Proposition 13 works and remains popular. So why are special interests attacking it?

Proposition 13 works and remains popular. So why are special interests attacking it?

Howard Jarvis, circa 1978. (Photo courtesy of Howard Jarvis Taxpayers Association.)

By Rob Lapsley and Allan Zaremberg, Special to CalMatters

Backers of an initiative to eliminate Proposition 13’s protections for some groups finally acknowledged something we have known all along: the measure is fatally flawed, would be bad for California and would shortchange school districts contrary to the stated purpose of the initiative.

This admission came after they spent millions of dollars to place the “split-roll” measure on the November 2020 ballot.

Now, they’ve decided to scrap that measure, write a second draft, and attempt to qualify it for the 2020 ballot.

The real question is why not withdraw the old, flawed ballot measure now? Do they really plan to present voters with an admittedly flawed constitutional amendment if they can’t replace it with their new measure?

Sadly, the answer is yes.

A split-roll initiative would remove Proposition 13’s protections for commercial and industrial property and raise their property taxes by billions of dollars a year. Businesses would have no choice but to pass those increased costs onto you and me, raising the prices on everything we buy, from gasoline to groceries, while also raising our utility and healthcare bills.

Unfortunately, these special interests are so intent on destroying Proposition 13 that they’ll leave the first poorly written measure on the ballot as a backup just in case they can’t qualify the new measure.

This is the clearest evidence yet that those behind the split-roll measure aren’t concerned with what’s best for Californians. They’re focused on raising taxes at any cost, even through a terribly flawed measure.

If the old measure is pulled from the ballot and replaced with this second draft, it still would be the largest property tax increase in state history and the most direct attack on Proposition 13 in a decade.

Public polling consistently shows that the split-roll property tax fails to earn even 50% support.

A June 2018 survey by the Public Policy Institute of California (PPIC) showed just 46% of respondents support the tax. This is the lowest level of support for a split roll tested by PPIC since 2012.

In contrast, Proposition 13 continues to remain popular with voters. The same PPIC poll showed 65% of voters believe Proposition 13 was good for California. That’s the same percentage that passed the measure 41 years ago.

Proposition 13 was passed by nearly two-thirds of California voters in 1978 because our property tax system was out of control.

The initiative stopped skyrocketing property tax bills by capping annual increases in property taxes at 2% per year. It also calculates general property taxes based on 1% of the purchase price rather than market value, protecting property owners and local governments from drastic booms and busts in the real estate market.

Proposition 13 creates stability for homeowners, renters and businesses, ensuring they won’t be broadsided with dramatic property tax increases. It also creates a reliable tax revenue stream that has grown on average 7% a year since the passage of Proposition 13, and is projected to reach an all-time high of $74 billion.

The pros and cons of a split roll will be argued before the voters next year. We’ll work hard to educate voters about why they should reject this attempt to gut Proposition 13.

California’s Proposition 13 turns 40 this year.

Paul Gann, left, and Howard Jarvis, hold up their hands on the night of June 7, 1978, as their co-authored initiative Proposition 13 limiting property taxes took a commanding lead in the California primary. Prop. 13 turns 40 this year, and may face challenges. (AP Photo/stf) ASSOCIATED PRESS

CALIFORNIA FORUM

California’s Proposition 13 turns 40 this year. Its midlife crisis may be on the way

BY DAN WALTERS

CALmatters

February 18, 2018 12:01 AM

Updated 10 hours 41 minutes ago

This year is the 40th anniversary of Proposition 13, the iconic property tax limit measure that California voters overwhelmingly endorsed in 1978.

It’s only a slight exaggeration to say that it’s also the 40th anniversary of efforts to repeal or alter Prop. 13’s provisions, and those on the left side of the political ledger – unions, particularly – may be trying once again this year to undo it.

IF THE SPLIT ROLL MEASURE MAKES IT TO THE BALLOT, IT WOULD LIKELY BE ONE OF THOSE MASSIVELY EXPENSIVE BALLOT MEASURES FOR WHICH CALIFORNIA IS FAMOUS, OR INFAMOUS.

An initiative awaiting clearance for signature-gathering would create a so-called “split roll,” preserving Prop. 13’s property tax limits for homes and residential rental units, but removing them for other commercial and industrial properties.

The up-front proponents are such good government groups as the League of Women Voters, which contend that the state’s schools and local governments are seriously underfunded.

Standing in the shadows, however, are public employee unions, which would benefit from having more money flowing to schools and local governments, especially since their budgets are being squeezed very hard by fast-rising pension costs.

How much more?

The Legislature’s budget analyst, Mac Taylor, estimates that a split-roll could generate net annual revenues in the $6-10 billion range.

Those are big stakes and while the unions could spend millions of dollars on a campaign to pass the measure, the business interests that would be paying more property taxes have even deeper pockets. After all, spending even $50 million to defeat a split-roll measure would be pocket lint in comparison to the multibillion-dollar stakes.

So, if the split roll measure makes it to the ballot, it would likely be one of those massively expensive ballot measures for which California is famous, or infamous.

Proponents would pound on providing more money for schools, which, polling tells us, are the most popular thing that government does. That was the theme of two successful ballot measures that raised income taxes on the wealthiest Californians in 2012 and 2016, and in fact per pupil spending has increased by 66 percent in the last seven years.

Opponents will raise the specter of undoing Prop. 13, which has consistently enjoyed high voter approval in polling over the last 40 years, arguing that if commercial property is hit with tax increases, homes will be the next target.

They also would point out that despite Prop. 13’s restrictions, property tax revenues have increased 12-fold since it was passed due to new construction and reassessment when properties change hands.

Finally, they may also contend – with a factual basis – that the extra money wouldn’t mean better schools and local government services, but rather would shore up pension funds that face huge unfunded liabilities.

So would California voters endorse a split property tax roll? Recent polling indicates its proponents would face an uphill battle.

The Public Policy Institute of California has tested the issue periodically and once found a fairly strong level of support among likely voters, but the most recent PPIC poll found it had slipped from 60 percent in 2012 to 55 percent in 2015 and just 46 percent now.

One rule of the thumb about contentious California ballot measures is that they must begin with strong support, well over 50 percent, if they are to have a chance of prevailing against well-financed opposition, so 46 percent is a very weak starting point.

In years past, split-roll advocates have loudly announced campaigns for it, only to quietly throw in the towel when it became clear they had little chance of winning.

Ultimately, therefore, the 40th anniversary of Proposition 13 may be a whimper, instead of a bang.

Dan Walters is a columnist at CALmatters. Reach him at dan@calmatters.org.

http://www.sacbee.com/opinion/california-forum/article200137504.html

Without Prop 13, Marin County could see 100% tax increases like Mattoon Township.

Mattoon Township businesses see over 100 percent property tax hike in one year

By Cole Lauterbach | Illinois News Network
Jan 3, 2018



Downtown Mattoon, IllinoisPhoto from Wikimedia


A federal lawsuit alleges that a central Illinois county’s assessor has been appraising property based on what the county needs to spend, not what the business is worth.

Business owners in a Coles County township say they were taxed at very unfair rates compared to their neighbors elsewhere in the county. Their lawsuit, which was appealed in federal court last week, says some of the businesses there saw property tax bills rise drastically one year. The hike didn't come from an increase in local levies but in significant appraisal increases.

Their lawyer, Erick Kaardal, said the assessor simply raised the value of their properties to match what the county needed to get around state laws limiting big hikes like that.



“They’re basically using the assessment procedures to increase valuations on the property for the purpose of borrowing and spending rather than having the valuations be linked to market value,” he said.

The businesses in question reside in Mattoon Township, where they paid 97 percent of the newly raised taxes that the county received in tax year 2016, according to the suit. They contend that this is a breach of the 14th Amendment’s Equal Protection Clause.

The county assessor's office would not respond to active cases but Brian Bower, Coles County State’s Attorney, said that previous Supreme Court rulings have said the appropriate venue for the challenge is in a local court. “We’re hopeful the Seventh Circuit sees it the same way,” he said.

Kaardal said that the federal court has jurisdiction if the state courts don’t provide “an adequate remedy.”

Property tax extension limit laws, or P-TELL, limit the amount of a property tax hike to either 5 percent or the last year’s Consumer Price Index, whichever is less. Kaardal says the implications of the case would affect every county in Illinois with tax limits. According to the Illinois Department of Revenue, 39 counties in Illinois have property tax extension limitation laws and could be affected by this lawsuit.

Proposition 13 isn’t the problem, pensions and spending are

Proposition 13 isn’t the problem, pensions and spending are

FILE PHOTO/GETTY IMAGESProposition 13 isn’t the problem, pensions and spending are
61 COMMENTS
By THE EDITORIAL BOARD | opinion@scng.com |
PUBLISHED: January 1, 2018 at 8:00 pm | UPDATED: January 2, 2018 at 11:01 am


Not for the first time, an effort is underway to persuade voters to “reform” Proposition 13 and raise property taxes.

“The California Schools and Local Communities Funding Act of 2018” was filed in mid-December with the attorney general’s office. It aims to raise $11 billion per year by removing Prop. 13 protections from industrial and commercial properties, reassessing them based on the unrealized, paper profits from rising real estate values.

However well-intentioned the backers of this initiative may be, it is reckless to impose a massive tax increase on nearly all California businesses, simultaneously and repeatedly.

If raising taxes was the solution to every problem, California would have no problems. The Golden State boasts the nation’s highest income tax rate and sales tax rate, and we’re within an eyelash of defeating Pennsylvania for the title of highest gas taxes.

Only property taxes fail to lead the nation in taxpayer pain. That’s because in 1978, the people of California used the initiative process to stop the escalating tax assessments that were tracking the rapid rise in property values and literally taxing people out of their own homes and businesses.

Under Prop. 13, taxes are limited to 1 percent a year of the assessed value of any property — residential, commercial or agricultural. Properties are reassessed to market value when sold.

This acquisition-value system protects longtime property owners from unaffordable tax increases while also bringing in revenue at a brisk pace when values are rising. Although California’s average effective property tax rate is under 1 percent, among the lowest in the nation, the state ranks 22 of 50 in per-capita property tax collected, according to the Tax Foundation’s data for 2014.

Proponents of the new initiative argue that California’s schools need more funding, but they are silent on the reason that California’s record spending on education is insufficient.

In March, officials of the California State Teachers’ Retirement System announced that CalSTRS’ unfunded liability increased to $97 billion in the fiscal year ended June 30, a $21 billion increase from the previous year.

But what effect will that tax increase have on California businesses?

In an apparent maneuver to limit opposition, proponents of the measure exempted residential rental property, agricultural property and commercial property owned and occupied by a business with 50 or fewer employees. So the tax hike would be borne by small businesses that rent space in a commercial building and large businesses that, incidentally, provide the jobs many Californians rely on to pay their bills.

California’s business climate is already abysmal by every measure. A massive and recurring tax increase on virtually all California businesses, simultaneously, will only accelerate the exodus to other states with more reasonable taxation.

And then what?

With growing pension costs continuing to draw funds away from classrooms and basic city services, will this measure’s proponents return to demand an end to Prop. 13 protections for everybody else?

Don’t bet the ranch that they won’t.

California needs pension and spending reform. Prop. 13 isn’t the problem.

Prop 13 was a victim of the Original "Fake News"

OPINION

Proposition 13 is the original victim of ‘fake news’

March 18, 2017 Updated 12:00 a.m.

By JON COUPAL / Contributing writer
Paul Gann, left, and Howard Jarvis hold up their hands as their co-authored initiative Proposition 13 takes a commanding lead in the California primary, in Los Angeles, June 7, 1978.AP PHOTO


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.

When the scare tactics were rejected by the public, some media attacked Prop. 13 sponsors Howard Jarvis and Paul Gann with false stories. Two weeks before the election, the Monterey Peninsula Herald editorialized that the public had “been so outrageously deluded by a pair of slick Southern California real estate operators.” The Herald was 0-for-2. Gann was from Sacramento, which Herald editors should know is in Northern California, and neither man owned any California real estate except for their own homes.

A month before the June 6 election, the Los Angeles Times repeated the claims of Prop. 13 opponents in a lengthy editorial in which the lies were treated as facts: “Los Angeles County would eliminate all of the Fire Department’s paramedic units, could close half of the 129 fire stations. It would close half of the county’s 93 libraries. ... More than 30,000 county employees would be laid off. The city of Los Angeles is considering the dismissal of 2,152 police officers and the closing of six stations. More than 1,000 firefighters would be cut, and 56 stations would be shut down. ... The prospect for Los Angeles schools is even darker. More than 18,000 teachers would be laid off.”

The same editorial in the Times included the following statement in italics: “Vote yes on Proposition 13 and send a message to tens of thousands of teachers, librarians, firefighters, police officers, sanitation workers and public-health specialists that you can safely dispense with their services.”

Howard Jarvis commented, “It was tough having 90 percent of the media against us.”

Nobel Prize winning economist Milton Freidman summarized the fake news campaign against Prop. 13 in his column in Newsweek several weeks after the overwhelming passage of the measure: “Despite the use of scare tactics including notices to teachers of automatic dismissal on passage of Jarvis-Gann [Prop. 13], advance local budgets threatening drastic cuts in police and fire protection, and whatever other portents of catastrophe desperate feeders at the public trough could devise, the public refused to be bamboozled this time, as they had so often before while watching taxes mount and government services deteriorate. This time, the scare tactics simply produced a backlash.”

But the beat down of Prop. 13 goes on. Some years ago, a newspaper editorial asked if Prop. 13 was responsible for a measles epidemic saying it may have limited the availability of vaccine. A national publication suggested that O.J. Simpson’s acquittal of murder charges was due to the tax limiting measure because prosecuting attorneys may not have been paid enough.

More recently, a column by a West Coast writer published in the New York Times claimed that one of the reasons that Los Angeles is becoming a “third world” city is reduced funding for education caused by the tax revolt that passed Prop. 13. As is typical, the writer ignores the fact that California now spends 30 percent more per pupil, in inflation adjusted dollars, than the amount spent just prior to the passage of Prop. 13 — a time when both liberals and conservatives agree that California schools were among the best in the nation.

Today, those who want to bring down Prop. 13 are a little more clever with their fake news. We are seeing claims, that the media delights in repeating, that Prop. 13 has caused the housing shortage, that Prop. 13 only helps the wealthy, and, of course, that Prop. 13 is responsible for our poor performing schools, even when our teachers are the third-highest paid in all 50 states.

Taxpayer advocates in California are still dealing with “fake news” as they have for nearly 40 years. It is doubtful that that battle will end anytime soon.

Jon Coupal is president of the Howard Jarvis Taxpayers Association.

Prop 13 could be history this Fall

Although this effort failed in 2016, progressive Democrats in Sacramento have a veto proof majority and are committed to changing the 2/3 vote requirement for taxes to a simple majority.  This would have a massive impact on California's economy.

http://www.capradio.org/articles/2016/01/19/change-to-californias-political-third-rail-headed-for-november-ballot/

Change To Prop. 13 Could Be Headed For November Ballot

•  Ben Adler 

Tuesday, January 19, 2016 | Sacramento, CA | Permalink

California voters could be asked this fall to touch what’s been an untouchable law: the property tax initiative known as Proposition 13. A potential November ballot proposal would raise taxes on the state’s highest-value properties and spend the money on anti-poverty programs.

After nearly 40 years, Proposition 13 is known as the third rail of California politics: you touch it, you die.

But don’t tell that to the Daughters of Charity. The order of Catholic nuns is one of several major donors to an effort to raise taxes on properties valued at more than $3 million.

“It’s a multi-faceted approach to try to get people out of poverty,“ says veteran Democratic strategist Bill Carrick, who's running the campaign. “That’s the point of it. We’re trying to keep in place — I think we do keep in place — the fundamental protections of Proposition 13,” which caps property taxes at 1 percent of the property's value and limits increases to 2 percent a year.

New revenues could reach $7 billion a year and would fund anti-poverty initiatives — including early childhood education, job training and welfare programs.

Carrick says few homeowners would be affected. But Allan Zaremberg with the California Chamber of Commerce says the measure would reach beyond the rich.

“In California, if you have a small restaurant, you’re probably renting from somebody who has a property of $3 million or more,“ Zaremberg says. “So you’re gonna pay more in rent. And you just can’t afford that.”

Democrats despise Proposition 13. But the party establishment doesn’t like this measure. It took a hard look at Proposition 13 — but decided to focus instead on extending the Proposition 30 income tax increases.

Democratic consultant Steve Maviglio says there’s no doubt California needs major tax reform, “but what a lot of people want to do is put everything on the ballot this year, instead of being more surgical about how to get there. We know what can win, which is a Proposition 30 extension. Anything you touch on Proposition 13, which has always been and always will be the third rail of California politics, becomes more problematic.”

That problem isn’t going away. Carrick says his campaign has collected roughly half the voter signatures it will need to reach the November ballot.