BILL ANALYSIS
SENATE REVENUE & TAXATION COMMITTEE
Senator Jenny Oropeza, Chair
SCA 17 - Simitian
Introduced: January 17, 2008
Hearing: April 23, 2008 Fiscal: No
SUMMARY: Amends the State Constitution to Lower the Vote
Threshold from 2/3 to 55% for School Districts,
County Offices of Education, and Community
College Districts to levy parcel taxes.
EXISTING LAW (California Constitution) states that
taxes levied by local governments are either general taxes,
subject to majority approval of its voters, or special
taxes, subject to 2/3 vote. Proposition 13 (1978) required
2/3 vote of each house of the Legislature for state tax
increases, and 2/3 vote of local voters for local special
taxes. Proposition 62 (1986) prohibited local agencies
from imposing general taxes without majority approval of
local voters and 2/3 vote for special taxes. Proposition
218 (1996) extended those vote thresholds to charter
cities, and limited local agencies powers to levy new
assessments, fees, and taxes. Local agencies generally
propose to increase taxes by adopting an ordinance or a
resolution at a public hearing. The Constitution further
bars school districts from imposing general taxes, but
allows school districts, community college districts, and
county offices of education to issue bonded indebtedness
for school facilities with 55% percent approval
(Proposition 39, 2000).
EXISTING LAW allows a school district to levy a
special tax that is uniform as applied to all taxpayers,
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except the district may exempt persons over the age of 65,
with 2/3 vote of the electorate. The district may
implement the tax for as long as it wants, spend the
proceeds for any purpose, and apply any tax rate it
chooses. Local agencies have only assessed parcel taxes
under this section.
THIS BILL authorizes school districts, community
college districts, or county offices of education to impose
a parcel tax on real property by a 55 percent vote of the
voters in the district or county.
THIS BILL defines "parcel tax" as a special tax
imposed upon real property at a rate determined without
regard to the property's value. The measure also makes
technical changes to the Constitution.
FISCAL EFFECT:
Unknown
COMMENTS:
A. Purpose of the Bill
According to the Author, "SCA 17 would allow local
school districts, community college districts, and county
offices of education to approve a local parcel tax with a
55 percent vote by the public, rather than the two-thirds
majority currently required. California voters have
consistently designated education as a chief priority, and
in 2000 passed an initiative lowering to 55 percent the
threshold for passing education facilities bonds; this
measure conforms the parcel tax threshold to that same
level. SCA 17 does not raise taxes; it simply provides for
local choice and control. The measure would remedy several
conditions faced by educational institutions. Current
state budget practices under-fund educational programs in
relation to the resources needed to achieve the state's
education goals for students. This measure would enhance
access to a revenue source that would allow local
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communities to augment the resources available for direct
education and support programs. The current two-thirds
requirement allows a small minority of voters to prevent a
community from having the kind of school system that a
sizable majority of the community envisions. There are
numerous historic instances of local parcel taxes failing
the two-thirds requirement despite having support from more
than 55 percent of the voters. In the past twenty or so
years, 68 percent of the local parcel tax elections that
failed received at least a 55 percent vote. Current state
budget practices undermine local control and distance the
electorate from their education leaders, since those
leaders have little influence over how resources are spent.
Significant portions of education funding are earmarked
for specific purposes, with little spending discretion
remaining for local boards. This measure would allow
educational leaders to solicit community support for
dedicated revenue to apply to specified priorities; if
local voters support that agenda, they subsequently can
hold district or county officials directly accountable for
using the resources as intended and for expected results.
SCA 17 makes great sense for our schools in these
difficult economic times. It enhances local control and
strengthens accountability."
B. Signed, Sealed, Delivered
Parcel taxes are flexible ways of raising revenues at
the local level, but are subject to certain requirements.
Parcel tax elections must be held on "established election
dates", which means in March, April, or November of an
even-numbered year, or March, June, or November in an
odd-numbered year. Parcel taxes do not have a cap;
According to EdSource, between 1983 and 2006, voters
approved 211 parcel taxes out of 414 elections, with 166
reaching majority vote but falling short of 2/3. One in
five California School Districts have tried to enact a
parcel tax. Parcel tax proposals voted on in 2003 varied
from $30 per parcel to $385 per parcel, with terms as short
as two years, and some being permanent. All property must
be taxed, except that a district may exclude individuals 65
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years old and older from paying the tax.
C. "Don't tax me?
Tax the guy behind the tree" posits an old piece of
tax policy wisdom. SCA 17 lowers the threshold on parcel
taxes, which are taxes on landowners. Therefore, resident
non-landowners, like renters, are able to vote in the
election, but do not pay any of the taxes except as passed
through in rents. In the reverse, non-resident landowners
are not able to vote in the election, but must pay the tax
if the voters approve the measure. In addition, districts
may exempt taxpayers 65 years or older, thereby creating
another class of voters who do not bear the incidence of
the tax. The Committee may wish to consider whether
lowering the vote threshold for new parcel taxes is
equitable when many voters do not bear the cost, and those
who may bear the cost are precluded from voting.
D. Diff'rent Strokes for Diff'rent Folks
Parcel taxes are different in many ways from property
taxes and general obligation bonds. First, parcel taxes
are not ad valorem, or assessed based on the value of a
property; instead they are a flat rate assessed per parcel,
regardless of its size. Essentially, parcel taxes are a
flat tax on property ownership. Secondly, the proceeds of
general obligation bonds must be spent on the acquisition
and improvement of property, or on school construction.
Parcel taxes give the imposing authority considerably more
flexibility to spend as they see fit. Proceeds are not
limited to certain uses; revenues may be used for ongoing
expenses, programs, or buildings at the local agency's
discretion.
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E. Accountability Provisions
Special taxes today are subject to additional
accountability provisions. SB 165 (Alarcon, 2002) added
new oversight and accountability provisions for the
proceeds of special taxes such as parcel taxes. Local
agencies must: (1) issue a statement indicating the
specific purpose of the tax and a requirement that the
proceeds be used only for that purpose, (2) create an
account in which to deposit proceeds, and (3) issue an
annual report that includes the amount of funds collected
and expended, along with the status of any project required
or authorized by the tax measure.
Support and Opposition
Support: Association of California School
Administrators; American Federation of State, County, and
Municipal Employees; California School Boards Association;
California Teachers Association; California Tax Reform
Association; California Association of School Business
Officers; Cypress School District; Huntington Beach City
School District; Orange County Department of Education;
Orange Unified School District; San Francisco Unified
School District; School Districts of Marin; Silicon Valley
Leadership Group; Small School District's Association;
Irvine Unified School District Board Member Sue Kuwabara
Oppose:Howard Jarvis Taxpayers Association
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Consultant: Colin Grinnell
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