CALTAX COMMENTARY: With Local Government Collecting Record Revenue, Why Are Voters Facing Hundreds of Tax Measures in November?

The budget of the State of California is $202 billion.  The actual, full budget is north of $250 billion—lots of tax increases in the budget.  Brown also took money from health care, Prop. 56, and gave it to his favorite special interests.  Yet, the State and local government want increased taxes, more bonds and bigger spending programs.  You are being used as an ATM.

“When Californians vote in the November election, they will choose a new governor, decide 11 statewide propositions and face hundreds of local tax measures.

On the November ballot alone, there are 254 local tax measures – a 65 percent increase compared to the 2014 gubernatorial election – along with more than 100 bonds that would be repaid with property tax increases. Earlier this year, voters approved 55 of 85 local tax measures.

The influx of local taxes comes during of a time of steady economic growth and fiscal prosperity in California. Since July 2009, the beginning of the economic recovery, California’s general fund budget grew from $89.5 billion to $138.6 billion, an increase of 54.8 percent. During the same period, California built up a $19 billion rainy day reserve. “

Your pay check is being used to payoff the special interests and totalitarians.  You work for the government—the government does not work for you.  Get used to it, stop it or leave the State.

taxes

CALTAX COMMENTARY: With Local Government Collecting Record Revenue, Why Are Voters Facing Hundreds of Tax Measures in November?

 

By Dustin Weatherby, CalTax Research Analyst, 10/12/18

 

When Californians vote in the November election, they will choose a new governor, decide 11 statewide propositions and face hundreds of local tax measures.

On the November ballot alone, there are 254 local tax measures – a 65 percent increase compared to the 2014 gubernatorial election – along with more than 100 bonds that would be repaid with property tax increases. Earlier this year, voters approved 55 of 85 local tax measures.

The influx of local taxes comes during of a time of steady economic growth and fiscal prosperity in California. Since July 2009, the beginning of the economic recovery, California’s general fund budget grew from $89.5 billion to $138.6 billion, an increase of 54.8 percent. During the same period, California built up a $19 billion rainy day reserve.

The benefits of economic expansion have filtered down to local jurisdictions as increased property and home values resulted in more property tax revenue.

According to the California Association of Realtors, the median home price grew from a 2011 low of $286,040 to $502,250 in 2016, a 75 percent increase. During the same period, there were 2.5 million home sales in California.

With Proposition 13 property taxes based upon a property’s acquisition value, the activity in the real estate market resulted in higher property tax revenue that can be used by local government to support police, fire, parks, libraries and other vital local services.

In 2010, voters approved Proposition 26, which strengthened the definition of a tax. Yet local taxes and fees still increased by $47 billion, a 36.9 percent increase, according to data compiled by the California Tax Foundation.

With increased tax revenue and economic growth, why are local governments asking voters to approve more taxes?

A report by the League of California Cities notes that city pension costs will increase more than 50 percent by the fiscal year 2024-25, and will reach “unsustainable levels.” The report states: “Often, revenue growth from the improved economy has been absorbed by pension costs.”

Rising pension costs will require cities to nearly double the percentage of general fund dollars they pay to the California Public Employees’ Retirement System. Cities are expected to spend approximately 15.8 percent of their general fund budgets on pensions, with a quarter of cities anticipated to spend more than 18 percent by 2024-25.

Looking ahead, local governments will have to prioritize spending and improve efficiency. There are no guarantees that taxpayers will authorize additional taxes.

Of the local taxes on the November ballot, 171 are general taxes, meaning local governments have full discretion on how to spend revenue generated by the tax.

The recent California Supreme Court ruling in Upland v. California Cannabis Coalition left open for interpretation the vote threshold for local taxes. While taxpayers believe the existing thresholds – a two-thirds majority for special taxes or a simple majority for general taxes – are still the law of the land, some local governments are trying to get around the taxpayer protections. For example, the San Francisco city attorney interpreted the ruling to mean that any tax measure placed on the ballot via the local initiative process requires a majority vote regardless of how the revenue would be used.

Two San Francisco supervisors used the initiative process to place Proposition C, a gross receipts tax increase to support homeless housing, on the June ballot. Under normal interpretations of California tax law, this special tax required a two-thirds vote. However, under a questionable interpretation of the Upland decision, the proposition needed only a simple majority vote.

This interpretation of the court ruling creates a dangerous and immediate precedent for California taxpayers. Unless we work together to preserve taxpayer protections, deep-pocketed non-governmental entities will begin proposing higher taxes via the initiative process to skirt the protections we have worked so hard to achieve.

It’s time for taxpayers to work together to reform local taxes, ensure tax dollars are spent wisely, and make sure the next gubernatorial election ballot doesn’t include even more local taxes with even fewer safeguards for the hard-working Californians who pay the tab.

 

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.