Is California really a low property tax state?

To hear progressives tell it, California’s property tax is way too low and needs to be increased to fund the critical needs of schools and local governments.  But the notion that Proposition 13 – enacted 40 years ago – has somehow “starved” local governments is nothing more than urban myth.  In virtually every year since 1978, the growth in property tax revenue has exceeded the combined growth in inflation and population.

While the consistent growth in property tax revenue is indisputable, that has not deterred Proposition 13’s detractors from arguing that, relative to other states, property owners in California aren’t paying their “fair share.”  Eschewing for the moment what constitutes “fair,” a part of the debate involves whether California is a high or low property tax state. And it is here that the saying “lies, damn lies and statistics” comes into full play. The reality is that there are many ways to measure tax burden and most can be manipulated to support some desired narrative.

Those who argue that California’s property tax burden is too high might be tempted to point out that California collects far more property taxes than any other state.  That is true, but it is also intellectually dishonest.  Our size and population is what generates the tax revenue and aggregate dollars collected simply do not reflect a fair measure of tax burden.

One measure, certainly more accurate than total dollars collected, is per capita property tax collections.  This is simply aggregate property tax revenue collected divided by population – a relatively easy calculation. Using this metric, it is clear that California is not a low property tax state.  The authoritative Tax Foundation ranks California 17th highest among the fifty states, which puts us almost in the top third in burden.

To read the entire column, please click here.

LAUSD’s Punishing Parcel Tax Proposal


LAUSD school busAmerica’s most dysfunctional school district has stepped in it again. The Los Angeles Unified School District (LAUSD), apparently coming to the shocking realization that there was no way they could pay for the horrible deal they just cut with the unions, has hurriedly placed on the ballot for June a new property tax that leaves no Los Angeles taxpayer unscathed.

That grassroots taxpayer interests would be opposed to the new levy is no surprise. But several business organizations, usually more tolerant of higher government spending — particularly for education — have had enough. Groups as diverse as the Howard Jarvis Taxpayers Association, the Los Angeles Chamber of Commerce, the Valley Industry and Commerce Association (VICA) and the L.A. County Business Federation (BizFed) have all announced their opposition. None of these organizations is anti-education. In fact, all are pro-education as long as there is demonstrable improvement in the education product we are all paying for. On this score, LAUSD falls way short.

At the core of the broad-based opposition is the abject lack of long overdue reforms at LAUSD.

The list of reasons to oppose the tax is long.

First, taxpayers would be wasting millions of dollars on a special election.

The LAUSD Board voted unanimously to put the tax increase before the voters in a special election to be held on June 4, 2019. The cost of the special election is $12.5 million.

The tax would add hundreds of dollars to tax bills and rents and would do so in a convoluted manner. Rather than a flat tax on every parcel — which would be bad enough — the proposed tax increase would be 16 cents per square foot of building improvements on properties within the district.

That’s $160 for every 1,000 square feet. Property owners (and tenants) should be sitting down when they do the math on this one.

Seniors are ostensibly exempt from the tax, but not from rent increases.

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What Recent Pension Ruling Means for California’s Taxpayers


pension-2Last week, the California Supreme Court issued a ruling in Cal Fire Local 2881 v. CalPERS, a case involving public employee pensions. For taxpayers, the decision was a mixed bag. On the plus side, the court refused to find a contractual right to retain an option to purchase “air time,” a perk that allowed employees with at least five years of service to purchase up to five years of additional credits before they retire. Under this plan, a 20-year employee could receive a pension based on 25 years of contributions.

On the negative side, the high court left intact, for now, the so-called California Rule, which has been interpreted as an impediment to government entities seeking to reduce their pension costs. The rule, unique to California, provides that no pension benefit provided to public employees via a statute can be withdrawn without replacement of a “comparable” benefit, even as deferred compensation for services not yet provided.

The unanimous 54-page opinion by the Supreme Court resulted in a wide variance of headlines and social media posts. The Associated Press read “California’s Supreme Court upholds pension rollback.” Ironically, a conservative reform group sharply criticized the decision for failing to repeal the California rule outright while another conservative policy organization called it a “victory for taxpayers.”

So what was it?

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Legitimate Lawsuit Against Trump? Or Political Posturing?


donald-trump-2The big news last week was the lawsuit filed by California and 15 other states challenging President Trump’s declaration of an emergency related to border security and the building of a physical barrier on the southern border. The reaction was a great deal of political hyperventilating from both sides of the political spectrum.

So, after everyone has taken a breath, what should rational taxpayers think about this lawsuit and the dozens of other lawsuits filed by California against the Trump administration?

Let’s stipulate that there are times when litigation is appropriate between states and the federal government. The United States is a constitutional republic with a political structure based on federalism. Brilliantly, our founding fathers (with some intellectual help from our founding mothers, no doubt) devised a system of divided government. Not only was the federal power divided into three branches, but substantial political power was reserved to the states via the Tenth Amendment.

Controversies between the federal government and the states have been bitter and, when one considers the Civil War, they’ve been violent as well. Fortunately, modern disputes between the federal government and the states involve lawyers, not bullets.

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Don’t Derail the Bullet Train Derailment


Gov. Jerry Brown, Anne GustEven before California’s High Speed Rail bond proposal appeared on the ballot in November 2008, the Howard Jarvis Taxpayers Association commissioned a study in conjunction with the Reason Foundation because of deep concerns about the project’s viability. The study, published in September 2008, just prior to the election, confirmed our worst fears. Specifically, the executive summary of the nearly 200-page document warned:

“The CHSRA plans as currently proposed are likely to have very little relationship to what would eventually be built due to questionable ridership projections and cost assumptions, overly optimistic projections of ridership diversion from other modes of transport, insufficient attention to potential speed restrictions and safety issues and discounting of potential community or political opposition. Further, the system’s environmental benefits have been grossly exaggerated, especially with respect to reduction of greenhouse gas emissions that have been associated with climate change.”

In the ensuing decade, it became increasingly clear that every negative prediction about the project came to be realized. Even initial advocates of the project, including a former chairman of the High Speed Rail Authority, turned against the costly boondoggle.

The capstone of criticism came at the end of 2018 when California’s own state auditor issued a scathing report excoriating the project’s mismanagement, waste and lack of transparency. To understand just how damning the HSR audit was, just consider the subtitle: “Flawed Decision Making and Poor Contract Management Have Contributed to Billions in Cost Overruns and Delays in the System’s Construction.”

To read the entire column, please click here.

Defending Direct Democracy and Defending Taxpayers


vote ballotsThe powers of direct democracy — initiative, referendum and recall — are powerful tools to control slow-moving or corrupt politicians. These powers are enshrined in the California Constitution for reasons that are just as compelling in 2019 as they were in 1911 when Gov. Hiram Johnson, seeking to suppress the absolute control the railroads had over the state Capitol, pushed to give ordinary citizens a “legislative battering ram” — using the language of the Supreme Court — to address issues that for whatever reason the Legislature refuses to address.

Political elites hate the initiative process. From their perspective it allows the great unwashed and unsophisticated to deal with matters such as taxation, victims’ rights, insurance and most importantly political reform. These are issues over which politicians strongly desire to exercise a legislative monopoly.

Like any political process, however, direct democracy can be abused. Some matters are indeed complicated and not well suited to a sound-bite campaign. Also, special interests with a lot of money can overwhelm the airwaves with TV and radio ads to convince a majority of voters (especially in a low-turnout election) to pass something they might later regret. Nonetheless, for taxpayers, direct democracy remains one of the few tools we have to protect ourselves.

Landmark initiative measures such as Propositions 13 and 218 have given taxpayers the kind of protection against greedy government entities that we would never have obtained but for rights granted through direct democracy. But taxpayers must do more than propose initiatives and convince voters to enact them. We must also defend them in court against never-ending assaults. For years, the Howard Jarvis Taxpayers Association has maintained a potent litigation capacity with three full-time lawyers and access to dozens more willing to defend not just taxpayer-sponsored initiatives but the very power of direct democracy itself.

And so it is that HJTA finds itself back before the California Supreme Court on an important direct democracy case.

To read the entire column, please click here.

Progressives Now Complaining About Gas Prices


Gas TaxOnly in California. Progressive policies in California have forced drivers to pay some of the highest gas prices in the nation. Now, a group of liberal legislators want the California attorney general to investigate why this is true.

Let’s recap what the progressives have inflicted on working Californians who are simply trying to get to work and get their kids to school and soccer practice. According to the California Center for Jobs and the Economy, gas prices dropped slightly in December but declined faster in other states. In the United States other than California, the average gas price was $2.26 per gallon. In California, it was $3.40, a premium above the national average of $1.144, a 50.6 percent difference.

California had the second-highest gasoline price among the states behind only Hawaii. Californians paid $1.48 per gallon more than consumers in Missouri, the state with the lowest price. That’s 77 percent more for the same tank of gasoline.

The Center also noted that “California’s fuel regulations and the isolated market created by those regulations continue to push the state’s cost premium up higher — a cost-of-living factor that in particular falls on lower-wage workers as they are forced to commute longer distances in order to find housing they can afford.” Those regulations include California’s unique cap-and-trade law and low-carbon fuel standards, rendering the production of gasoline an expensive and risky enterprise.

To read the entire column, please click here.

Stop Letting Sacramento Fool Us


Capitol“Fool me once, shame on you. Fool me twice, shame on me,” so the saying goes. Unfortunately, California voters have been fooled (aka lied to) so many times by our political leaders that perhaps they have come to expect it. For a politician to actually keep his or her word is now the exception, not the rule.

And it’s not just voters who get fooled. Interest groups and other officials are often snookered by those with more political power.  Several recent displays of this political behavior show beyond any doubt that promises made in Sacramento have an extraordinarily short shelf life.

The first example deals with California’s one-of-a-kind “cap and trade” law, a market-based regulatory system for incentivizing reductions in greenhouse gas emissions. Under this program, impacted industries must pay for emitting greenhouse gases by purchasing credits at auction. The program was set to expire in 2020, but in 2017 there was a big political push to extend “cap and trade” in a way that would impose another huge cost to refineries and utilities, which would then pass those costs to California drivers, truckers and electricity customers.

Surprisingly, many industries forced into the “cap-and-trade” auctions supported the extension. They did so because they were threatened by Gov. Jerry Brown, environmental extremists and powerful regulators that if they didn’t, they’d be hit with an alternative program run completely by the government bureaucrats at the California Air Resources Board. Taxpayer groups, small-business interests and most Republicans opposed the extension because it would further raise California’s already sky-high cost of living. In addition to the cost, there was nothing in the political deal that guaranteed CARB wouldn’t move forward with punishing regulations anyway. …

Click here to read the full article from the OC Register

Gavin Newsom’s Budget Calls for More Spending, Higher Taxes


Gavin Newsom budgetTo the surprise of absolutely no one, California’s new governor has proposed a state budget with billions in increased spending and lots of tax hikes. And, as an added bonus, he is proposing new mandates on businesses and local governments as well as depriving Californians of the right to vote on certain kinds of local debt. From the perspective of taxpayers, this is not a propitious start.

Gov. Gavin Newsom’s budget envisions spending $144 billion of general fund dollars, a 4 percent increase over former Gov. Jerry Brown’s last budget, which clocked in at $138 billion. To put this in perspective, general fund spending was less than $100 billion just six years ago. In California, state government is the No. 1 growth industry.

No California spending plan would be complete without new “revenue enhancements.” And the biggest item on this list is the imposition of the “individual mandate” for health insurance. Recall that President Obama’s so-called Affordable Care Act (which was anything but affordable) imposed a burdensome tax on millions of Americans. (Indeed, it was only the fact that the ACA imposed a “tax” that saved it from a constitutional challenge).

The good news is that Congress repealed the tax at the federal level. The bad news is that Gov. Newsom wants to reimpose it at the state level in order to save Covered California from imploding. The cost to Californians for a state-imposed individual mandate with a penalty?: $700 per person, which is projected to raise $500 million in new revenue.

To read the entire column, please click here.

What the High-Speed Rail Audit Really Means


Gov. Jerry Brown, Anne GustAlthough the midterm election was held on November 6th, the news media was absorbed for several weeks with undecided close races and the strength of the “blue wave,” especially here in California. Perhaps that is why a report from the Auditor of the State of California on the High Speed Rail Project issued the following week did not receive as much attention as it would otherwise warrant.

To understand just how damning the HSR audit was, just consider the subtitle:  “Flawed Decision Making and Poor Contract Management Have Contributed to Billions in Cost Overruns and Delays in the System’s Construction.”  But like many government documents, the audit is couched in bureaucratic language that ordinary citizens may not understand.  For that reason, below are the summary points as provided by the state auditor with accompanying translations.

Auditor: “Although the Authority has secured and identified funding of over $28 billion that it expects will be sufficient to complete initial segments, that funding will not be enough to connect those segments, or finish the rest of the system—estimated to cost over $77 billion.”

Translation: The Authority has succeeded in talking both the federal government and the state of California into providing billions of dollars on a failed project and yet still has no idea where the rest of the money will come from.

To read the entire column, please click here.