Proposition 39 May Inspire Another Taxpayer Revolt

Proposition 39 cuts against the grain of California’s tax history. The measure will make it easier to raise property taxes by reducing the requirement to pass local school bonds from the current two-thirds vote down to 55%. These bonds would be paid off exclusively by property owners.

In his recently published book, “California’s Tax Machine,” David R. Doerr, a 40-year veteran in analyzing tax policy for the Legislature and the California Taxpayers Assn., states: “The epochal changes in California’s tax structure since 1850 all stem from an effort to provide property tax relief.”

From the state constitutional convention of 1879, which established the two-thirds vote requirement for local bonds, to the 1910 constitutional revision eliminating state property taxes, to the move away from property taxes with the addition of sales and income taxes in the 1930s, through the Gov. Ronald Reagan tax reforms of the 1960s, Proposition 13 in 1978 and the “Right to Vote on Taxes Act” (Proposition 218) of 1996, California tax reform meant property tax relief and making it more difficult to raise property taxes.

Proposition 39 races down the reformer’s road in the opposite direction.

Of course, you wouldn’t know it from the “Yes on 39” campaign ads. Nary a word is mentioned about losing the 121-year-old two-thirds-vote constitutional protection. The commercials and mailings refer mostly to statutes that supposedly enhance accountability of tax spending, which are not even part of the proposition. This legislation is contingent on Proposition 39 passing, and it can be weakened or repealed at any time by Sacramento politicians without a vote of the people.

So while Proposition 39 requires a lower public vote to raise property taxes, the controls of the so-called taxpayer protections will be in the hands of legislators, not the people. For taxpayers, the bottom line means increased property taxes.

One of the statutory proposals not in Proposition 39 sets a cap for taxes collected per $100,000 of property value for each bond passed. However, the limitations only apply to a single bond measure. School districts could easily circumvent these caps by placing a series of bond measures on the ballot. The Los Angeles Unified School District is considering asking for more bond money from local taxpayers even after the Belmont fiasco.

Furthermore, if caps are truly effective they could prevent schools from being built in some poorer, urban school districts where the schools are needed most. Since the value of the property is much less in poorer areas, caps probably will prohibit collecting enough dollars to build schools.

Reliance on local property taxes to finance schools has raised equity questions in this state for decades. In the Serrano vs. Priest cases of the 1970s, the California Supreme Court concluded that property tax funding for schools leads to inequalities because similar tax rates will bring in fewer dollars in poorer communities than in richer communities with properties of greater value.

What will the courts say when the property tax system put forth by Proposition 39 and its accompanying legislation prevents poorer districts from building equal schools?

State budget surpluses are the answer to pay for school facilities on a more equitable basis. State funds, paid by all taxpayers, can be used to pay off statewide bonds or to assist in school construction on a pay-as-you-go basis. Considering their vocal concern for the physical condition of our public schools, it is incredible that the governor and Legislature did not offer a penny of the state’s $13-billion surplus to specifically aid in school construction and repair. Why should homeowners face the prospect of higher property taxes with such a massive state budget surplus?

Resorting to higher property taxes to solve school facility problems risks the truth of the adage that those who do not remember the past are condemned to repeat it. That truth is reflected in the property tax bills that homeowners have just received--taxes and other charges on them are already too high for many homeowners.

The taxpayer protection ethos still lives in California. If Proposition 39 is successful and leads to high property tax burdens, the taxpayers will revolt. Just read your California tax history.