Could high taxes and crime push California voters to a tipping point?

VotingDespite changing demographics and a sharp veer to the ideological left, is it possible that California could take a political trip back to the future as two staples resurface that drove the state’s politics in the more conservative 1980s and 1990s? Look around and you’ll see indications that even in this liberal bastion on the left coast, the issues of taxes and crime are stirring again.

From the time when cinema’s Doc Brown (Dr. Emmett L. Brown, ably played by Christopher Lloyd) was sending his flux-capacitor equipped DeLorean back in time to today’s California run by Jerry Brown — a past-and-future character if there ever was one — attitudes on the issues of taxes and crime seemed to have shifted dramatically.

Considering recent evidence, one might think that the tax issue has faded from the conscience of Californians, most of whom were not around when the state’s voters kicked off a national tax revolt that helped propel Ronald Reagan to the presidency by overwhelmingly passing property tax-cutting Proposition 13 in 1978.

In a Wall Street Journal piece from a year ago leading up to the 2016 election, I asked, “Nearly 40 years later, many Californians are wondering: Will the tax revolt mind-set die where it all began?”

After all a measure on the 2016 ballot (Proposition 55) extended the highest-in-the nation income tax that voters put in place just four years previously; a cigarette tax passed, as did many local taxes and bonds.

This year’s legislative session included a gas tax increase, the cap-and-trade extension, which many call a tax increase because it raises revenue for the government to spend, and a document tax to fund housing issues. This legislative session probably produced the most pro-tax successes since the 1935 legislature created both a state income tax and a vehicle license fee.

Yet all this tax activity may be driving voters to a tipping point to say enough!

The first indication is the California electorate’s sour reaction to the gas tax. In a University of California Berkeley Institute of Governmental Studies poll conducted after the gas tax increase became law, 58 percent opposed the gas tax, 39 percent solidly opposed. The twelve-cent a gallon tax will not even be collected until November. The negative reaction to the tax seen in the poll likely would increase once the tax adds to the price of gasoline at the pump.

The test of new California resistance to taxes could well occur in November 2018. Two measures to repeal the tax have been filed. A gas tax repeal measure could rally Republican voters to the polls during the general election, especially if no Republican makes the runoff for either of the state’s high-profile offices, governor and United States senator. Since the state’s Republican Party is said to be behind one of the repeal initiative proposals,  polling shows that this is a powerful issue among voters. In addition a Southern California state senator, Democrat Josh Newman, is facing a recall effort centered on his gas tax vote.

The heated debate over extending cap andtrade to reduce greenhouse gases centered on the additional costs that would be felt by California consumers. The word “tax” would have dominated were a word cloud image created over word use frequency during the cap-and-trade debate. Increased costs generated by cap-and-trade demands were labeled a hidden tax.

California citizens have yet to feel the additional costs that the cap-and-trade measure might add—anywhere from fifteen- to seventy-three-cents per gallon of gasoline over time, according to the state’s legislative analyst.

If the gas tax repeal makes the ballot, an interesting political dynamic will play out in defense of the tax. A campaign to preserve the tax would likely have the greatest financial support. The tax was supported by both labor and big business. They argued that California’s economy depends on improved transportation and updated roads and highways. Business also supported the cap-and-trade bill, fearing if it were defeated an unelected California Air Resources Board would put a tougher, command-and-control greenhouse gas restriction in place.

The individual voter who pays the freight of the gas tax increase, additional car fees, and increased costs linked to the cap-and-trade law, however, may want to use the gas tax repeal initiative to send a message.

A rejection of the gas tax increase would certainly be a marker that as liberal as Californians have become, there is still a conservative streak when it comes to taxes and a potent issue from the past could return.

Meanwhile there is the issue of crime—like taxes, also on the rise. A backlash is stirring to changes backed by criminal reform efforts in the legislature and on the ballot.

In response to a court order to reduce prison populations, Governor Jerry Brown championed AB 109 in 2011. Under so-called realignment, certain low-level offenders were moved to county jails from state prisons. In many instances, overwhelmed local jailers were forced to release prisoners from their jails to make room.

Along came two ballot measures, Proposition 47 in 2014 and Proposition 57 in 2016, that downgraded a number of felonies to misdemeanors and fast-tracked the parole process for felons convicted of nonviolent crimes.

Efforts to reform the justice system and reduce prison overcrowding prompted the law changes. Voters are sympathetic to efforts allowing prisoners to achieve rehabilitation. Voters passed both ballot initiatives despite major opposition from the public safety community.

The combination of laws, however, has the law enforcement community warning of a rise in crime with little ability to curb it. Property thefts, forgeries, frauds, illegal drug use, and more under $950 are labeled a consequence-free crime because few arrested for such crimes serve any time, and perpetrators are aware of the situation.

According to a release from the Association of Los Angeles Deputy Sheriffs, “Prop 47 has created a criminal culture where criminals know they face little, or far lesser, punishment for their crimes. Following the passage of AB 109, nearly 25 percent of jail space that could house criminals serving local sentences for property or violent crime is now occupied by those shifted from state prison to local jails to serve their time.”

Law enforcement officials reveal increases in crime as a result of the new laws, but it is the consequences on the street and in people’s lives that have changed the tone of the conversation. If you’re not convinced, take a look at neighborhood websites with constant chatter about break-ins and suspicious activity and how to set up alarm systems and security cameras.

In Sacramento a growing number of neighborhoods fed up with petty crime pooled money to hire private security for public streets. In the inland empire, vehicle thefts jumped from ninth in the nation to fifth in just one year. In the west San Fernando Valley, gang activity has increased 63 percent in two years. A number of California cities are joining in an effort called Taking Back Our Community, a coalition of local governments dedicated to public education and community advocacy surrounding the unintended adverse public safety impacts of recent changes to California’s criminal law.

This surge of activity recalls another time in California history when crime became a major policy and political issue. As noted California historian Kevin Starr wrote in his book, Coast of Dreams, California on the Edge, 1990–2003: “In 1980, California had fewer than 25,000 inmates in a dozen prisons. By January 1998 there were some 154,000 prisoners in 33 prisons.” Californians elected two governors in succession who were tough on crime. Republicans George Deukmejian and Pete Wilson occupied the corner office in the capitol for much of the 1980s and 1990s.

In his first inaugural address in 1983, Deukmejian said, “All the prosperity in the world will not make our society better if our people are threatened by crime. Therefore, it will be the highest priority during my administration to provide all the leadership I can to make California safe again.”

Wilson’s 1994 State of the State Address was one of many to pinpoint the crime issue. He called for get-tough measures against dangerous felons and repeat criminals. He also called for bills that would put three-repeat felons behind bars for good.

The legislature responded by passing a three-strikes law in March, but the people did them one better supporting a three-strikes ballot measure (Proposition 184) in November 1994 that received nearly 72 percent of the vote.

But the crime pendulum shifted with Propositions 47 and 57.

In a Sacramento Bee op-ed published a month before the November 2016 election in hopes of stopping Prop 57, which Wilson argued gutted the three-strikes law, he wrote, “The three-strikes initiative approved in 1994 and other sensible crime- control laws prevented millions of Californians from becoming crime victims. It would be gross dereliction of duty to discard laws that have provided us protection of such proven effectiveness.”

This time he was not as persuasive.

But now that the effects of the crime reform initiatives and state laws are being tallied, that pendulum may be moving back again. Will state politics follow?

Certainly California is in a different place today than three and four decades ago, but growing unease can be detected about the tax and crime issues that dominated politics in that era.

Let’s just say that Jerry Brown, rather than Doc Brown, would recognize the modern social-media terminology associated with the taxes and crime in California.

They’re trending.

ditor and Co-Publisher of Fox and Hounds Daily

Originally published in EUREKA, Stanford University’s Hoover Institution’s online magazine.

L.A. County Illegally Spending Taxpayer Money on Measure H Ads

Photo courtesy of channone, flickr

Photo courtesy of channone, flickr

Today, Los Angeles County voters will decide Measure H, a proposed sales tax increase to pay for homeless programs. This tax increase will be in addition to the property tax increase to pay for bonds for homeless programs just enacted by the city of Los Angeles last November with Measure HHH.

If you are wondering why Angelinos should tax themselves even more, you’re asking the right question. California is one of the most heavily taxed states in America with the highest income tax rate, the highest state sales tax and nearly the highest gas costs due to both the high excise tax on each gallon sold plus the additional costs embedded as a result of environmental regulations. And even with Proposition 13, California ranks in the top third among all states in per capita property taxes collected.

The inability of our political leaders to prioritize spending is driving both the state and our major cities into insolvency. If massive spending on homeless programs — assuming it does any good at all — is what the county wants to do, then it should reduce spending on other programs of a lower priority.

To read the entire column, please click here.

Taxes, Fees, Charges and Assessments: What Difference Does It Make?

TaxesWhat’s the difference between a tax and fee? There is no easy answer and the political class likes it that way. In fact, they would prefer that the public remain confused to the point of apathy.

The political class, of course, consists of elected officials, bureaucrats and their special interest allies who are to the Capitol what insider traders are to Wall Street. Working in lockstep, their approach to increasing the take from taxpayers was best outlined by Jean Baptiste Colbert, Minister of Finance under Louis XIV of France: The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.

But taxpayers are not defenseless because Proposition 13 – later strengthened by Proposition 218, the Right to Vote on Taxes Act – provides effective weapons against an insatiable government ever in search of more revenue. These include voter approval requirements. At the state level, new or higher taxes require a two-thirds vote of each house and, at the local level, voter or property owner approval requirements allow those who have to pay a government exaction (no matter what it is called) an opportunity to say no.

However, to protect themselves, taxpayers must be knowledgeable, alert and ready to fearlessly protect and exercise their rights.

Therefore, while most taxpayers don’t have a law degree, here are some basics about the difference between a “tax” and a “fee.” There are very few legal limitations on “taxes.” About the only way a tax could be unconstitutional is if it impaired a fundamental right (a “poll” tax on the right to vote) or if it singled out some group for discriminatory purposes. But fees are different. A fee is a charge for something that confers a benefit to the fee-payer that is not available to those who do not pay the fee. A classic example is a charge for entering a state campground.

Until the passage of Proposition 26 in 2010, the Legislature could approve fees with a simple majority vote. But in 2011, the Legislature approved, with a simple majority, charging 850,000 rural homeowners an annual “fire fee” of $150. The “fee” was not accompanied by any additional benefit or service, clearly making it a tax requiring a two-thirds vote of the Legislature. This issue is currently being litigated by taxpayers, but it is a classic example of the dishonest ends to which tax raisers are willing to go to wring ever more money from taxpayers.

Moreover, the political class has a habit of pursuing taxes that are not apparent to the general public. Almost any tax on business fits into this category. As Howard Jarvis liked to say, businesses do not pay taxes, “we do.”

As part of Obamacare, the federal government imposed a tax scheme designed to stop employers from offering top quality health plans. Backers of the Affordable Care Act included a 40 percent tax on providers of what were derisively described as “Cadillac” plans. As these plans disappear, the uninformed will assume that it is their employer who is responsible, when, in fact, it is government.

Here, in California, a major hidden tax is cap-and-trade legislation, not approved with a two-thirds vote, that compels companies to buy carbon credits. Of course, these costs are passed on and drivers feel the impact every time they fill up with gasoline that costs, by the most conservative estimates, an additional 12 cents per gallon with more increases on the horizon. Unaware of the impact of cap-and-trade, many motorists may mistakenly assume that the high cost of gas is entirely due to the petroleum companies.

This is why taxpayers are closely watching a case just argued before the Sacramento appeals court, where opponents argue that cap-and-trade charges amount to an unconstitutional tax. The court is expected to render a decision within 90 days but, regardless of the outcome, the loser is likely to appeal to the California Supreme Court.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

This piece was originally published by HJTA.org

For Tax Raisers, End of Drought Is Bad News

Flooding In Long Beach, California

Flooding In Long Beach, California

As I write this, it is raining in Sacramento. Pouring, actually. And even though I live about 200 yards from the Sacramento River, I have confidence that the levees within the city limits are in good shape. (As well they should be given that Sacramento’s flood control agency collects millions of dollars from local property owners annually to keep them maintained.)

In a word, California is wet. Rain totals and snowpack measurements are the highest we’ve seen in about a decade. But despite the fact that flood gates at major dams throughout the state are now open, levies have been breached and there is serious flooding in both Southern California and the Central Valley, the State Water Resources Control Board refuses to declare the drought over.

As taxpayer advocates in a high tax state, we’re accustomed to seeing a political motivation in most statements coming from government. But this time, we’re not alone. Local water officials gave the State Water Resources Control Board an earful last week about the failure to call the drought over. A representative of the California Water Association, an organization comprised of local water districts, noted that the Yolo Bypass (designed to prevent flooding in Sacramento by releasing vast amounts of water into uninhabited farm land where it eventually flows back into the delta) now “looks like Lake Michigan.” But state water officials were not persuaded and decided to keep the draconian drought regulations in place “for a few more months.”

So are state officials being overly prudent? Even if they have the best of intentions, they are losing credibility by claiming that a “drought emergency” still exists. But what if the intentions of some state politicians – including the governor – are not so noble?

Back when the drought was real, there were calls by the governor that certain constitutional protections for taxpayers were preventing the state from dealing with the crisis. Proposition 13’s voter approval requirements as well as Proposition 218’s “cost of service” water rate limitations were the targets of complaints. Indeed, after a Court of Appeal decision over the summer upheld Proposition 218’s commonsense requirement that water rates had to reflect the true cost of providing the water to water users, Governor Brown lashed out claiming that this deprived him of any tools to deal with the water shortage. (This was nonsense, as nothing in Propositions 13 or 218 took away an array of tools available to local governments to incentivize conservation and disincentivize waste).

The real problem for the politicians and bureaucrats is that if the drought is truly over, which common sense tells rain soaked citizens that it is, then this removes one more justification for repealing or weakening those laws designed to prevent governmental overreach.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

This piece was originally published by HJTA.org

Can California’s Taxpayers Be Thankful for 2016?

taxesIf taxpayers focus on the results of the recent election, there may not seem to be much to celebrate. While the rest of America took a big step toward fiscal sanity, the same cannot be said of California. At the state level, all three taxes, one on marijuana users, one on smokers and another on higher income taxpayers, passed. Fueled by massive special interest campaign spending, tax hike proponents convinced voters that they were simply raising taxes on “other people” which made them more palatable.

The bright spot among the 17 statewide measures was the approval of Proposition 54, which will provide much needed transparency over the California Legislature. For years taxpayers have wanted legislative bills to be available for public review prior to being voted on. Prop. 54 makes that happen.

At the local level, it looks like 80 percent of the local taxes and bonds were approved. The good news is that, largely due to the requirements of Jarvis initiatives Proposition 13 and Proposition 218, the Right to Vote on Taxes Act, these measures were decided by voters rather than being imposed by out of touch public officials.

However, what encourages and inspires taxpayers greatly, is the ongoing efforts of tenacious individuals around the state who continue, against long odds, to challenge the powerful political class to advance the cause of average citizens.

Howard Jarvis used to say the reason for the success of the campaign to pass Proposition 13 could be encapsulated in three words, “and then some.” Those working to pass tax reform did what was required, “and then some.”

Here are just three examples of those who personify the Jarvis ideal.

Dino Cortopassi is a successful farmer and businessman. He and his wife Joan now focus on responsible philanthropy, using the family foundation to fund a wide array of programs for the benefit of the disadvantaged and the environment. Dino is also deeply concerned about California’s runaway debt that is placing an ever-growing burden on our children and grandchildren.

This is why they funded the qualification of Proposition 53, the Stop Blank Checks initiative, that would have required voter approval of state construction bonds of $2 billion or more.

Of course, those who benefit from unrestricted debt, the deep pocketed “Sacramento gang,” outspent the Yes campaign by 20 to one, focusing their money on a dishonest television campaign. Although Proposition 53 fell just short, Dino and Joan provided a major public service by exposing how government funds its programs, often out of sight and without the approval of the taxpayers.

Knowing this effort fell just short, Howard Jarvis would likely have smiled and offered encouragement. He would point out that before the success of Proposition 13, he had mounted three failed ballot campaigns over a period of 15 years.

Another bright light for taxpayers is Andrea Seastrand, who serves as President of the Central Coast Taxpayers Association (CCTA). The organization works to inform and educate voters on important tax issues at all levels of government. Andrea is constantly advocating for the protection of Proposition 13 and fighting for the forgotten taxpayer. Although Andrea is a former member of the Assembly and House of Representatives, she never voted for a tax increase and always focused on the interests of those who are compelled to pay government’s bills. In the 20 years since leaving office, Andrea has been a tireless taxpayer advocate.

A third example is Richard Rider, Chairman of the San Diego Tax Fighters. With a sharp wit and willingness to do his homework, he has been the outspoken bane of San Diego area politicians who attempt to misuse taxpayer dollars or impose unnecessary taxes. Rider is a former client of HJTA’s legal team who has been unrelenting in his efforts to protect Propositions 13 and 218, the Right to Vote on Taxes Act. Rider, like Andrea Seastrand, is a former recipient of HJTA’s Taxfighter of the Year Award.

There are so many more that deserve mention, and we are grateful for each. With thousands of folks willing to make sacrifices to defend the interests of average taxpayers, if we work together, there is still hope for a brighter future for California.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

This piece was originally published by the HJTA.org

A Clear and Present Danger to Proposition 13

property taxThe attacks on Proposition 13 began within a few days after its overwhelming passage by California voters on June 6, 1978. Over the last three and half decades, this landmark taxpayer protection has been assailed in the Legislature, the courts and by ballot initiatives sponsored by tax-and-spend interests. These assaults continue to this day.

In a development that has surprised taxpayer advocates and the business community, a new attack on Proposition 13 is quickly gaining traction. Filed as an initiative with the sympathetic title of “Lifting Children and Families Out of Poverty Act,” the proposal would impose a massive $6 billion property tax increase on both homeowners and business properties. Its primary backer is Conway Collis, a former member of the California Board of Equalization.

The fact that there is yet another attack on Proposition 13 is not much of a surprise. However, this proposal is as odd as it is dangerous. First, it is not being financed by the usual anti-Proposition 13 coalition of public sector unions and local government interests. Instead, the funding is coming from anti-poverty groups aligned with the Catholic Church, including the Sisters of Charity.

Second, in a strange political move, the proposal would impose its sliding scale of property tax increases – euphemistically labeled as “surcharges” – on residential properties as well as commercial real estate. Conventional wisdom in Sacramento has been that the most likely attack on Proposition 13 would be limited to commercial property with the imposition of a so-called “split roll” tax. (Proposition 13 maintained California’s historical tradition of taxing all real estate at the same rate. “Split roll” proposals – which remain a constant threat – would impose higher rates and/or different tax rules on business properties.)

By imposing higher taxes on homes have the proponents made a political miscalculation? While it is true that, for now, the tax increase would only impact properties with a current assessed value in excess of $3 million, owners of average homes are fully aware that any breach in Proposition 13 could open the floodgates to more attacks that weaken their own protections. California homeowners, in other words, fully grasp the notion of “slippery slope” when it comes to attacks on Proposition 13.

By adopting a “go it alone” strategy without the usual left of center coalition, the proponents face the very real prospect of a broad opposition coalition. For example, public sector labor organizations are more focused on extending the Proposition 30 income tax increases. If they view the Conway Collis measure as a threat to their own interests they could very well oppose it or, worse yet, oppose it with significant money.

Moreover, it appears that the proponents haven’t fully comprehended how local government interests will react to the creation of a new state (not local) fund that would distribute the property tax proceeds generated by the new “surcharges.” It is likely that cities, counties and special districts will view this an unwanted intrusion into a primary source of their own funding.

The above are just a few of the problems with the Collis initiative. There are many more that will become evident as scrutiny from various political interests begins to intensify.

But one thing is certain. With the recent infusion of nearly a million dollars for the signature gathering effort, property owners need to take this threat very seriously. And while there is no guarantee that it will qualify for the 2016 ballot, anyone who values the protections afforded by Proposition 13 better not wait too long to prepare for a tough fight in November.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Certainty in Taxation: Prop. 13’s Best Feature

property tax​In its more than 160 plus year history, few things have remained constant in California.  However, since the 1800’s California has taxed all classes of property the same.

Thus, when the iconic Prop. 13 passed in 1978, it did not differentiate between different kinds of property.  All real property – whether residential or commercial – was bestowed with the benefits of a reasonable one percent tax rate cap and, just as importantly, a two percent limit in the annual increase in taxable value.

In 1978, the predominant fear permeating California was an exploding tax burden that was forcing people out of their homes. The one percent rate cap was important, of course, but a rate cap by itself does nothing to control a property tax bill that is based on the “market value” of one’s home. If market values double – as they frequently do in an overheated real estate market – then property owners remain vulnerable to wild fluctuations when tax time comes around.

By limiting the annual increases in “taxable value” or “assessed value” of property to two percent per year, Prop. 13 gave property owners something they never had before – absolute certainty in what their tax bills would be in future years. No more would property owners open their tax bills with trembling hands because they knew that, thanks to Prop. 13, any increase would be modest.

The certainty and predictability of property taxes is just as important to owners of business properties as it is to homeowners.

First, let’s dispel the myth that Proposition 13 created a loophole for business properties. As noted above, California has always taxed property at the same rate. Proposition 13 didn’t change that. Second, we often hear that, during the campaign in 1978, the fact that Proposition 13 protections would be extended to business properties wasn’t presented to the voters. Not true. The opponents hammered those arguments throughout the campaign and, specifically, in the official ballot pamphlet itself.

Moreover, during the Proposition 13 campaign, it was predicted that, over time, homeowners would pay an increasing percentage of the total property tax revenue because residential properties change hands more frequently than commercial properties and thus would be taxed closer to market value. But for many years the percentages remained relatively static.  Only more recently has there been an uptick in the percentage of property taxes paid by homeowners. And this appears to be due to land use changes, such as a shrinking industrial/manufacturing sector and luxury home development than it is to Prop. 13.

Californians need to keep in mind the stability and predictability of Proposition 13 is as important to owners of business properties as it is to homeowners. Indeed, this is more true now than it was in 1978. Back then, California was a pro-business state with a growing economy, a vital aerospace industry and an infrastructure system that was the one of the world’s best. Now, California is rated dead last as a place to do business, we have the highest poverty rate and a tax and regulatory environment that has caused countless businesses – both large and small – to move elsewhere.

Stability and predictability of future property tax liability afforded by Prop. 13 is one of the few remaining pro-business policies in California. Why on earth would we want to repeal that?

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Small Measures Can Provide Large Benefits to Taxpayers

TaxesThose who follow the political machinations in Sacramento might well conclude that not much good emerges from the California Legislature. Gas taxes, attacks on home ownership, a tax increase on commercial property, ever-expanding pension deficits, high speed rail, there seems an endless list of proposals for which the average taxpayer is supposed to foot the bill, while others receive the benefit.

With all this bad news, it is easy to overlook some relatively obscure bills that could have an oversized beneficial impact on taxpayers.
​​
Assembly Bill 809 by Assembly Member Jay Obernolte (Hesperia) is a proposal that will aid local voters deciding on tax measures by providing some much needed transparency. Under current law, there is no word limit requirement on the ballot label – the descriptive information that appears on the ballot — for local tax measures. The ballot label is the last thing most citizens see before casting their vote. The label is often filled with whole paragraphs explaining how the funds will be spent, but little or no information that helps voters determine what it will cost them.

AB809 states that the ballot label will include the tax rate increase, its duration, and a revenue estimate of what it will generate annually. If voters approve a county-wide sales tax increase for 30-40 years, they should at least be fully aware of the cost in the years to come. By placing this information in the ballot label, voters can make informed decisions that will best benefit their communities.

Assembly Bill 1378 by Assembly Member Chris Holden (Pasadena) expands the provisions of Proposition 60, which was based on an idea by Howard Jarvis and approved by voters in 1986, that provides property tax relief for seniors. Proposition 60 allows for an individual over the age of 55 to transfer the Proposition 13 base value of their property to a new residence in the same county as long as it doesn’t exceed the value of their current home based on its sales price. While this provides a tax benefit to seniors, any cost to government is made up when the first home sells and goes on the assessor’s books at market value for tax purposes. Without being able to retain their Proposition 13 tax base, many seniors would be locked into their current residence, unable to move, and their homes would remain off the market.

Under current law, a married couple can only take advantage of this tax exemption once. AB1378 would allow each individual in a married relationship to take advantage of the exemption, allowing them to move a second time and transfer their lower tax base. The result is increased residential flexibility that benefits our seniors.

With life expectancy increasing, we cannot assume that individuals will remain in the same house in retirement for 30 years. Individuals may decide to move again to be closer to their children or because of health difficulties that makes their current home impractical. They should not be punished with higher property taxes in retirement for circumstances that may be beyond their control. AB1378 is a common-sense proposal that adapts California law to the changing lifestyle requirements of our aging population.

Just like the small, often overlooked, belt buckle can have tremendous impact on the success of a pair of pants, these unheralded bills, AB809 and AB1378, have the potential to contribute significantly to the well-being of all taxpayers. AB809 and AB1378 deserve to be adopted by the Legislature and signed into law by the governor.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

It’s Scary Season Again — Property Tax Season

For many the real scare this time of years is not the monsters at our doors on Halloween but the property tax bill in the mail box.

Fortunately, as a direct result of Proposition 13 which limits increases in a property’s assessed value to two percent annually, most property owners have a good idea what their tax bill will be even before opening the envelope.  However, like we do every year about this time, the Howard Jarvis Taxpayers Association reminds taxpayers to carefully examine their latest property tax bill.  Although not common, assessors sometimes do make mistakes.

Taxpayers should understand the various charges and make certain that they are not being assessed for more than they are legally obligated to pay.  The best way to check a tax bill is to have your previous year’s bill handy for reference.

Checking the bill is especially important for those who bought their homes a few years ago at the height of the market.  If the current home value is actually lower than the assessed value shown on the tax bill the owner is entitled to file for a reduction in taxes.

Typically the property tax bill will show three categories of charges. They are the General Tax Levy Voted Indebtedness and Direct Assessments.

General Tax Levy

The General Tax Levy is what most people think of when talking about property taxes. It is based on the assessed value of land improvements and fixtures.  This charge usually makes up the largest part of the tax bill and it is the amount that is limited by Proposition 13.

Proposition 13 passed overwhelmingly by voters in 1978 established a statewide uniform tax rate of one percent of assessed value at the time of purchase and limited annual increases in assessed value to no more than two percent. From a practical standpoint this means that once the base year value of your property is established the General Tax Levy cannot be increased more than two percent each year. This allows all property owners to predict their property tax bills into the future and budget accordingly.

The best way to check to make sure that your current General Levy of Assessment is correct is to compare it with the previous year’s bill. The increase should be no more than two percent unless there have been improvements to the property like adding a room to a house or if you previously received a “reduction in value.” This bears repeating: Because the real estate market in many parts of California is recovering many homeowners who previously received a temporary reduction in “taxable value” from their assessment may now see an increase in their tax bill more than two percent from last year.  But in no case will the taxable value be more than the initial Prop 13 base year plus two percent annually from the date of purchase.  Although that may seem unfair, keep in mind that while the reduction was only temporary, the savings you received when your property was worth less are permanent.

If in doubt about the current value of your property, check sales of comparable homes in your neighborhood.  If homes like yours are selling for less than the valuation on your latest bill contact your county assessor and ask that the value and resulting tax be adjusted to reflect true current value.

Voted Indebtedness

Voted Indebtedness is made up of those bonds and per parcel taxes approved by the voters.

Local general obligation bonds for libraries parks police and fire facilities and other capital improvements are repaid exclusively by property owners. Because a minority of the population is required to pay the entire amount the California Constitution of 1879 established the two-thirds vote for approval of these bonds. This assures a strong community consensus before obligating property owners to repay debt for 20 or 30 years.

Until the year 2000 local school bonds also required a two-thirds vote but the passage of Proposition 39 lowered the vote to 55 percent. (Of course this did very little to improve schools as was promised). Because the 55 percent requirement guarantees that most school bonds will pass regardless of merit many homeowners are seeing a significant increase in the Voted Indebtedness column on their tax bills.

Less common than bonds are per parcel taxes — although this could change as a result of efforts by the Legislature to make parcel property taxes easier to pass. These are taxes on property ownership not on property value. Under Proposition 13 they require a two-thirds vote and are also listed either under “Voted Indebtedness” if they are being imposed to repay bonds or under “Other Levies” if they are for operational expenses of a local government entity.

Direct Assessments

Ironically under the system in place for over a century property taxes go into the general fund and are used for local services unrelated to property. For services to property such as sidewalks and sewers we pay extra. These charges are known as direct assessments.

Because of Proposition 218 — the Right to Vote on Taxes Act placed on the ballot by the Howard Jarvis Taxpayers Association in 1996 — property owners must be given a meaningful say in approving new assessments. Before an assessment can be imposed or increased property owners must be informed in writing and be given the opportunity to cast a protest vote on the new assessment or assessment increase.

For more information regarding your property tax bill go to HJTA.org and click on Frequently Asked Questions then scroll down to “About Property Tax Assessments”.

If you have a question about your property tax bill you should contact the office of your county assessor. It’s your money and you have a right to be certain that your bill is correct.

This piece was originally published on HJTA.org

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Greater Transparency on Threat to Property Owners

Legislation just signed by Gov. Brown may help alert homeowners to the threat posed by per parcel property taxes. Parcel taxes have become one of the most insidious threats to home ownership because they can be imposed over and above the property tax limits set by Proposition 13.

Supported by a broad coalition lead by the California Taxpayers Association and the Howard Jarvis Taxpayers Association, Assembly Bill 2109 requires the Controller to maintain a publicly accessible data base relating to the imposition of locally assessed parcel taxes, including the type and rate of a parcel tax and the number of parcels subject to or exempt from the parcel tax. Finally, taxpayers will be able to see the extent of parcel taxes throughout the state and the costs to property owners.

Parcel taxes came about as a result of politicians never ending effort to circumvent the property tax limitations contained in Proposition 13. Howard Jarvis and Paul Gann, Proposition 13’s authors, intended that taxes on property be limited to one percent of the taxable value and that the taxable value on the assessor’s books could not be increased by more than two percent annually.

To squeeze more from homeowners, local officials came up with the parcel tax, usually a uniform tax placed on each parcel of property within a community –although it can also be based on size. By imposing a uniform charge for the privilege of owning property within a community, they were able to persuade the courts that it did not violate Proposition 13’ prohibition against additional ad valorem (value based) taxes.

Parcel taxes are extremely regressive, bearing no relationship to ability to pay. The young couple in a starter home, the elderly couple in a bungalow and a multimillionaire in a mansion, all pay the same amount. There is no restriction on the dollar amount of these taxes that exceed Proposition 13’s limits, or on the number of such proposals that can be placed on the ballot. And while bonds — also paid for by property owners — must be used for “brick and mortar” construction, parcel taxes can be used for any purpose including increased pay and pensions for government employees.

Adding insult to injury, there has been a major push in the Legislature to reduce the two-thirds vote needed to approve parcel taxes. Although this would clearly undermine Proposition 13 by making it easier to increase property taxes, backers of a lower approval threshold respond innocently, “We are not trying to raise taxes, we are just making the process more democratic.” The threat of course is that by making it much easier to impose new taxes on property owners, home ownership could again be threatened as it was prior to Proposition 13 when taxes were going up so fast that many owners were forced to give up their homes.

Thanks to Assembly Bill 2109, more attention can be brought to the burden that parcel taxes impose on California homeowners and it will help make the case that not only should they be defeated individually as they appear on the ballot, but they should be banned outright.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

This article originally appeared on HJTA.org