of “adoption.”

And SB 443 would help prevent guiltless spouses from suffering financially when allegations are made against their partners. Under federal law, if you made the mistake of marrying the wrong person, too bad. SB 443 gives protection to innocent spouses.

No doubt, SB 443 raises difficult questions for conservatives. It exposes Republicans to the charge of being soft on crime, to not exerting maximum leverage on drug dealers.

But the bill speaks to larger questions – the rule of law and the reach of the federal government. If we lose sight of those concerns in rhetoric about drug dealers, another chunk of our democracy will be gone.

Obviously, convicted drug dealers should not be allowed to protect their assets. But before the government grabs someone’s property, we should at least make sure the accused person has committed the crime.

The rule of law requires a trial and conviction. Coincidentally, a trial and conviction is the minimum threshold established by SB 443.

artner at GrassrootsLab, and a nationally recognized expert on Latino voting trends. In 2001, named one of America’s “Most Influential Hispanics” by Hispanic Business Magazine.

This piece was originally published by Fox and Hounds Daily

Property Rights and The American Democrat

James Fenimore Cooper widely influenced American literature. However, one of his books–The American Democrat, a civics primer–gets scant attention. Given that Cooper was born (September 15) so close to Constitution Day, it merits revisiting now.

Cooper defended the limited government the Constitution authorized, because political power not tightly controlled would be abused. In particular, he emphasized private property rights as necessary to liberty, our “right of self-government.

Unfortunately, the erosion of property rights Cooper warned against has only accelerated. Consequently, his understanding, echoing our founders, may be even more important today, because “vigilance in the protection of principles is even more necessary in a democracy.”

Cooper began from an insight few recognize today: “The rights of property [are] an indispensable condition of civilization.” Consequently, “we must take those consequences of the rights of property inseparable from the rights themselves.”

Since “property is the base of all civilization,” it follows that “its existence and security are indispensable to social improvement.” So “the first great principle connected with the rights of property is its inviolability,” leading to “the safe and just governing rule … permitting everyone to be the undisturbed judge of his own habits and associations, so long as they are innocent, and do not impair the rights of others to be equally judges for themselves.”

Given the foundational role of private property rights to effective social cooperation, Cooper concluded that for public policy, that meant property rights. “shall have no factious political aids.” That denial of unequal treatment implies “it is a great mistake … to take sides with the public, in doubtful cases affecting the rights of individuals, as this is the precise form in which oppression is the most likely to exhibit itself in a popular government.”

That led Cooper to dissent from democratic orthodoxy that has only intensified since: “As between the public and individuals, therefore, the true bias of a democrat … is to take sides with the latter. This is opposed to the popular notion, which is to fancy the man who maintains his rights against the popular will an aristocrat.”

Cooper connected this to individuality, which property rights protect. “Individuality … lies at the root of all voluntary human exertion … because we know that the fruits of our labors will belong to ourselves, or to those who are most dear to us.” Consequently, “all which society enjoys beyond the mere supply of its first necessities is dependent on the rights of property.” In other words, “property is an instrument of working most of the good that society enjoys,” because “it encourages and sustains laudable and useful efforts in individuals.” In sum, “Property is desirable as the groundwork of moral independence, as a means of improving the faculties, and of doing good to others, and as the agent in all that distinguishes the civilized man from the savage.”

The upshot of Cooper’s logic of liberty was that “the man of property … is privileged to use his own means … in the pursuit of his own happiness, and they who would interfere with him, so far from appreciating liberty, are ignorant of its vital principles.” Unfortunately, that is radically at odds with “the habit of seeing the public rule,” which “is gradually accustoming the American mind to an interference with private rights that is slowly undermining the individuality of the national character.”

The American Democrat was a civics book. But with the declining respect for property rights since Cooper wrote, it doesn’t read like current civics books.  Americans today would greatly benefit by remembering that “All who love equal justice, and, indeed, the safety of free institutions, should understand that property has its rights, and the necessity of rigidly respecting them.” It would serve us far better than the prevailing view, which applauds using government power to give majority coalitions what they want by blatantly violating others’ property rights.

Gary M. Galles is a professor of economics at Pepperdine University.

Redevelopment Agencies Poised for a Comeback

Redevelopment agencies would once again have the power to seize private property for big developers under a bill that passed the California State Assembly earlier this month.

Assembly Bill 2, authored by Assemblyman Luis Alejo, D-Salinas, would give local governments the power to create new entities that would have the same legal authority as redevelopment agencies. These new Community Revitalization Investment Authorities would have the power to issue bonds, award sweetheart deals to businesses and “acquire and transfer property subject to eminent domain,” according to the legislative analysis of the bill.

Property rights advocates warn that the bill’s language contains no restrictions on eminent domain and could resurrect the abuses made possible by the Supreme Court’s controversial Kelo decision.

“It brings back the right of governments to exercise eminent domain against some private parties in order to resell their property to other private parties,” cautioned Howard Ahmanson, Jr., a property rights advocate and founder of Fieldstead and Company. “Only new and wealthy suburbs would be potentially spared from ‘redevelopment,’ the lower middle class and poor would not.”

12 Assembly Republicans back redevelopment, unrestricted eminent domain

In 2005, the U.S. Supreme Court ruled in Kelo v. New London that government agencies have the power to seize property for economic development. The decision was widely criticized across the political spectrum and inspired states to pass tougher laws limiting governments’ eminent domain powers. Here in California, the momentum for property rights reached its zenith in 2011, when Gov. Jerry Brown pushed through a plan to end redevelopment as part of his plan to balance the state budget.

Kristin_Olsen_PictureNow a decade since Kelo, the horror stories of small businesses being seized to make way for strip malls and condo complexes have faded from public memory. During the state Assembly’s floor debate on the bill, not a single member – Republican or Democrat – spoke in opposition to the bill, which passed by a 63-13 vote.

Surprisingly, a dozen Assembly Republican lawmakers, including Assembly GOP leader Kristin Olsen, joined the Democratic majority in backing the bill. Olsen’s office refused to comment on the bill or explain how the bill fit with the Republican Caucus’ position on property rights. One GOP lawmaker defended her vote by arguing that redevelopment agencies are an important tool for economic development.

“I ran for Assembly to help create jobs,” said Assemblywoman Young Kim, R-Fullerton. “RDAs give us another tool to do just that while turning around poor and disadvantaged areas.”

Redevelopment focused in areas with high unemployment, crime

Under the bill, a Community Revitalization Investment Authority could be created by a city, county or special district if certain conditions are met. The first requirement is that the area have an annual median household income that is less than 80 percent of the statewide median. Additionally, three of the following four conditions must be met:

  • Unemployment that is at least 3 percent higher than the statewide median unemployment rate;
  • A crime rate that is 5 percet higher than the statewide median crime rate;
  • Deteriorated or inadequate infrastructure such as streets, sidewalks, water supply, sewer treatment or processing, and parks;
  • Deteriorated commercial or residential structures.

“It’s redevelopment with a kinder, gentler twist,” explains Steven Greenhut, the state’s foremost expert on eminent domain and author of the book, Abuse of Power: How the Government Misuses Eminent Domain. “If AB2 passes, agencies will take property by eminent domain and use public dollars to fund private projects. Localities will run up debt without a vote of the public. As always, the plans of residents will give way to the edicts of the planners.”

There’s overwhelming evidence that redevelopment agencies harm small businesses, while failing in their mission to stimulate economies. That’s most evident in the landmark Kelo case, where a Connecticut town offered a corporate welfare package to the pharmaceutical giant Pfizer, Inc.

“While Ms. Kelo and her neighbors lost their homes, the city and the state spent some $78 million to bulldoze private property for high-end condos and other ‘desirable’ elements,” the Wall Street Journal observed in 2009. “Instead, the wrecked and condemned neighborhood still stands vacant, without any of the touted tax benefits or job creation.”

Those abuses extended to California’s application of redevelopment, property rights advocates say.

“California has rightly earned the reputation as one of the nation’s largest abusers of eminent domain, given that Redevelopment Agencies routinely abused their power of eminent domain to seize homes, small businesses and places of worship for private development,” wrote the California Alliance to Protect Private Property Rights, the state’s leading property rights group. “Time and time again, these obscure agencies diverted taxpayer dollars from core government programs to finance professional sports arenas, luxury hotels, golf courses and strip malls.”

Alejo: Bill needed to help disadvantaged communities

Nevertheless, supporters of AB2 say that blighted areas are a problem that demand government action.

“There are many areas in the state where the streets are broken and old water and sewer pipes lurk below,” Alejo said of his legislation. “In these areas, businesses do not open up shop. This leads to high unemployment, high crime rates and a hopeless community. This bill will work to tackle issues facing our state’s most disadvantaged communities.”

Several GOP lawmakers that opposed the bill dispute Alejo’s arguments.

“Private property rights are a foundational principle declared by our founding fathers,” said Asm. Scott Wilk, R-Santa Clarita, who opposed the bill. “Eminent domain is used by the government to trample on private property rights and as an individual property owner, there are legal protections in place to prevent government encroachment.”

Assemblywoman Melissa Melendez, R-Lake Elsinore, one of only 13 members to oppose the bill, said that she understands her colleagues interest in redevelopment, but can’t back legislation that undermines property rights.

“Stripping away property rights in the name of economic development isn’t the answer,” said Melendez, a former member of the Lake Elsinore City Council. “I think it has become more fashionable to allow the government to take over instead of allowing the free market to do so.”

Originally published by

Follow the Big Money as it Ripples Through L.A.

Los Angeles’ major daily newspapers this weekend each had separate stories that reflected big money in Los Angeles and, in a way, the two stories are connected.

The Los Angeles Times reported than many Silicon Valley entrepreneurs were spending big bucks for Los Angeles area real estate. We’re talking on the high end about $70 million for a custom mansion in Beverly Hills. One realtor said the techies are buying second, third or fourth homes on the West Side of Los Angeles and the beach communities in the $2 to $5 million range.

The Los Angeles Daily News reported on the top salaries of employees of the Los Angeles Unified School District. The article focused on the dismissed Superintendent John Deasy and his $440,000 paycheck. Of note, number five on the list was an elementary teacher who took in $235,000, much of it in unexplained “back pay.” The top ten annual salaries were at $200,000 and above.

Infusion of high tech money into the real estate market means increased property taxes for Los Angeles County. It also makes you think of the trouble long time residents would be in with their property taxes if the pre-Prop 13 property tax system were in place. Dramatic increases in property sales prices would ripple through the community increasing property valuations and thus taxes for all.

The top dollars for educators comes with an additional price tag. Teachers’ union officials, currently in tough negotiations with the LAUSD over pay increases, will use the information about top administrators’ salaries in their quest for more money. High pay for administrators and wage increases for teachers will lead to larger pension obligations for the district.

Will the buying splurge and increased housing payments raise enough tax revenue for the schools to offset the teacher salary demands and increased pension obligations? It’s all connected. My suspicion is the school demands for money will still fall short of the new revenue so the debate over more taxes will continue.

Originally published by Fox and Hounds Daily

A Short History of Proposition 13

(Note from the author): Proposition 13, the 1978 property tax measure, continues to be in the news in California with talk of reforms in some quarters. Just this week, the Public Policy Institute of California polled some issues related to Prop 13. The poll found that 66% of likely voters found Prop 13 to be a good thing for California. That included 78% of Republicans, 62% of Independents, and 58% of Democrats. With 13 still making news in California, it is probably an opportune time to publish the text of a speech I gave a few months ago on the history of Proposition 13.)

Let me take you back to 1966 to Newhall, California right here in Los Angeles County, to an item that appeared in the local Newhall Signal newspaper. It came with a picture of an elderly couple standing before their house. It would not be unkind to call it a shack. The house was assessed for taxes at the property’s highest and best use, a standard used by assessors at the time. Since an apartment building had been built close by, this elderly couple’s home was assessed as if an apartment building was built there. The couple’s tax bill, in 1966 dollars, was $1800 a year. Their total income was $1900 a year.

Four years earlier, a retired, civic minded, combative businessman, Howard Jarvis began an effort to reform the property tax system. He said he worked with “ordinary people” to do something about taxes. He called it “grand felony theft” when people, like the Newhall couple, lost their homes to the taxman.

And he wasn’t alone in protesting outrageous taxes. Remember this was about the time George Harrison wrote, and the Beatles’ sang, Should five percent appear too small, Be thankful I don’t take it all, Cause I’m the Taxman.

Howard Jarvis worked 15 years on property tax reform. He submitted or worked on a number of initiative proposals that either didn’t qualify for the ballot or were defeated at the polls.

Meanwhile, the situation got worse. What happened was property values were increasing dramatically in the 1970s—kind of like now. Property taxes are a function of the tax rate and the value of the property. If the tax rates were not adjusted but the property value increased, taxes zoomed up.

In some instances people bribed assessors to keep their property values low and reduce their taxes. Some assessors were caught and they went to prison – one committed suicide. Officials decided something had to be done. They computerized assessments so when a property sold all the property around it would automatically have their assessments increased and their taxes increased with the increased valuation.

In San Francisco, bumper stickers soon appeared that read: “Bring back the crooked assessor!”

Speaking of San Francisco, one San Francisco government official told the San Francisco Chronicle that before Prop 13 ‘the mayor had a relatively easy job, you just add up all your revenues and all your expenses and then you just SOCKED it to the taxpayer.’

That was the environment when Howard Jarvis and Paul Gann combined to get a record number of signatures for Prop 13, in every county, practically all through volunteer signature gatherers.

Many members from both political parties and most of the state’s special interests from business to labor opposed Prop 13. Yet the fund raising was fairly even. The No side had more, and they got it in large donations, but the many small donations from homeowners offset the large donations enough to keep the Yes on 13 side in the game.

Milton Friedman, the Nobel Prize winning economist, made a television ad for Prop 13. Ronald Reagan did a radio ad. Reagan’s radio ad said Prop 13 would protect the American Dream. Marty Anderson, Reagan’s chief economist for the 1980 presidential campaign, told me once 13 passed it gave the Reagan campaign impetus to make taxes a lead issue in the presidential campaign.

While the other side may have had more money, the campaign was high profile and the media helped. KABC-TV in Los Angeles held a debate on the news for 5 to 10 minutes every night for weeks. Howard Jarvis taking on all comers.

It wasn’t a fair fight – for the other guys. Jarvis said, “When you see politicians and bankers and union leaders standing together against something you’re for, you know there is no way in the world you can be wrong.”

Prop 13 passed two to one on Election Day, June 6, 1978. It capped the property tax rate, allowed a limited increase for inflation, reassessments on sale of property, and required a supermajority vote in the legislature for state taxes and a vote of the people on local tax increases.

It was challenged in the courts, of course. The California Supreme Court said it was constitutional…that the acquisition value system—taxes are set when you acquired the property—was reasonable and fairer than the system in place before 13.

But that wasn’t the only court challenge. In the early 1990s, a Prop 13 case made it to the United States Supreme Court.

This delighted the folks who had longed hope to see the end of Prop 13. The Long Beach Press editorial the morning of the hearing before the U.S. Supreme Court cried, “Off with its Head!”

Didn’t work out that way. As with the California Supreme Court, there was only one dissenting vote against Prop 13.

Justice Harry Blackmun, who wrote the majority opinion, found Prop 13 was constitutional, that the state had a legitimate interest in neighborhood preservation and stability and could set tax laws to discourage rapid turnover of property in homes and businesses to discourage displacement of mom and pop stores by newer chain operations.

Blackmun also wrote that someone acquiring property doesn’t require the same protection as someone who owns property and could be subjected to jarring tax increases.

The case against Prop 13 was based on the issue that side-by-side similar properties pay different taxes. Renowned economist Adam Smith in his work, Wealth of Nations, said certainty in taxation was much more important than equality. However, I prefer how a writer in a Northern California newspaper put it. Proposition 13 reminded her of her grandmother’s quilt. It is made up of different patches but sewn together it keeps everyone warm.

Even with Prop 13 upheld by the courts it comes under constant attack as you know.

From the ridiculous – a track coach said his shot puts were lost in tall grass because the grass was not cut as frequently because of Prop 13, to the more serious, when the Bakersfield Californian newspaper asked: Is Proposition 13 killing children because we don’t have enough measles serum in this county? To the editorial cartoon in the Los Angeles Times after the Loma Prieta earthquake in the Bay Area that showed a car crushed by a freeway and the license plate read, Prop 13. And my favorite in the New Republic, which said the reason O.J. Simpson was found not guilty in his criminal trial was because of Proposition 13. The reasoning was that because of the tax cuts Los Angeles city and county did not have the funds to hire competent police and corner officials. No matter that at that time, LAPD officers were paid more than police in New York and Chicago.

Which is why Howard Jarvis created a taxpayer organization, the Howard Jarvis Taxpayers Association, to carry on the fight and the defense of Prop 13. As Howard used to say, “A ship can’t sail on yesterday’s wind.”

Prop 13 was revolutionary because for the first time it gave certainty to the taxpayer instead of the tax collector.

Finally let me close with the following assessment of Prop 13 when it hit it’s 20th anniversary: “Proposition 13 is 20 years old and it’s time to proclaim the tax cutting measure a stunning success. The brainchild of Howard Jarvis and others has been vilified by critics for two decades and blamed for much of what ails California. But, at the heart of it, the measure did exactly what Jarvis promised …Proposition 13 provided a substantial and permanent reduction in soaring property tax levels and brought stability to a tax system that had been rife with corruption and subject to the volatile whims of the housing market.”

So said the Editorial in —ready for it –the Los Angeles Times!

Originally published on Fox and Hounds Daily

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