The influential California Association of Realtors is launching a signature drive for a November 2018 ballot measure that would greatly expand the ability of Californians who are at least 55 years old and disabled people to maintain their low-tax assessments even if they move to other counties or purchase more expensive new homes.

Prop. 13 requires counties to tax properties at 1 percent of their value (plus bonds and other special assessments), which is established at the time of sale. The owners maintain that assessment even if values increase, as they typically do in California. The proposition limits tax hikes to no more than 2 percent a year. Prop. 13 passed overwhelmingly because many people – especially seniors – were being taxed out of their homes as assessments soared during a real-estate boom.

Under current rules, people 55 and older may keep their low assessments if they move within the same county or within one of 11 counties that accept these transfers. They may do so only once in a lifetime. It enables retired people, for instance, to downsize from a big family house to a condominium without paying a stiff tax penalty.

For example, if one purchased a home in 2008 for $350,000 and that home is now worth $750,000, they may continue paying taxes at the lower assessed value even after they sell the home and purchase a smaller one. The valuation goes with them. But the newly purchased property must have a market value the same or lower than the house that has been sold.

The Realtors’ proposal would, for seniors and the disabled, tie the assessed value of any newly purchased home to the assessed value of the old home. They would be free to take that assessment with them to any of the state’s 58 counties. They could carry it with them as many times as they choose. The reduced assessments would apply even for people who purchase home with market values above the ones that they sold.

As the nonpartisan Legislative Analyst’s Office explains, if the new and prior homes have the same market values (based on sales and purchase prices), the new tax valuation would be the same as the old one. A fairly complex formula would determine the tax rate for purchases that were either higher or lower than the sales price of the prior home.

The initiative addresses a problem faced by many empty-nesters. They are living in large homes where they raised their families and would like to downsize – but to do so would mean a huge tax hit given that their new tax rate would be tied to the purchase price of the new property. In the preponderance of situations, the new purchase price for even a smaller house would be far higher than the price that the seniors paid for the homes where they currently live.

The Orange County Register reports that, if passed, the initiative could spur an additional 40,000 home sales a year. Supporters say that could ease up tight housing markets, but foes argue that the Realtors have an interest in spurring more home sales. County governments – backed by LAO projections – say that it eventually will cost them as much as much as $1 billion a year.

“By further reducing the increase in property taxes that typically accompanies home purchases by older homeowners, the measure would reduce property tax revenues for local governments,” according to that LAO analysis. “Additional property taxes created by an increase in home sales would partially offset those losses, but on net property taxes would decrease.”

The Howard Jarvis Taxpayers Association, which defends the legacy of Prop. 13, disputes the idea of large tax losses, given that younger couples would move in to the homes that older people sell, and they would pay property taxes based on the new market value. In other words, an older couple will sell a house and keep their lower tax rate.

“We believe upward portability makes a lot of sense especially as property values across California continue to rebound,” said HJTA president Jon Coupal in a statement. The statement says he believes the measure would “help California alleviate its current housing crisis by removing a financial barrier that keeps many older homeowners from selling their homes, and many millennials from entering the housing market.”

The Realtors’ association had submitted three different potential measures, including one that would expand portability for people of all ages. But the final measure applies only to seniors and disabled persons. As the saying goes, the best defense is a good offense. Supporters of Prop. 13 have learned that the best way to protect it might be by trying to expand it.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

It’s no secret that the state’s legislative leadership is less than thrilled about an open-government initiative that California voters passed in the November election, and are doing what they can to undermine its clear intent.

Yet, it’s a testament to the measure’s importance that the Legislature painstakingly followed its dictates as they passed last week a controversial bill to increase gas taxes and vehicle-license fees to fund $52.4 billion in transportation upgrades over the next decade.

Had they not followed the timelines detailed in the measure, the transportation bill would be subject to legal challenge. That reality showcases the “teeth” in Proposition 54, which passed statewide with 65 percent of the vote – and even had the rare virtue of receiving voter approval in every one of California’s 58 counties.

The proposition is simple, though arcane sounding. It mainly requires that all bills be printed in final form – and published online –72 hours prior to a final vote in either house of the Legislature. Good-government reformers had for years tried to get the Legislature to approve such a measure, but were consistently stymied.

That’s because legislators love to rush through those “gut and amend” measures at the last moments of a legislative session. That’s when the guts of a bill are stripped away and an entirely new piece of legislation is dropped into its shell. In these rush situations, most legislators are unaware of the details of what they are voting on and the public and media can’t see what’s in the bills. This situation breeds cynicism and contempt for the legislative process.

By contrast, the vote over Senate Bill 1, the transportation measure, was a model of openness, according to many observers. As observers have noted, there’s plenty of reason for criticism of the bill and other parts of the process – the size of the tax increases, the pork-barrel projects, the lack of reforms for current transportation programs – but there’s no doubt the voter-approved proposition made it easier to see what was in it, warts and all.

Prior to SB 1’s passage, an ideologically diverse group of Prop. 54 supporters, including the Howard Jarvis Taxpayers Association and California Common Cause, sent a letter to legislative leaders expressing their “concerns with the Legislature’s implementation to date, which could inadvertently result in the invalidation of bills that the Legislature wishes to pass.”

The bill seemed like a warning: The Legislature better follow the details of Prop. 54 in its consideration of SB 1 or potentially face legal efforts to overturn the measure if it passes. Indeed, the Legislature reportedly followed the 72-hour rule with nine minutes to spare.

But the warning was timely. As the San Francisco Chronicle’s John Diaz explained in an April 7 editorial, “Of particular concern was the Assembly’s attempt to interpret the 72-hour rule more narrowly than was presented to voters.” Assembly leaders interpreted the measure – which its authors say applies to all bills – “only to bills that had previously passed the Senate and were on their last stop before the governor.” That interpretation could eventually be challenged in court.

As the letter writers explained, “Each member of the Legislature is constitutionally guaranteed the right to have at least 72 hours to review the final version of any bill prior to a floor vote, regardless of the bill’s house of origin, and your constituents have the same right. We believe the Legislature’s rules should unambiguously reflect that right.”

The proposition also allows the public to record public meetings and requires the Legislature, beginning in 2018, to post videos of all such meetings online within 24 hours. The letter argues that the Legislature, however, is improperly adopting rules regarding such recordings.

“If the Legislature wishes to regulate the placement and use of recording or broadcasting equipment, it must adopt those rules in compliance with the Constitution’s requirements: that is, by a two-thirds vote concurring in each house, or by statute,” the signers explained.

As Diaz argued, the Legislature had for years “rejected any and all such reforms.” Supporters of the status quo had maintained imposing these “sunshine” rules would restrict the ability of legislators to get things done. But with the passage of SB 1, the Legislature passed one of its major and controversial priorities, despite having to operate with a new level of openness.

Legislators still are resisting the new rules, but they face grave risks if they push their recalcitrance too far. “If the Legislature does not adopt rules consistent with Proposition 54, there is a risk that the Legislature may schedule votes in violation of the Constitution’s 72-hour notice requirements,” according to the coalition letter. “Any such vote for passage will be invalid, and that bill will be ineligible to become a law.”

Ultimately, the Legislature understood what was at risk, which is why they apparently didn’t take any chances with their transportation bill.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

But it seems safe to say the rail authority didn’t expect implacable, unyielding opposition from this group: Wealthy equestrians. For months, they have targeted plans to put the tracks for high-speed rail in parts of the San Fernando Valley that are beloved by horse owners and riders.

Attempts to reassure the equestrians that the effects would be minimal blew up in the rail authority’s face in March. The authority touted a study from the San Jose State-based Mineta Transportation Institute that said the bullet train would have little effect on horses and riding along the Tujunga Wash and other communities in the Santa Clarita-Sunland area.

Leaders of the equestrian communities in the north San Fernando Valley —  home to an estimated 10,000 horses — dismissed the report as untrustworthy because rail authority Chief Executive Jeff Morales and former bullet-train board member Rod Diridon serve on the institute’s board.

Bullet-train board chairman Dan Richard further undermined confidence in rail authority claims at a March public meeting when he noted that in Europe, cows have become used to the noise of passing bullet trains. The comparison of cows to horses — considered an unusually high-strung animal — prompted laughter and disbelief.

‘Environmental justice’ move not paying off

The bullet-train route was changed in ways that outraged equestrians in response to criticism that previously planned routes would bisect working-class, largely Latino communities in more populated parts of the San Fernando Valley. Richard likened this decision to “environmental justice” at the March public meeting. But the route change hasn’t won much praise from opponents of the previous alignment, who still see the bullet train as more trouble than it is worth.

Now rail authority officials find themselves caught in an unexpected crossfire from both wealthy and working-class critics in the San Fernando Valley. A recent Los Angeles Times story treated the rich equestrians’ grievances with the same sympathy that previous coverage had shown for protesters from Pacoima and Sylmar:

Dale Gibson grimly shook his head, his white cowboy hat blocking out the bright afternoon sun.

“How about this mess,” he said, walking through his Sunland ranch in the shadow of the San Gabriel Mountains.

Gibson, a rodeo cowboy and stuntman who has performed in more than five dozen films, was pondering the prospect of 220-mph bullet trains rocketing about 100 feet from his competition arena along the Big Tujunga Wash. He boards about 100 horses on 5 acres and, on many days, is out teaching children and actors the finer points of riding.

“It would be like trying to ride your horse down the runway at LAX,” Gibson said. “We will be done.”

Study seeing minimal effect widely ridiculed

Meanwhile, the Mineta Institute study’s findings continue to draw mockery from equestrians who see it as confirmation that they’re not being taken seriously. The study stated that compared to humans, “horses are somewhat deaf.”

The assertion outrages Gibson who, to prove his point, made a kissing sound to a horse about 50 feet away. The animal raised its head. “Does he look deaf to you?” asked Gibson, who serves on the Los Angeles Equine Advisory Committee.

“Deaf?” he said. “I don’t think so.”

That’s also from the recent Times account.

The only conceivable way to placate both the equestrian community and residents of San Fernando, Sylmar, Pacoima and neighboring towns is to build a 20- to 24-mile segment of the bullet train underground. But given that studies suggest it costs nine times as much to build underground tracks as above-ground tracks, that could balloon the cost of the estimated $64 billion project by at least $20 billion.

The state government presently doesn’t have enough money to complete the project’s initial $21 billion segment in the Central Valley. The prospect it may have to spend far more than expected to bring the bullet train to the Los Angeles region could make it even more difficult to attract the private investors that the rail authority has been hunting for without success since 2008.

Correction: Due to a reporter error, an earlier version of this article mistakenly reported that Assemblywoman Catharine Baker supports the extension of Prop. 30 taxes. Baker does not, in fact, support the proposed extensions. 

Steve Glazer – bald, bespectacled and mild-mannered – doesn’t look like a revolutionary. But the politically moderate Democratic state senator from Orinda hopes to be in the vanguard of a centrist coalition in Sacramento that challenges the Legislature’s entrenched partisan divide and loosens labor unions’ grip on power.

“[When] I ran, a big part of it was to break down the power that exists in Sacramento,” said Glazer at a town hall meeting in San Ramon on Nov. 30. “There is no center anymore. It’s a polarized place, from the left and from the right. It’s unhealthy, it’s very unhealthy.”

“Everybody is afraid to try to occupy that center because you lose,” Glazer continued. “So, part of the reason that I got into this was to try to break it down, and say, ‘Look, I run, I lose, it’s OK.’ But it’s an unhealthy process.”

Glazer’s candidacy in a May special election sent alarm bells to Sacramento’s biggest power player, organized labor, which spent more than $2.7 million attempting to elect union-friendly Assemblywoman Susan Bonilla.

In that campaign a union front group played a dirty trick in an attempt to siphon votes from Glazer. Posing as an Asian-American business group, they sent mailers touting another Republican candidate, Michaela Hertle, but failed to mention she had dropped out of the race too late to have her name removed from the ballot.

“Maverick” status

Glazer touted his political maverick status to the standing-room-only crowd in the Amador Rancho Center, site of the recent town hall meeting.

“In my first week in office – the pro tem in the Senate [Kevin de León] is the top guy – I voted against four of his bills in my first week,” he said. “People said to me, ‘Steve, the Chamber of Commerce supported them.’ In the first week I voted against two of their top priorities on the floor of the Senate.”

He added, prompting laughter, “I can’t find anybody that’s really that happy with me.”

A question about why things don’t seem to get done in Sacramento prompted Glazer to elaborate on his view of Sacramento’s polarized, unhealthy atmosphere:

“Some of it is intractable and difficult to solve,” he said. “It’s because these interest groups are so powerful. When you have a choice to be made as an elected leader between what you might think is better for your community or the powers in Sacramento, what does that really mean?

 

“It means campaign contributions. It means the organizers that come into communities, they don’t live there, and influence the decisions that are made in that local community. It affects independent expenditure campaigns.”

For two months last spring those IE groups flooded mailboxes daily with mailers featuring Glazer’s face. Half praised him as a fiscal conservative and maverick willing to buck the special interests in Sacramento. The other half denounced him as a tool of business interests, including tobacco companies.

Score Card

Several legislative report cards affirm that Glazer is one of the most fiscally conservative, pro-business Democratic legislators in Sacramento.

The Howard Jarvis Taxpayers Association gave him a “D,” which sounds bad, except that every other Senate Democrat but one (Sen. Richard Roth, D-Riverside) received an ‘F.’ Glazer voted with the HJTA 57.6 percent of 16 bills.

The California Taxpayers Association scored Glazer as voting with taxpayers only 50 percent of the time on targeted legislation. But that still made him the third most taxpayer friendly Democrat in the Senate.

Glazer did better on business legislation, according to the California Chamber of Commerce. He voted with business interests on 11 of 13 bills, which is the highest score among Senate Democrats. Most Democrats voted the Chamber’s way only three or four times on those bills.

After casting more than 1,300 votes in his six months in office, Glazer said one of things he’s most proud of is his 100 percent voting score from the California League of Cities. It was based on votes on 15 bills mostly dealing with local control but also with marijuana, economic development and affordable housing.

Local Control

As part of his crusade for more local control, Glazer is cosponsoring Senate Bill 799. It would raise a state-imposed cap on local school districts’ reserve funds. The union-backed cap was designed to free up school district funds for increased employee compensation, according to the Contra Costa Times.

“The whole school district cap issue happened because all the power was in Sacramento,” said Glazer. “Think about it. It’s not just about we here engaged locally concerned about your local control, your local choices.”

He continued, “They, excuse my language, they – how do I use better language? [audience laughter] – they stepped on every school district in the state. Every legislator made the choice to step on every school district in their district to create an artificial cap because of that power, that grip that exists in Sacramento on school policy. It’s very unhealthy, but it’s a great example.”

Several attempts to remove the cap failed this year, but six Democratic senators who voted for the reserve fund cap have signed onto Glazer’s bill.

Bipartisan Cooperation

In an example of the bipartisan cooperation Glazer is hoping to increase in Sacramento, the town hall was co-hosted by Republican Assemblywoman Catharine Baker. She recently celebrated her first anniversary in office after fighting a similarly expensive, divisive election campaign against a union-backed Democrat.

She received 51.6 percent of the votes in a district with 32 percent registered Republicans, and is the only Republican state lawmaker in the Bay Area.

Baker is more fiscally conservative than Glazer. She received a “B” from Jarvis and a 100 percent score from CalTax.

No one in the Assembly, including all of the Democrats, scored higher than Baker’s 86 percent on the League of Cities report card. She received the same score as Glazer from the Chamber.

All of that commonality, including overlapping districts, has engendered a mutual respect society with each legislator praising the other at the town hall and urging a new way of doing things in Sacramento. In Glazer’s words:

“It’s the center we are trying to build and occupy. Both of us here, we see the value of bipartnership, in partnering, in building that center so it will be more reflective of what we are here to represent.”

 

“We wish every place was like San Ramon, but it’s not. But we are trying to break it down. We are creating a cluster here that’s very unusual in the state. A Democrat supporting a Republican, a Republican supporting a Democrat.

 

“So we are creating a cluster here of independently minded representatives that is unique in California. It’s part of the excitement of what we do. We are trying to recruit to find more members like that who want to join our centrist party.”

Baker is moving a companion measure to lift the school district reserve cap, Assembly Bill 1048, through the Assembly.

Only about one-third of Californians can afford to realize the American dream of owning their own home. The homeowners’ property tax exemption of $7,000 (worth a $70 deduction on your property taxes) has not been increased since 1972 when the median priced home sold for $28,660. Currently, an average home is selling for nearly 10 times that amount, and yet the homeowners’ exemption remains unchanged.

Increasing the homeowners’ property tax exemption from $7,000 to $32,000 will save every homeowner in California an additional $250 per year. This will help to mitigate the heavy financial burden placed on homeowners from property tax increases to repay local bonds, and provide some relief from excessive utility fee and charge increases.

By increasing the renters tax credit, this act will provide tax relief to renters, who also face severe housing affordability problems.

Details on the renters’ credit can be found on page 5 of this PDF.

Spotlights on existing CA programs

At a time when affordable housing and poverty are emerging as big issues in California, the Howard Jarvis measure is likely to have little trouble gathering signatures. The cost of housing pinches everyone.

But the measure is also likely to put the spotlight on existing affordable housing programs in the state. A 2003 report by the Public Policy Institute of California on those programs was not flattering, depicting them as helping relatively few people and as being inefficient and ineffective. I have cited this report on CalWatchdog.com and in U-T San Diego editorials. Here’s a previous summary:

The study cited profound flaws in the state’s primary affordable-housing law. It forces cities to plan for needs that are much more appropriately addressed on a regional level. It emphasizes process — laborious long-term planning — over results — more housing units.

The PPIC analysis identified high-cost states with similarities to California that had significantly more success with affordable housing. In New Jersey, the “builder’s remedy approach” gives developers concessions in return for helping a community meet its affordable-housing obligations. Giving developers a profit motive has yielded “far more housing units” than previous policies. California’s version of this approach is much more constrained.

In Massachusetts, the state radically simplified the approval process for residential projects in which at least one-quarter of the units had “long-term affordability restrictions.” To limit NIMBYism, developers can appeal permits rejected at the local level to a state board.

Assembly speaker wants to ramp up approach PPIC knocked

But instead of heeding the PPIC, Assembly Speaker Toni Atkins, D-San Diego, seeks to double-down on the approach the think tank criticized. She’s calling for hundreds of millions of dollars in new state subsidies to create a few thousand new units across California.

New York Mayor Bill de Blasio, by contrast, argues that housing prices will only come down in a significant way if there is much more housing stock. He’s seeking to add 240,000 units in his city.

The Howard Jarvis proposal is less ambitious than de Blasio’s, but it would also offer broad benefits. As the PPIC report laid out, the current California approach of providing affordable housing to a few lucky families is more comparable to a lottery than to a program offering help to a broad category of residents.

The PPIC report can be read here.

After more than a century in California’s political spotlight, the state’s initiative process will be getting a major revise next year. Even more surprising, both Democrats and Republicans in the famously partisan Legislature are happy to see it happen.

While Republicans made up most of the limited opposition when SB1253 made its way through the Legislature, the two GOP leaders, state Sen. Bob Huff of Diamond Bar (Los Angeles County) and Assembly member Kristin Olsen of Modesto, both voted “aye.”

“It was a bipartisan effort,” said former state Sen. Darrell Steinberg of Sacramento, the Democrat who authored the bill. “People like the initiative process but believe it can be improved.”

The measure opens the way for increased collaboration between lawmakers and backers of initiatives by requiring the Legislature to hold a joint public hearing on a proposed initiative as soon as 25 percent of the required signatures are collected. It also calls for the attorney general to open a 30-day public review before approving an initiative for circulation and lets supporters amend the initiative during that time.

A much-bigger problem: Slanted ballot language

These reforms make sense and should lean to cleaner ballot measures.  But if one looks back over the past 15 years, all of the biggest outrages in the initiative process involved another problem that the Legislature declined to try to fix: the extraordinary way that the last three attorneys general — Bill Lockyer, Jerry Brown and Kamala Harris — have slanted ballot language to achieve the outcome that Democratic special interests prefer.

Gov. Schwarzenegger’s bid to use a 2005 special election to force through major reforms was hurt badly by Lockyer’s ballot titles and language. Proposition 76 would have created a rainy-day fund and a less chaotic budget process. Lockyer made it sound like an attempt to hurt school kids, titling it “State Spending and School Funding Limits. Initiative Constitutional Amendment.”

In one week alone in 2010, then-Attorney General Jerry Brown had his ballot language thrown out by judges who agreed that Brown wasn’t playing fair on a ballot measure challenging AB 32 and one making it easier to pass a state budget without Republican votes. (He tried to sabotage the first one, Prop. 23, and promote the second one, Prop. 25.)

Kamala Harris has continued this unfortunate tradition. This CalWatchdog post looks at her attempt to help trial lawyers with their misleading 2014 ballot measure.

Lockyer, Brown and Harris all say they don’t draft the language; instead, they depict it as a chore that they leave to their “professional staffs.” But if that were the case, then why have all three AGs opposed reforms transferring ballot-language responsibilities to the FPPC, the LAO or a panel of retired judges?

Because they know being able to compose ballot language on measures digging with the biggest issues of the day gives the California attorney general extraordinary power.

The worst ballot-language abuser of all

But the twist to all this is that the single worst abuser of the privilege of writing ballot descriptions was the Legislature itself. In 2008, Democrats in the Assembly and Senate directly wrote the highly misleading title and summary for Proposition 1A, the measure which provided $9.95 billion in bond seed money for the bullet-train project. Here’s the summary:

SAFE, RELIABLE HIGH-SPEED PASSENGER TRAIN BOND ACT. To provide Californians a safe, convenient, affordable, and reliable alternative to driving and high gas prices; to provide good-paying jobs and improve California’s economy while reducing air pollution, global warming greenhouse gases, and our dependence on foreign oil, shall $9.95 billion in bonds be issued to establish a clean, efficient high-speed train service linking Southern California, the Sacramento/San Joaquin Valley, and the San Francisco Bay Area, with at least 90 percent of bond funds spent for specific projects, with federal and private matching funds required, and all bond funds subject to independent audits?'”

This prompted a Howard Jarvis Taxpayers Association lawsuit. That suit led a state appellate court to issue a jaw-dropping decision that forever banned the Legislature from writing ballot language.

By Katy Grimes

An Assembly Constitutional Amendment attacking Proposition 13 is expected to be heard in the Assembly today, and some are saying it may even be passed by the Assembly.

The Howard Jarvis Taxpayers Association learned only yesterday that Assembly Constitutional Amendment 8 by Assemblyman Bob Blumenfield, D-Los Angeles, was moved out of the Assembly Local Government Committee and taken up without committee hearings or public vetting, and moved directly to the Assembly Floor today along with the other budget bills.

I had a chance today between floor sessions to talk with David Wolfe, Legislative Director for the HJTA, about ACA 8.

HJTA is a non-profit association “dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights, including the right to limited taxation, the right to vote on tax increases and the right of economical, equitable and efficient use of taxpayer dollars,” according to their website.

While a two-thirds vote is required to pass ACA 8 because it amends the Constitution, there are enough Democrats in the Assembly to pass the bill.

“This represents a direct attack on Prop. 13 because it lowers the two-thirds vote to 55% to fund various infrastructure projects,” Wolfe, told me.

“This sets up an unexpected opportunity to tarnish the Governor’s budget,” Wolfe explained. “We can now make the case that instead of demonstrating restraint, Democrats are showing their true colors. All they’ve ever really wanted to do with their supermajority is raise your property taxes.”

According to Wolfe, ACA 8 is a direct attack on Proposition 13 because it undermines the one percent property tax cap. Any bonds or special taxes approved by voters are added onto property tax bills ‘below the line’ and are separate from Prop. 13’s stable one percent threshold.

This is why Californians commonly pay 1.2 or 1.3 percent on your property tax bill. Lowering the two-thirds threshold would mean this amount will go even higher.

“For evidence of what happens when the threshold is lowered, look to Proposition 39 school bonds,” Wolfe said. “Hundreds of millions of dollars of bonds have been approved across California in the last 12 years that would not have occurred with a two-thirds vote.”

Prop. 39 was passed in 2000, specifically to reduce the threshold required to pass local California school district bond issues from a 2/3rds supermajority vote to a 55 percent supermajority vote. “Prior to the passage of Proposition 39, about 60% of local school bond ballot questions succeeded in getting the previously required 2/3rds vote. In the wake of its passage, about 75% of local school districts are passing with the 55% requirement,” according to Ballotpedia.

Even with Prop. 13, California is only 14th in combined state-local per capita property tax payments according to the Tax Foundation. “If ACA 8 clears the Legislature and is approved on the statewide ballot, this will move property taxes closer to the number one rank we already hold in other broad-based tax categories like income taxes, sales taxes, and gas taxes,” Wolfe said. “Only property owners will pay for these bonds over 30 years but everybody gets to vote on them, making the two-thirds vote of crucial importance.”

 Public infrastructure projects’ snowball effect

The language of “public improvements” listed in ACA 8 is incredibly broad. It does not just target public safety infrastructure facilities but targets streets and roads, sidewalks, transit systems, highways, water and sewer systems, parks and the furnishing and equipping of buildings,Wolfe explained. “The ‘life-cycle cost’ on this bond debt would be heinous,” Wolfe said.

“For those who say ‘Ah, let the people decide’ well, they have,” Wolfe added. “According to polls released this month, 62 percent of voters still support Prop. 13.”

“A recently released Field Poll showed well less then 50 percent of voters supported a change to lower the two-thirds vote threshold for special taxes under any circumstance.”

If ACA 8 passes, it will be unprecedented, Wolfe said.

By Katy Grimes

SACRAMENTO — The Senate Governance and Finance Committee on Wednesday passed six constitutional amendments to make it easier for local voters to pass various tax increases on property owners.

“California didn’t knowingly vote for centralized power,” said Sen. Lois Wolk, D-Davis, speaking about the passage of Proposition 13 in 1978, as she opened the committee hearing on the bills. Wolk, the committee chairwoman, echoed longtime critics of Prop. 13 that it reduced the ability of local governments to increase taxes, requiring the state government to step in and fund programs.

She said Prop. 13 has been around for more than 30 years, but it was time to change the law which has held property taxes in check since 1978. “Voters today ought to have a say,” she said.

Prop. 13 limited property taxes to 1 percent of the property’s assessed value, plus annual increases of up to 2 percent. When a property changes ownership, the new owner pays 1 percent of the newly assessed value.

Despite that, California by no means is a low-property tax state; it’s ranked 14th highest nationally, according to Jon Coupal, President of the Howard Jarvis Taxpayers Association.

Parcel taxes

Senate Constitutional Amendment 3 by Sen. Mark Leno, D-San Francisco, would lower the threshold for school district per-parcel property taxes from two-thirds to 55 percent. “SCA 3 provides parents, teachers and school districts with more local control and much needed flexibility in raising local education funding,” Leno said at the hearing. “The current two-thirds vote requirements for passage of local parcel tax allows a relatively small minority of voters to block a local education funding proposal that may have support of more than a majority of voters.”

All of the support for Leno’s bill came from other government agencies, associations, schools or public employee unions.

However, Leno did not address the influx of $7 billion in new tax revenue from Proposition 30, passed by voters in November, and sold as the fix-all to dwindling state education funds. Prop. 30 increased the income tax on individuals with income of $250,000 or more, and upped the sales tax on everybody in the state.

“We live in a state with the highest marginal tax rate, the highest sales tax, and we are not a low property tax state,” HJTA’s President Jon Coupal told the committee. 

Coupal said SCA 3 is a direct assault on Prop. 13 because it makes it easier to increase property taxes above Prop. 13’s cap of 1 percent.

In a recent poll by the HJTA, more than 53 percent of voters oppose the parcel property tax vote change, and only 35 percent support it. Approximately 11 percent were undecided.

“Moreover, a majority of those against don’t just oppose the change — they oppose it strongly. The intensity of opposition to lowering the voting threshold was nearly double what it was for those in support,” the HJTA reported. “Forty percent of voters ‘definitely’ oppose the idea of lowering the vote requirement, while just 21 percent say they would definitely support the change.”

The HJTA also found that opposition to changing the voting threshold was broad-based: 68 percent of Republicans oppose it, along with nearly 53 percent of Decline-to-State voters, while 44 percent of Democrats also oppose it. Fifty percent of Democrat women also oppose the change.

“This poll mirrors what we’ve been hearing from our members who are Democrats, Republicans and Independents. They oppose any further money grab from politicians — whether from Sacramento or the local level — and they oppose it strongly,” said Coupal. “Prop. 13 was established to protect homeowners from outrageous property tax increases, and that includes parcel taxes, which local politicians now want to expand to pay for their local spending.”

“The tax-and-spend lobby has been emboldened by the passage of Prop. 30 and it’s clear that the $50 billion tax hike didn’t sate their thirst for more money,” said Coupal.

In the survey, the question was posed to voters: “Proposition 13 limits California property taxes to one percent of the taxable value of property. Parcel taxes are property taxes above the regular one percent tax and, under Proposition 13, these parcel taxes require a two-thirds vote of local voters to be passed into law. Do you support or oppose lowering the vote requirement for local parcel taxes from two-thirds to 55 percent?”

Taxes, taxes, taxes

In addition to Leno’s SCA 3, HJTA lists the following bills as major threats to property owners. As with SCA 3, the bills were passed by the Senate Governance and Finance Committee Wednesday:

* SCA 4, Sen. Carol Liu, D-La Canada, and SCA 8, Sen. Ellen Corbett, D-San Leandro: “Lowers the threshold for the imposition, extension or increase of local transportation special taxes from the Proposition 13-mandated two-thirds vote to 55%. Most transportation special tax increases consist of very regressive sales tax hikes. These add to the burden of California taxpayers who already pay the highest state sales tax in the nation.”

* SCA 7, Sen. Lois Wolk, D-Davis: “Lowers the threshold from two-thirds to 55% in order to approve a bond to fund public library facilities. Lowering the threshold for school facilities to 55% has already resulted in billions of dollars of additional property tax payments that otherwise would not have been approved by voters.”

* Senate Constitutional Amendment 9, Sen. Ellen Corbett, D—San Leandro: Lowers the threshold from two-thirds to 55% to increase special taxes to fund community and economic development projects.

* SCA 11, Sen. Loni Hancock, D-Berkeley: “Lowers the threshold to 55% to allow for voters representing ANY local government entity to approve a special tax for ANY purpose. This is far and away the broadest application, and thus the most egregious, of these constitutional amendments.”

By Dave Roberts

The $89 million annual fire prevention fee imposed on rural Californians for the first time last year could, ironically, increase the chance that their houses will burn down in the event of a fire. The $135-$150 per home annual assessment, which critics believe is a tax, is having the perverse effect of making it more difficult for local fire districts to increase revenue in order to provide adequate fire protection.

That’s what has happened in the Placer Hills Fire Protection District, which covers 35 square miles in rural Placer County in the Auburn area. Ten years ago, the district placed a tax hike on the ballot, which passed easily with 73 percent of the vote. But when the district went back to the voters last November seeking an additional $83 per home annually to keep both of its fire stations open, it garnered only 53 percent of the vote, well short of the two-thirds needed to pass.

The voters who rejected it gave two reasons: 1) They had already paid $135 to the California Department of Forestry and Fire Protection, not realizing that Cal Fire is a separate entity from the Placer Hills fire department and that it’s possible that none of that money would directly result in increased safety for their home. 2) They felt they couldn’t afford to pay the total of $218 for two fire tax hikes in the same year.

That was the bad news from Placer Hills Fire Chief Ian Gow, speaking to the Senate Natural Resources and Water Committee on Tuesday in support of SB 17 by Sen. Ted Gaines, R-Rocklin, which seeks to repeal the fire fee.

Fire fee ‘decimates’ local protection

“All of us [California fire districts] are struggling financially,” said Gow. “That’s not a secret. My department has lost 12 to 15 percent of its budget over the last five years. That equates to two full-time fire positions. I only staff two fire stations. The likelihood of closing a station is very high. The problem there is that it could double our response times. As you may imagine, for fire departments the quicker we can get there is everything. If I have to close a station due to budget losses, I’m in deep trouble and my constituents are. So the inadvertent effect of this fire fee is to decimate local government’s ability to protect itself.

“The other two problems with the fee is that it doesn’t improve fire protection at all in my fire district. It does nothing to help us. Our citizens see it as double taxation. And, frankly, maybe a smaller effect, but I think it damages all of our reputations. It looks like we don’t know what we are doing from my level, with respect, up to yours. So we have real problems with this fee and we’d love to see it go away.”

Despite Gow’s testimony, SB 17 failed, gaining only three aye votes from the nine-member committee.

“I am extremely disappointed that the committee failed to pass this bill,” said Gaines in a press release. “It was an opportunity to make things right with the 825,000 Californians stuck paying the illegal tax. I would like to thank all of the constituents who came from across the state to testify in support of the bill. Their messages and testimony were impactful and made a difference. I vow to continue fighting this in every way possible and encourage those who have gotten stuck paying this phony fee to get in the arena and fight it too.”

The California Fire Chiefs Association has endorsed SB 17. Also on hand to support SB 17 were a half-dozen fire chiefs and officials from Camp Pendleton, Laytonville, Vacaville, and San Diego and Sacramento counties, along with scores of taxpayers wearing t-shirts with the slogan “Burned by the Fire Tax!”

The Howard Jarvis Taxpayers Association has filed a lawsuit seeking to overturn the fire assessment. HJTA representative David Wolfe told the committee that the fee is actually a tax because it does not provide a direct benefit to those paying it. If the court decides it is in fact a tax, then it would have required two-thirds to pass in the Legislature, which the enabling legislation, AB X1 29, did not receive due to strong Republican opposition.

Desert, condo examples show unfairness of tax

“We believe it can’t possibly be a legitimate fee because there is no direct benefit,” said Wolfe. “Just a couple of examples of plaintiffs in our lawsuit. There’s one individual who lives in a mobile home park in the middle of the desert with no landscaping around the mobile home park. And yet he has to pay the tax. There’s another individual, a property owner who lives next door to a casino. The homeowner has to pay the tax, but the casino does not. How is that fair?”

Also decrying the unfairness of the fee was Skip Daum, representing the Community Associations Institute, which represents homeowners associations throughout the state. He said that condominium owners are being hit with the $150 fee (the $135 fee is for those who are also paying a local fire tax), but that fee is only supposed to be assessed against the owner of a habitable structure.

“Condominium owners only own the air space inside the wallpaper, they don’t own the structure,” said Daum. “The homeowners association owns that structure.”

Condo owners are among the 87,000 property owners who have filed appeals of the fire assessment since it went into effect last August. Most of the appeals are based on the contention that it is an illegal tax. Those appeals are being automatically rejected, according to a Cal Fire spokesman.

The illegality of the tax is also Gaines’ main justification for repealing the assessment.

“If it’s illegal, we shouldn’t be collecting it,” he told the committee. “That will be sorted out in the courts. All of us as taxpayers pay state taxes for Cal Fire. It has always been their responsibility in these state responsibility areas to pick up that obligation. Now if you have got communities that are stepping forward and wanting to pay for their own fire departments, we have put a huge damper on that opportunity now because people are paying a [Cal Fire] tax.”

Where are the benefits?

Gaines’ other justification for SB 17 is that rural residents are not seeing the benefits for their money.

“We’ve had no evidence that there’s been any increase in manpower or fire engines from Cal Fire,” he said. “The discussion and debate we are having would be very different if this was a fee and we knew exactly what we would be getting for the fee. It might be defensible. Clearly we need more manpower and equipment around Lake Tahoe. I’m very concerned about that. We are having another dry year. If we were clear on what we are getting for that fee, we might not be here. We would be having a different discussion on whether it was worthy or not. I have supported fees historically in this body.”

According to AB X1 29 and regulations adopted by the Cal Fire board, the fee will fund a variety of fire prevention services, including defensible space inspections around structures, fuel breaks for staging firefighting equipment, brush clearance around communities and improving forest health to improve resiliency to wildfires.

But, as previously reported by CalWatchdog.com, the funds can pretty much be used for any projects or activities that the board labels “fire prevention.” That leaves open the possibility of the money being abused, as occurred with a $3.66 million slush fund that the Los Angeles Times revealed earlier this year to Cal Fire’s embarrassment.

Cal Fire did not send a representative to the committee meeting to defend the fee or explain how it is spending the $73 million that has come in so far.

That concerned Sen. Hannah-Beth Jackson, D-Santa Barbara, who told Gaines, “You have raised some concerns, and I do think they need to be addressed. [There] are very legitimate questions and concerns that people have about how they are conducting and using these funds.”

But Jackson voted against SB 17, arguing that it’s premature to legislate the issue before the court has ruled on the legitimacy of the fire assessment. She’s also concerned about leaving Cal Fire short of funds to provide adequate fire suppression.

“I come from a district that tends to burn down pretty regularly, Santa Barbara, Ventura counties,” she said. “I’ve been evacuated [from my home] twice in the last six to eight years. Obviously this [fee] has some serious problems. People are paying all this money and not understanding what the tax is. I’m not sure I do either. But … how are we going to keep funding the services we so desperately need, clearing defensible space and making sure we are doing everything in advance of a fire to make sure we don’t have fires, or at least their impact is minimized?”

Her concerns were shared by several other senators, leading to the bill’s defeat.

Other legislation targets fire assessment

But two other bills seeking to kill the fire prevention assessment are due to be heard in committees this legislative session: AB 23 and AB 124. In addition, Gaines has two other bills limiting the assessment. SB 147 would exempt certain low-income residents from having to pay the assessment. SB 125 would exempt property owners who are also paying for local fire services, which includes more than 95 percent of the fee payers.

And AB 468 by Assemblyman Wesley Chesbro, D-North Coast, would replace the fire fee with a 4.8 percent surcharge on all property insurance in California that would be used by Cal Fire, the California Emergency Management Agency and the California Military Department.

By Dave Roberts

It hasn’t been a great year for the California Department of Forestry and Fire Protection. In January, the Los Angeles Times revealed that for seven years Cal Fire has been hoarding a slush fund that grew to $3.66 million. In February, the Sacramento Bee reported that Cal Fire fees that were supposed to be used for fire prevention measures had instead been used to investigate wildfires, according to the legislative counsel.

And earlier this month, the Howard Jarvis Taxpayers Association served Cal Fire and the state Board of Equalization with a lawsuit seeking to nullify Cal Fire’s $150 annual fee (or tax) on homeowners in mostly rural California for fire prevention. In addition, three bills have been introduced by Republicans in the Legislature seeking to do likewise.

The slush fund was a major black eye for Cal Fire. Instead of following the law by depositing money from legal settlements into the state General Fund, fire officials put it into the care of the California District Attorneys Association. In addition to paying CDAA a fee to hold the money, fire officials spent it on digital cameras, evidence sheds, GPS equipment, metal detectors and a conference at a Pismo Beach resort, among other expenditures.

Cal Fire faces bipartisan fire over slush fund

Coming on the heels of the revelation of the state Department of Parks and Recreation’s secret $54 million slush fund, Cal Fire was pilloried on editorial pages up and down the state:

— “Once again, California residents have been asked to pay higher taxes to help revenue-challenged state agencies fund important services — only to learn that those agencies had hidden large sums of money in secret accounts to keep it away from public scrutiny,” editorialized the Orange County Register.

— “Its arrogance underscores the larger issue: The money doesn’t belong to some bureaucrat with a badge. It belongs to the people,” lectured the Sacramento Bee.

Gov. Jerry Brown was quoted in the Bee calling the slush fund “a relatively boring story, to tell you the truth.” But the governor added that he would look into it. Senate Republican Leader Bob Huff, R-Diamond Bar, responded that “’boring’ is the last word I would use to describe these very disturbing revelations of hidden funds.”

Cal Fire spokesman Dennis Mathisen said in an interview that there was no effort to conceal the fund.

“The reality is that the fund had been publicly known,” he said. “We initiated our own audit of the fund a few years ago. The audit tried to determine the appropriate way of administering the fund. We are going through the process of re-evaluating it and determining the correct method of administering the fund.”

Scathing audit was three years old

Apparently that re-evaluation process has been going on for more than three years. The 26-page audit report, which was issued in November 2009, contains numerous criticisms of the way Cal Fire was handling the money:

— The funds collected from legal settlements were not reported to the Cal Fire Departmental Accounting Office or the Law Enforcement Program, and did not become part of the state’s accounting system.

— The money was dubbed a “Fire Investigation Trust Fund” — but was never placed in a trust account — in order to ensure it wouldn’t go into the state’s General Fund. “It is not clear what authority Cal Fire has to separate the Fund money from State money,” the audit states.

— There was no documentation of how the fund committee made its decisions on spending the money.

— State purchasing guidelines were not followed for hundreds of thousands of dollars spent on equipment.

— Travel expenses for training conferences were improperly documented, including numerous overcharges for lodging and unapproved travel to conferences in other states.

Slush fund depicted in benign light

Mathisen defended the expenditures, saying, “The sole purpose of that fund is to help support fire investigation-related things such as equipment and training. That involves Cal Fire investigators, local agency investigators, district attorneys.” The Pismo Beach conference focused on fire investigation training, he said, adding that “the hotel charged the typical government rate, which is lower than the standard rate.”

Mathisen also disputed the Bee’s report that fire prevention fees were not supposed to be spent on wildfire investigations.

“One of the fire prevention activities that’s mentioned in the law, it’s very clear that it includes the activities involved in fire investigations,” he said. “We look at the act of investigating fires and determining the cause, whether negligence or a crime such as arson. [If arson is suspected] we go through case development and district attorneys to prosecute. In the case of accidents, [investigation] helps us educate the public on how to prevent those things from happening in the future.”

The enabling legislation for the fire prevention fee, ABX1 29, does not specifically cite wildfire investigation as one of the uses for the funds. Money can be spent on public education, fire prevention projects and activities as well as fire severity and hazard mapping.

But there is no definition for what constitutes a “fire prevention project.” The legislation leaves it up to the Cal Fire board to determine that. In essence, the fire prevention fee, which was projected to total as much as $89 million annually, is potentially another slush fund for Cal Fire officials to use as they see fit as long as they can call it a fire prevention project or activity.

The goals of the Howard Jarvis lawsuit

And that’s what concerns the HJTA, which filed its class-action suit in Superior Court in Sacramento in October.

“This tax was dreamed up by politicians in Sacramento who are so desperate for revenue that they were willing to ram this through the Legislature without the proper two-thirds vote,” said HJTA President Jon Coupal in a press release. “The fire tax is a direct violation of Prop. 13. It is our goal to overturn this tax, prevent the politicians from taking more money from hardworking people for a program they were already paying for, and help taxpayers to get a refund from the government.”

The suit argues that the fire prevention assessment does not fall under the state constitutional definition of a “fee.” Therefore, it’s a tax requiring two-thirds approval in the Legislature, which it did not receive due to strong Republican opposition.

Article 13 A, section 3, subdivision (b) of the California Constitution defines a tax as “any levy, charge, or exaction of any kind imposed by the state” unless it’s imposed for a specific benefit, privilege, service or product provided directly to the payer that is not provided to those not charged, and which does not exceed the reasonable costs to the state of providing the benefit, privilege, service or product.

It’s likely that state attorneys will argue that fire prevention fits the definition of a fee instead of a tax, because it’s: 1) a specific service provided directly to people living in the mostly rural 31 million acres of California that are in Cal Fire’s State Responsibility Area, 2) that it is not provided to people outside of that area who are not charged a fee, and 3) it does not exceed the cost of providing that service.

A version of that argument was made by the author of ABX1 29, Assemblyman Bob Blumenfield, D-Los Angeles, on the Assembly floor just before the bill was approved on June 15, 2011.

“This approach has long been supported by the LAO [Legislative Analyst’s Office],” he said. “It reduces the financial exposure of the state to fight fires in the State Responsibility Areas, especially at a time when local governments continue to approve developments that increase fire risk. … We worked very closely when the Senate sent this over with leg[islative] counsel. And the key distinction here [making this a fee instead of a tax] is that it deals with prevention rather than protection. And so it’s not replacing existing services. But there’s a direct nexus. And that’s why this is an acceptable bill.”

Prediction of fire tax’s demise

Blumenfield was responding to then-Assemblyman Kevin Jeffries, R-Lake Elsinore, who predicted the fire assessment would soon be doused.

“We’ve seen this bill before,” he said. “At least I have over previous terms here. A funny thing happened: it failed in previous versions. When it was a $50 tax — you can call it a fee — but when it was a $50 tax it required a two-thirds vote. Now that it has moved to a $150 tax, somehow it’s been changed to a majority vote. I’m wondering if the leg[islative] counsel has issued a new opinion reversing their previous opinions that said this was a tax. It clearly violates Proposition 26 [requiring two-thirds support for tax hikes], and will last maybe a week at best until any number of interest groups, property rights proponents, any group out there who just happens to have a spare moment, and this bill will be dead. This tax will die a fast, quick death.”

Despite Jeffries’ assurance, the assessment is very much alive and well nearly two years later. The first billing for about 750,000 habitable structures was sent out from August through mid-December last year (in alphabetical order by county). A little over $73 million has been collected so far.

That’s short of the estimated revenue because 20 percent of respondents have declined to mail back their payments. More than 87,000 have filed an appeal. About 71 percent of the appeals, which were based on the fee being an illegally passed tax, were denied, according to Mathisen. More than 12,000 appeals were granted, however, as those assessments were based on misinformation from incorrect records.

“When this law was created there was no database in existence that identified all habitable structures in the SRA,” said Mathisen. “That was a significant task to put together that database. So we knew that there were going to be some inaccuracies. We are making those corrections as we move along.”

Fighting fire tax: The big picture and at individual level

The second round of billing for the current fiscal year was due to start in April. But it will be delayed, according to the Associated Press, to allow more time to sort through the thousands of complaints stemming from the initial billing.

In the meantime, three bills seeking to kill the fire prevention assessment are due to be heard in committees this legislative session: AB 23, AB 124 and SB 17. Click here for more information on the assessment from Cal Fire’s perspective. For the HJTA’s take, including instructions on filing an appeal, click here.