BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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                                 THIRD READING


          Bill No:  SCA 6
          Author:   Simitian (D), et al
          Amended:  6/8/09
          Vote:     27

           
           SENATE REVENUE & TAXATION COMMITTEE  :  5-3, 5/13/09
          AYES:  Wolk, Alquist, Florez, Padilla, Wiggins
          NOES:  Walters, Ashburn, Runner

           SENATE ELEC., REAP. & CONST. AMEND. COMM. :  3-1, 6/11/09
          AYES:  Hancock, DeSaulnier, Liu
          NOES:  Strickland
          NO VOTE RECORDED:  Walters


           SUBJECT  :    Taxation:  educational entities:  parcel tax

           SOURCE  :     Author


           DIGEST  :    This constitutional amendment lowers from  
          two-thirds to 55 percent the threshold of voter approval  
          necessary for school districts to enact parcel taxes.

           ANALYSIS  :    Existing law, under the 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 two-thirds vote.   
          Proposition 13 (1978) required two-thirds vote of each  
          house of the Legislature for state tax increases, and  
          two-thirds vote of local voters for local special taxes.   
          Proposition 62 (1986) prohibited local agencies from  
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          imposing general taxes without majority approval of local  
          voters and two-thirds 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, except the  
          district may exempt persons over the age of 65, with  
          two-thirds 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 constitutional amendment 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 constitutional amendment defines "parcel tax" as a  
          special tax imposed upon real property at a rate determined  
          without regard to the property's value.  This  
          constitutional amendment also makes technical changes to  
          the Constitution.

           Background  

          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 of 414 parcel tax elections, with another 166  
          reaching majority vote but falling short of the required  







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          two-thirds.  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 years old and older from paying the tax.   
          School districts in some areas of the state seek to levy  
          parcel taxes more so than other areas.
                       
          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.   Revenues may be  
          used for ongoing expenses, programs, or buildings at the  
          local agency's discretion.  
          Special taxes such as parcel taxes are subject to  
          additional accountability.  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. 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           SUPPORT  :   (Verified  6/15/09)

          Antioch Unified School District
          Association of California School Administrators
          Association of Low Wealth Schools 
          Buena Park School District
          California Association of School Business Officials
          California Association of Suburban School Districts
          California Communities United Institute
          California Community College League







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          California County Boards of Education
          California Federation of Teachers
          California School Boards Association
          California School Employees' Association
          California State PTA
          California Tax Reform Association
          California Taxpayers' Association
          California Teachers Association
          Children Now
          Davis Joint Unified School District
          Eureka Union School District
          FIRST 5 Santa Clara County
          Fremont Union High School District
          Irvine Unified School District
          Jefferson Elementary School District
          Las Lomitas Elementary School District
          League of Women Voters of California
          Long Beach City College
          Los Altos School District
          Los Angeles Unified School District
          Los Gatos - Saratoga Joint Union High School District
          Milpitas Unified School District
          Mountain View Whisman School District
          Newport - Mesa Unified School District
          Palo Alto Unified School District
          Riverside County Schools Advocacy Association
          San Carlos School District
          San Diego Unified School District
          San Francisco Unified School District
          San Mateo - Foster City School District
          San Rafael City Schools
          Scotts Valley Unified School District
          Superintendent of Public Instruction

           OPPOSITION  :    (Verified  6/15/09)

          California Association of Realtors
          California Taxpayers' Association
          Howard Jarvis Taxpayers Association

           ARGUMENTS IN SUPPORT  :    According to the author:

            "SCA 6 would allow local school districts, community  
            college districts, and county offices of education to  







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            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 6 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 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."

           ARGUMENTS IN OPPOSITION  :    The California Association of  
          Realtors opposes this constitutional amendment because  
          "parcel taxes are not limited to faulty construction, can  







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          be imposed indefinitely, and are a 'flat' fee parcel tax  
          that may place an additional burden on homeowners least  
          able to afford it."  
           

          DLW:mw  6/15/09   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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