Closing the Assessment Loophole in Proposition 13

Proposition 13 could be rendered meaningless if Proposition 218 fails at the polls next month.

Consider: Proposition 13 is a law designed chiefly to protect property taxpayers. It put limits on how high and how fast property taxes can climb and requires a vote of the people on new local taxes. After Proposition 13’s success, bureaucrats looked for ways to raise revenue while avoiding Proposition 13’s restrictions. They hit upon assessment districts, which were historically used to fund capital improvements that directly benefited property.

Over time, bureaucrats molded assessments into property taxes that avoid Proposition 13’s restrictions. The courts supported this artistry by ignoring the historical precedent demanding a link between assessments and a direct benefit to property. They held that assessments could be used for operational budgets and maintenance costs and were not covered by Proposition 13’s limits and vote requirements.

Assessments have become unrestricted property taxes. They appear on your property tax bill. There are no limits on how high assessments can go. There are no limits to how many assessments can be placed on your property. Indeed, one Northern California county redesigned its property tax bill to accommodate its growing list of assessments.

Because assessments can be imposed without a vote, they are attractive to local governments. Remember the debacle last spring when the Los Angeles Community College District tried to rush through landscaping improvements and construction of facilities such as an equestrian center with an assessment against property? Only after a massive outcry, including 30,000 protests, did district trustees agree to put the proposal on the Nov. 5 ballot. The current assessment system is stacked against taxpayers because an absolute majority of all properties within the assessment district is required to kill an assessment. In other words, those who do not protest are counted as “yes” votes. In the case of the community college district assessment, it would have taken 500,000 protests.

Proposition 218 would remedy this grossly unfair situation by giving the voters a more evenhanded say in the taxes levied on them and their property.

Proposition 218 will continue Proposition 13’s legacy of protecting property owners from being the cash cow forced to fund most local services. As an example, recall the last two votes taken in the city of Los Angeles to raise taxes for police. Because these special taxes were to be paid exclusively by property owners, a two-thirds vote was required under Proposition 13. Both failed to achieve the two-thirds mark.

Proposition 218 once again limits the use of assessments to services that specifically benefit property. Police services are a general benefit to the community and should be funded by taxes, not assessments.

If Proposition 218 fails at the polls, look for city officials to try to impose a police assessment on property. Already, the City Council has asked city bureaucrats to look into the possibility of using assessments to fund police operations. If, as the saying goes, the courts follow the election returns, it is possible that assessments for police will be upheld. The end result is that those same Los Angeles property taxpayers who were protected by Proposition 13’s two-thirds vote requirement could see assessments placed against their property with no vote at all.

Property taxes with no limits and no vote--just like before Proposition 13 passed.

Opponents of Proposition 218 are falling back on the failed strategy of exaggerated predictions that we witnessed in the Proposition 13 campaign They claim 218 would give new powers to foreign and big landowners and fewer rights to renters. To the contrary, Proposition 218 follows the current law, which allows property owners to protest assessments, and creates no new powers except for renters, who may vote on assessments for which they are liable.

The impartial legislative analyst says that potential revenue loss from Proposition 218 is minuscule--a mere $100 million spread across the entire state, or one-tenth of 1% of all government revenue in California. By contrast, the Los Angeles County budget is about $12 billion; the city and L.A. school district budgets are in the $3 billion-$4 billion range.

Under Proposition 218, government officials still will be able to raise taxes--if they convince voters of the need for an increase. Assessments will pass with a majority vote of property owners; general taxes with a majority of all voters.

Proposition 218 tackles the age-old question: Who should control the most important function of government, taxation? Those who think the safest place for this power is with the people will vote yes on Proposition 218.