Like wrangling over Common Core Standards (CCS) in California, legislators and school district personnel can’t bring themselves to “do something” about the 1978 Proposition 13.
For the CCS, California can accommodate Algebra I in the 8th grade and few of the English/Language Arts standards need reworking. As of Monday, August 2, 2010, the California Board of Education finally adopted the standards. Now to implement procedures and allow time to make sure school district personnel, not only teachers but principals and administrators, have the resources to use the standards to improve academic achievement.
Which brings us to the old Proposition 13 that has done its worst to bring down our schools. Not only is every local municipality stretching its few property tax dollars to cover services, so also are schools.
Things are so unstable that legislators are finally looking at revisions of some aspects of the legislation passed by voters in 1978. Never fear, your grandmother’s property will not be touched. She will still only feel an increase of 2% on the tax she currently pays based on the 1% assessment of her property’s value 35 years ago (in 1975) as the law states.
Legislation to fund school budgets in California is “complex, irrational, and inequitable” according to the Getting Down to Facts Project report. Still, looking at the news in 1978, 38% of the voters believed the state could absorb the 40% estimated reduction in tax revenue. Voters were sick of high tax liabilities without an increase in their ability to pay, just like today when wages were stagnating well before the great recession.
Simply put, the answer over time has been to assess fees for every municipal service, set bond and local utility or parcel tax proposals, and authorize a plethora of special assessment districts such as flood control and drainage. These tithes supplement the minimum funding for schools and provide funds for local municipal services.
But in 2010 with a $19 billion deficit in the state budget and nothing agreed to by the legislature and governor as of this post, here are two possibilities to increase funds for municipalities and schools.
In December 2008 Senator Joe Simitian offered SCA 6 (amended several times) to change the 2/3 provision of Proposition 13 and make 55% needed to pass special tax legislation. Such a change would improve the chances that local parcel tax measures written for specified school purposes would pass.
This change is difficult. Recently Californians for Improved School Funding tried to collect enough signatures to put an initiative similar to Simitian’s bill on the November 2010 ballot and failed.
Assembly member Tom Ammiano has offered AB2492. It revises how property tax is calculated on commercial properties which by 2009 benefited far more than any voter understood in 1978. Though never talked about during the campaign, the Jarvis-Gann proposition was devised to serve commercial properties far more than homeowners. For example, in Los Angeles County, 1979 commercial property taxes were 47% of the total, while in 2009 taxes from commercial properties were 30%.
The assembly bill changes how ownership of a commercial entity is defined. It refines the circumstances under which a sale occurs and reassessment must be made. Revising this section of Proposition 13, while complex, would close an estimated $7.5 billion corporate tax loophole for the benefit of local municipalities as well as local schools.
Another way to reform the commercial property loopholes is called “split roll” by which residential homeowners’ tax assessment remains as is, but commercial properties are assessed at 1 ½% and reassessed more often. Provisions in the reform offer +65 owners breaks and low-income family breaks, applicable to landlords of rental housing. Lenny Goldberg hopes to bring a ballot initiative up for the 2012 elections.
Either of these proposals will bring more budget control to local districts and still protect individual taxpayers. Most important, revenue sources will be made evenhanded and help the state overcome its budget debacle.
Tags: commercial property loopholes, Proposition 13, special taxes, split roll