Let’s Educate the Voters About Proposition 13

VotedThis week, progressive interest groups announced they had sufficient signatures to qualify an initiative for the 2020 ballot that is a direct attack on Proposition 13. Specifically, this so-called “split roll” initiative would raise property taxes on the owners of business properties to the tune of $11 billion every year, according to the backers. Because many small business owners rent their property via “triple net” leases, they too would be subject to radical increases in the cost of doing business.

Although there is a statewide election this November, the “split roll” measure will not appear on the ballot until 2020 because the proponents, either intentionally or not, did not submit their signatures in time for the 2018 ballot. They say they anticipate a better voter turnout in two years, which in itself may be wishful thinking. Ben Grieff, a community organizer with the ultra-progressive group Evolve, also said that the later election would be necessary to lay the groundwork for “a long two-year campaign” and that, “we need all of that to educate people.”

Well, educating people about Prop. 13 cuts both ways. And if past campaigns and polling are any indication, the more Californians learn about Prop. 13, the more they like it.

So let’s start today’s lesson with an overview of a class we’ll call “Why Prop. 13 is Good for California.” Here are the benefits of it in a nutshell.

Prop. 13 limits the tax rate on all real estate in California to 1 percent. Increases in the taxable value of property — often referred to as the “assessed value” — are limited to 2 percent per year. This prevents “sticker shock” for property owners when opening their tax bills compared to the previous year’s bill. Property is reassessed to full market value when it is sold. This system of taxing property benefits homeowners, because Prop. 13 makes property taxes predictable and stable so homeowners can budget for taxes and remain in their homes.

Renters benefit because Prop. 13 makes property taxes predictable and stable for owners of residential rental property, and this helps to reduce upward pressure on rents. If one believes that California’s current housing crisis is bad now, imagine how high rents would be if the owners of the property were forced to pass along their higher tax bills to their tenants. In truth, Prop. 13 increases the likelihood that renters, too, will be able to experience the American dream of homeownership.

Business owners, especially small business owners, benefit because Prop. 13 makes property taxes predictable for businesses, and it helps owners budget and invest in growing their businesses. This helps create jobs and improves the economy. California has ranked dead last among all 50 states in business climate by CEO magazine every year for more than a decade. Prop. 13 is one of the only benefits of doing business in California. …

Click here to read the full article from the Daily Breeze

Protecting taxpayer interests in the fire liability fight

Thomas FireOne of the most contentious political battles currently being waged in Sacramento during the final two weeks of the legislative session is over the extent to which investor-owned utilities, such as Pacific Gas & Electric, should be held liable and have to compensate property owners for the damage inflicted by the horrendous wildfires that are still burning across the state. Average California taxpayers and homeowners probably sense this is a big deal because of extensive media coverage, but may not know what to think about it.

Here’s what’s going on.

First, there is little dispute that the number of wildfires and their intensity has increased dramatically in recent years. Investor-owned utilities, including PG&E as well as San Diego Gas & Electric, have been forced into big legal settlements because many fires were allegedly caused by electrical wires or other equipment. The utilities, however, have attempted to shift some of the blame to natural causes such as climate change, which they argue produces the conditions for more catastrophic fires. (More recently, blame has also been placed at California’s mismanagement of public lands, which is undoubtedly a contributing cause).

Determining liability for wildfires is such a hot issue — no pun intended — because of the amount of money involved. San Diego Gas & Electric was facing more than 2,500 lawsuits and thus paid $2.4 billion in settlements for its role in three 2007 fires that burned over 1,500 homes, took human lives and burned 368,316 acres in San Diego County. Fires still burning as this column is being written have inflicted even greater damage and loss of life.

These damages have rocked PG&E and SDG&E.  According to a January blog post from the Energy Institute at Hass, California utilities lost $20 billion in market capitalization after last year’s fires.

In an effort to lessen their liability, the utilities say a constitutional doctrine called inverse condemnation has compelled them to settle lawsuits from property owners, firefighting agencies and local governments. They believe the doctrine entitles them to recoup some of the expenses by raising rates, but California’s Public Utility Commission has balked.

Although the utilities’ efforts to offload some of their liability for fire damage is understandable, taxpayer advocates are opposing the shift as it diminishes their own property rights.  The Howard Jarvis Taxpayers Association views limited taxation on property as a natural extension of property rights generally.  For example, following the infamous Kelo v. New London decision by the United States Supreme Court allowing the use of eminent domain for private-to-private transfers of property, HJTA fought for both a state constitutional, as well as statutory, prohibition of those takings.  Other property-rights issues of major concern to taxpayer advocates include the attempt to expand rent control in California and ensuring that just compensation is paid to property owners for traditional exercises of eminent domain, especially for boondoggle projects like California’s High Speed Rail project. …

Click here to read the full article from the Pasadena Star News

California’s leaky bucket theory of public improvement

The Tehama-Colusa Canal transports water to irrigate northern California agriculture and communities.

Unfortunately, Californians have come to expect significant levels of waste and incompetence when it comes to government programs. Just last week, we learned that the “new” $290 million computer system for the California Department of Tax and Fee Administration — in the works for over a decade — was having significant problems with tax filers trying to submit their quarterly returns. Despite California being home to Silicon Valley and the best high-tech minds on the planet, the State of California has a sorry history of failure when implementing big computer projects.

Although Will Rogers famously said it’s good that we don’t get all the government we pay for, Californians surely want more value for the outrageous level of taxation under which they are burdened. Other states provide better and higher levels of public service with much smaller tax burdens.

If one is carrying a bucket of water from a trough to a burning barn, it is best to have a bucket that doesn’t leak. If not, you’ll arrive at the fire with an empty bucket. When Sacramento carries taxpayer dollars to some popular project or program, they do so with a leaky bucket that virtually ensures that few dollars go to the intended target.

A story in the Sacramento Bee caught our eye last week about 2014’s Proposition 1, a $7.1 billion water bond measure approved by the voters. Not surprisingly, the bond measure was widely supported by a broad range of interest groups and received only token opposition. Given the high priority water has in the hearts and minds of Californians, such support is understandable.

However, much of the support for that bond was driven by the need for increased water storage, especially surface water storage, i.e., dams. So, although the measure passed fully four years ago, where are we on the construction of the promised projects and how much funding will they receive? In other words, how much leakage is going on here?

The biggest surface water project to be financed is the Sites Reservoir, in an area north of Sacramento, designed to store water from the Sacramento River.  For water users, especially in agriculture, the Sites project has been on the top of their wish list for decades. The good news is that the project will get the lion’s share of the $2.7 billion of Prop 1 proceeds dedicated to water storage. But the California Water Commission, which has been openly hostile to new dams, only awarded $816 million of the $5.2 billion cost of the project. And even that paltry amount was awarded after political pressure was exerted on the Commission which had originally recommend zero dollars for new surface water storage. …

To read the entire column, please click here.

California’s Property Tax Postponement program aids low-income seniors

property taxFor Californians who are struggling to pay property tax bills that are rising ever higher due to the increasing number of local bonds and parcel taxes, help may be available.

Property taxes are held in check by Proposition 13, passed by voters in 1978. It limited the annual increase in the assessed value of a property and cut the tax rate to 1 percent statewide. Prop. 13 has helped millions of Californians keep their homes by keeping property taxes predictable and affordable.

But keeping property taxes in check doesn’t always keep property tax bills in check. That’s because extra charges for voter-approved debt or special taxes can be added to property tax bills, and those can really add up. This can become a terrible burden for homeowners who live on fixed incomes, and may even force some to sell their homes because they can’t afford to pay the taxes.

Fortunately, the state of California has restarted the Property Tax Postponement program, allowing homeowners who are at least 62 years old, are blind or have a disability to defer the current-year property taxes on their principal residence if they meet certain criteria.

Before the Legislature ended the Property Tax Postponement program in 2009 amid budget cuts, nearly 6,000 homeowners throughout the state were able to benefit from it. Many had been in the program for 20 years or more and the majority were over 70 years old. In the last year of the program before it was cut, 208 people who claimed its assistance were over 90 years old.

In 2014, legislation was passed to restore the program, and it started up again in the fall of 2016.

To qualify, applicants must have 40 percent equity in their home and an annual household income of $35,500 or less. Other requirements also apply. For example, homeowners who have taken out a reverse mortgage are not eligible.

Homeowners who are accepted into the program may defer their current-year property taxes. It’s actually a loan from the state, with an interest rate of 7 percent per year. The state places a lien on the property until the loan is repaid, but repayment is not due until the homeowner moves or sells the property, transfers the title, refinances, defaults on a senior lien, obtains a reverse mortgage or passes away. …

Click here to read the full article from the Orange County Register

Withdrawal of the Taxpayer Protection Act could haunt the American Beverage Association

TaxesBy now, political observers have heard how a series of negotiations in Sacramento resulted in three initiatives slated for the November ballot being withdrawn by their respective proponents. The blame (or credit, depending on your perspective) for these deals has been attributed to a 2014 bill authored by then-Senate Leader Darrell Steinberg, D-Sacramento, which allows proponents to withdraw an initiative even after it has qualified for the ballot. It was believed that this reform would result in more compromises being hammered out with the Legislature on contentious issues.

One of the measures withdrawn last week was the Taxpayer Protection Act, which would have strengthened a number of existing constitutional provisions including the two-thirds vote for local taxes. While a broad coalition of business and taxpayer groups backed the measure, and even provided significant input into its drafting, the lion’s share of financial support came from the American Beverage Association.

Faced with massive opposition from local governments and public-sector labor organizations, ABA decided to strike a deal with the Legislature to prohibit any future local soda tax increases between now and 2030 in exchange for removing the Taxpayer Protection Act from the ballot. The decision may also have been based, at least in part, on the perception that other potential financial backers for the campaign would be focused on other initiatives on the November ballot.

Nonetheless, ABA’s decision to withdraw the measure in exchange for limited protection for a specific industry blindsided many interests in the Capitol, including taxpayer organizations which were excited for an opportunity to campaign for strong taxpayer protections in an absurdly high-tax state.

Whether the Taxpayer Protection Act would have passed will be the subject of speculation for years. But it’s now a moot point. What isn’t moot, however, is whether the deal itself, and the similar negotiated agreements on measures addressing issues related to lead paint and consumer privacy, are a reflection of good government or whether they lead to “extortion light.”

Interestingly, political commentators have viewed these negotiated withdrawals differently. Some see them as all that is wrong with Sacramento while others see them as forcing the legislature to do its job. Most fall in the first category. Joel Fox, who puts out the Fox and Hounds blog, wrote a piece entitled “Weaponizing the Initiative Process.” Long time Sacramento Bee columnist Dan Walters, who now writes for CalMatters, calls what happened “genteel extortion.”

On the other hand, veteran Los Angeles Times columnist George Skelton liked the fact that three potentially confusing measures have been taken off the ballot. He also observes that “unlike … initiatives, bills can later be easily tweaked by the Legislature to fix flaws.” But Skelton’s observation reveals another downside to these deals: Will the parties keep their word?

The decision by ABA to withdraw the Taxpayer Protection Act resulted in the enactment of legislation that they presumably believed would protect their interest for more than a decade. But almost immediately, interest groups, including health organizations that have targeted “sugary drinks” for years, filed a new initiative measure specifically targeting that industry. And unlike the Taxpayer Protection Act, which had broad support from an array of business and taxpayer groups, a measure seeking higher taxes just on soda might leave ABA alone in the opposition camp. …

Click here to read the full article from the Long Beach Press-Telegram

California’s Budget Process Should Worry Every Taxpayer

California Gov. Jerry Brown points to a chart showing the growth of the state's Rainy Day fund as as he discusses his proposed 2018-19 state budget at a news conference Wednesday, Jan. 10, 2018, in Sacramento, Calif. Brown proposed a $131.7 billion state spending plan, dedicating $5 billion toward the fund. (AP Photo/Rich Pedroncelli)

Let’s face it, when it comes to the state budget of California, most citizens suffer from MEGO (My Eyes Glaze Over).  Because even public finance experts are confused by the thousands of pages of budget documents, it’s no wonder that citizen taxpayers don’t stand a chance. Besides, normal people are too busy working hard to pay for all the spending increases reflected in the budget.

Nonetheless, passage of the state budget remains one of the most important functions of the Legislature because it reflects the state’s spending priorities for years in the future.  Here are some key takeaways that should concern every California taxpayer.

First, government spending is out of control. While projected revenues are up eight percent – a good thing – from a year ago, expenditures continue to accelerate at a faster clip, up by nearly eleven percent to a record $138 billion budget. When other state funds, including special funds, are added to the total, nearly $200 billion in state funds will be spent in this budget. Legislators will argue that some of these expenditures are going to bolster a rainy day fund to protect against an economic downturn. While this fund is also at a record $14 billion, this will hardly protect state programs even in the event of even a moderate recession.  Second, we doubt that the spending priorities of politicians reflect what taxpayers think are important.  For example, this year’s budget includes a billion-dollar plan to completely remodel the State Capitol, while the state continues to lose ground on nearly a trillion dollars of unfunded pension obligations.

Finally, as in prior years, the 2018-19 budget is a vehicle for numerous abuses. It is now common to enact politically motivated legislation as so-called budget “trailer bills” as a means to avoid any meaningful analysis and public hearings.  This column previously alerted readers to one such sneak attack, a precedent-setting tax on water that thankfully was beaten back – at least for now.  But two other proposed bills represent the worst of Sacramento special-interest politics.

Two years ago, the Howard Jarvis Taxpayers Association sponsored Assembly Bill 195 (Obernolte), a bill that increased transparency for local bonds and special taxes by requiring disclosure of the rate, duration and amount of revenue to be raised. AB 195 mandates that these important facts be included in the actual ballot label, typically the last thing voters read before deciding.

Now, education lobbyists and building trades groups are attempting to delay the implementation of AB 195 for local bonds by two years, to keep this important information from being presented to voters. In other words, our legislators are using a corrupt, non-transparent process to deprive local voters of transparency regarding the cost of bonds at the local level.  This is a double insult to taxpayers. …

Click here to read the full article from the San Bernardino Sun

The Outrageous Tactics Used to Keep the California Gas Tax

Gas PricesA few weeks ago this column addressed the issue of polling and how it can be manipulated and, even when it is not manipulated, how wrong it can be.  Still, candidates, consultants and the media do a lot of polling to test the viability of whatever it is they support or oppose.

Sen. Josh Newman’s recall election was a bitter fight. While polling suggested he was in trouble, those supporting the recall were well aware that polls can be wrong. But even recall proponents were surprised that the recall would prevail by a 59-41 percent margin. That wasn’t just a loss for Newman. It was a trouncing.

This past week, in his political swan song, Newman vented against the recall effort on the floor of Senate.  Incredibly, Newman stated, “I can’t imagine wanting to win so badly that I would ever do, in the pursuit of partisan advantage, what has been done here.”  In light of how Democrats skewed the political process during the recall effort, Newman’s complaint is laughable. Let’s review.

Not once, but twice, Democrats jammed through new laws changing the recall process specifically for the purpose of throwing Newman a political lifeline.  These were enacted as so-called “trailer bills,” last-minute, supposedly budget-related bills that are passed without any public hearings.  These were designed to delay what otherwise would have been a special election for the recall last November or December, a ploy that succeeded in delaying the issue to June.  Because the purpose of the 100-year-old right to recall is to get a rapid resolution of whether a politician should continue in office, the claim that the new laws were “improving” the process was ridiculous.

Then, adding insult to injury, the ostensibly neutral Fair Political Practices Commission adopted a new rule allowing Newman unlimited campaign contributions from his fellow Democratic senators.  This despite the fact that they denied this right to a Republican senator just a few short years ago.

For Newman to upbraid Republicans on the floor of the California Senate for failing to defend him suggests that he has totally forgotten the Banana Republic tactics that were deployed to save his political career. It also demonstrates how disconnected he was from his constituents, who really were angry over his vote to ensure that California had the highest gas and car taxes in the nation.  His political tone deafness was further revealed by more anti-taxpayer votes for single-payer healthcare, a recording tax to fund housing and a vote for cap-and-trade. …

Click here to read the full article from Pasadena Star News

After all these years, liberals are still wrong about Proposition 13

Howard-JarvisForty years ago this week, California voters began the modern tax revolt movement that spread across America like wildfire. The idea that citizens could take back control from an overreaching government helped to propel Ronald Reagan to the presidency. Reagan, who had a close friendship with Howard Jarvis, took his message of limited government to Washington and his message of freedom to the world.

Proposition 13 cut property taxes, put limits on their rise, and toughened the requirements for passing other tax increases. It passed overwhelmingly in June 1978, and ever since, liberals have failed to acknowledge how wrong they were about it — both in terms of politics and policy.

Two months before the vote, California’s then Gov. Jerry Brown (version 1.0), was quoted in the New York Times as saying “I don’t think there is one credible observer who thinks Proposition 13 will endure over the long period.” Forty years later, it’s Brown who is heading into the political sunset while Proposition 13 continues to protect grateful California taxpayers.

So-called “experts” were also wrong in their dire predictions about the harm that would be inflicted on California if Prop. 13 were to pass. One of the TV commercials run by the well-funded opposition campaign featured a doom-saying UCLA economist who predicted that California would be plunged into a deep recession if voters approved the measure. But in the years immediately following passage, California had an extraordinarily booming economy.

Progressives like to perpetuate another falsehood about Prop. 13 in their ceaseless efforts to divide and conquer the taxpayer coalition that supports the law. They seek to target the owners of business properties who, like homeowners, benefit from predictable taxes under Prop. 13. A false argument is advanced that during the 1978 campaign, voters weren’t told that Proposition 13 protections would be extended to business properties as well as homes.

This simply isn’t true.  The opponents of Prop. 13 themselves repeated that fact throughout the campaign and, specifically, in the official ballot pamphlet.

Perhaps the granddaddy of all lies about Proposition 13 is how it “destroyed education” in California. This falsehood is repeated so often and with such vigor that it is accepted as established fact by liberal elites and mainstream media. For example, just a couple of weeks ago, Sacramento mayor and former Senate leader Darrell Steinberg blamed Prop. 13 for “years of cutbacks to arts funding in public schools.” This despite record revenues being pumped into education. …

Click here to read the full article from the L.A. Daily News

In Sacramento, Democrats are run by the unions

Unions2June 6 marks the 40th anniversary of voters’ overwhelming approval of Proposition 13, which has been protecting all California taxpayers ever since.

Some people mistakenly think Prop. 13 protects only homeowners, because it cut the property tax rate statewide to 1 percent and put a stop to uncontrolled increases in assessed value. But it did something else, too. It required voter approval of local tax increases and set the threshold for approval of special taxes at a two-thirds vote.

For 40 years, big-spending politicians have been looking for loopholes.

Take parcel taxes, for example. A parcel tax sounds like a tax on UPS deliveries, but it isn’t. It’s a tax on real estate parcels. Under Prop. 13, politicians can’t raise property taxes that are based on the value of property, but they figured out that they could add a flat tax to property tax bills if it wasn’t based on value.

Under Prop. 13, two-thirds of voters have to be convinced to approve parcel taxes.

Politicians figured out that the two-thirds threshold would be easier to reach if they exempted a lot of people from having to pay the tax. Certainly people who won’t have to pay a tax are more likely to vote for it. And politicians who vote for the exemptions can say they voted for a tax break, even though they were raising taxes at the time.

An example of this was the Legislature’s action in 2008 to exempt people on Social Security Disability from paying education parcel taxes. HJTA opposed this bill because it undermined the two-thirds vote requirement for parcel taxes established under Prop. 13. The more classes of people who are exempted, the more the two-thirds vote will be watered down, and the easier it is to raise taxes.

Taxpayers are hit twice by the exemption trick. Taxes are raised more often, but the exemptions mean the government receives less revenue. So the likelihood of other taxes being raised to make up the difference in the future is that much greater.

But when something is working for the politicians, it tends to stick around.

Politicians love picking winners and losers.  It means power over the lives of others and provides a great source of campaign contributions.

The “progressive” legislators who control California’s government favor government employee union organizations — the most powerful force in Sacramento. Every favor granted to public sector unions is a transfer of wealth from taxpayers and the private sector to government employees and the public sector.

Right now, the Legislature is considering a bill that would exempt teachers and education support staff from paying education parcel taxes. Senate Bill 958, which has passed the Senate and is now in the Assembly, was initially a statewide proposal but has been narrowed to target only the Davis Joint Unified School District in Yolo County.

For now. …

Jon Coupal is president of the Howard Jarvis Taxpayers Association.

Click here to read the full article from the Orange County Register

Proposals to ban internal combustion engines in California are a bad idea

carpool-laneThe latest battle in Sacramento’s war on California’s middle class is the push to ban the internal combustion engine.

Luckily, the effort has stalled.

The legislation that would have imposed the ban, Assembly Bill 1745, died last month, but bad ideas in California have a way of recurring like nightmares. We will see this proposal again, either as legislation next year or perhaps even as a ballot initiative. A number of so-called progressive candidates on the ballot this year have publicly stated they embrace this foolish idea.

The bill that was stopped, AB1745, would have prohibited the Department of Motor Vehicles from registering a new vehicle unless it was a zero emissions vehicle, beginning on January 1, 2040. Under the proposed law, a new car with an internal combustion engine could not legally be driven in California after that date.

A ban on internal combustion engines would certainly limit mobility and transportation options for millions of California families and businesses. And it would arbitrarily limit the development and use of advanced and efficient vehicle technologies, the kind that have already achieved great success in squeezing extra miles out of a gallon of gas.

Today, despite the availability of ZEVs, a substantial publicly funded rebate program and access to HOV lanes, ZEVs accounted for only 1.9 percent of the over 2,000,000 new passenger vehicles sold in California in 2016. And many of these sales are repeat sales to the same households, according to the UC Davis Institute of Transportation, raising the question of whether plug-in vehicles are experiencing widespread consumer rejection, outside of a limited group of true believers.

A ban on internal combustion engines is an attempt to force consumers into buying vehicles that they have decided are not best suited to their needs.

The better alternative is leveraging all available vehicle technologies, including efficient internal combustion engines, so that California can reach its environmental goals without banning or discouraging any technological innovations. …

Click here to read the full article from the OC Register