BILL ANALYSIS Ó
SENATE COMMITTEE ON ELECTIONS
AND CONSTITUTIONAL AMENDMENTS
Senator Lou Correa, Chair
BILL NO: SCA 5 HEARING DATE:
6/21/11
AUTHOR: SIMITIAN ANALYSIS BY:
Darren Chesin
AMENDED: 5/26/11
FISCAL: NO
SUBJECT
Taxation: Educational Entities: Parcel Tax
DESCRIPTION
Existing law , pursuant to 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 a 2/3 vote (Article XIII A,
XIII B, and XIII C). Proposition 13 of 1978 required a 2/3
vote of each house of the Legislature for state tax
increases, and a 2/3 vote of local voters for local special
taxes. Proposition 62 of 1986 prohibited local agencies
from imposing general taxes without majority approval of
local voters, and a 2/3 vote for special taxes.
Proposition 218 of 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 of 2000).
Existing law additionally allows school districts and
community college districts to levy qualified special taxes
that are uniform as applied to all taxpayers with a 2/3
vote of the electorate; however, school districts may
exempt persons over the age of 65 or those receiving
Supplemental Security Income (SSI) from the tax. County
offices of education have no direct taxing authority, but
receive a share of the property tax, and counties may fund
programs delivered by the education offices. The district
may implement these taxes, for as long as it wants, spend
the proceeds for any purpose, and apply any tax rate it
chooses. To date, 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 under specified
circumstances, including:
The district governing board approves the proposition
by 2/3 vote.
The ballot proposition contains a specific list of
programs and purposes to be funded, and a requirement
that funds be spent solely for those programs and
purposes.
The ballot proposition includes a requirement for
annual independent audit of the amount of tax proceeds
collected and expended and the specified purposes and
programs funded.
The ballot proposition requires the governing board
to create a citizens' oversight board to review all
expenditures of proceeds and financial audits, and
report its findings to the governing board and the
public.
The ballot proposition allows for an exemption from
the tax for parcels owned by persons over the age of 65
or those receiving SSI.
This bill also defines "parcel tax" as a special tax
imposed upon real property at a rate determined without
regard to the property's value, and caps the total amount
of parcel taxes imposed, increased, or extended by a
district to $250 per parcel per year adjusted for inflation
by the California Consumer Price Index. Tax proceeds may
not be used to fund administrative salaries. SCA 5 also
makes other clarifying and conforming changes to the
SCA 5 (SIMITIAN) Page
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Constitution.
BACKGROUND
Parcel Tax Elections . California uniquely among the states
allows school districts to levy parcel taxes, which 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 or per square foot,
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, although parcel taxes imposed at a lower voter
approval rate under this bill cannot be used for
administrative salaries, among other restrictions.
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; parcel
tax proposals voted on in the last ten years varied from
$26 per parcel to $765 per parcel, with terms as short as
two years, and some being permanent.
According to EdSource, between 1983 through November 2010,
voters approved 289 parcel taxes in 542 elections, with 92%
of proposals receiving at least a majority vote from the
electorate during that time. Districts have increasingly
turned to parcel taxes in recent years as a result of
fiscal stress: in 2010, 38 districts placed parcel taxes on
the ballot, compared to 31 in 2009, and 13 in 2006. The
median district levying a parcel tax had about 3,180
students of whom 15% qualified for free/reduced-price meals
and 9% were English learners. Although all districts can
propose a parcel tax to their community, they are
relatively rare in most of the state. Between 2001 and June
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2009, out of roughly 980 California school districts, 132
conducted parcel tax elections and 83 districts passed
them. Only seven of those districts were located in
Southern California, while 66 were within the nine-county
San Francisco Bay area. The districts that had successful
elections generally serve fewer low-income students than
the typical California school district. They are also
disproportionately small, with 66 (80%) of them serving
fewer than 10,000 students. In 2008-09, those districts
that had parcel taxes reported total revenues of about $250
million, according to the California Department of
Education.
COMMENTS
1. According to the author , given the State's on-going
financial crisis, school districts are now facing severe
cutbacks in funding. Worse still, it is unlikely that
the State will be able to provide adequate funds in the
foreseeable future. Now more than ever, school
districts need to find ways to help them maintain
quality programs. SCA 5 provides school districts with
much-needed flexibility in raising local educational
funds.
The measure would remedy several conditions faced by
educational institutions. Current state budget
practices underfund 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 2/3 requirement for passage of a local parcel
tax allows a relatively small minority of voters to
prevent a community from implementing the kind of
educational system that a sizable majority of the
community envisions. This measure would allow a
supermajority of 55% of local voters, rather than the
current 2/3 majority required, to approve a local parcel
tax for local educational purposes. California voters
have consistently designated education as a chief
priority in recent years, and accordingly in 2000 passed
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an initiative lowering to 55% the threshold for passing
education capital facilities bonds; this measure
conforms the threshold for parcel taxes to that same
level.
Current state budget practices undermine local control and
distance the electorate from their education leaders,
since the latter 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, it subsequently can hold district or county
officials directly accountable for using the resources
as intended and for expected results.
SCA 5 includes several key "accountability restrictions"
that will provide increased oversight to ensure that
funds raised from a parcel tax are spent appropriately
and for certain intended purposes. Additionally, a $250
per parcel cap has been included in the bill; however,
if a district wishes to place a parcel tax on the ballot
that exceeds the $250 cap, they could still do so but it
would require a 2/3 vote for passage.
2. Land Owner Tax, But Not A Land Owner Election . SCA 5
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.
3. Related and Prior Legislation . SCA 5 is substantially
similar to SCA 6 (Simitian) of 2009, SCA 17 (Simitian)
of 2008, SCA 8 (Simitian) of 2005, and ACA 4 (Simitian)
of 2003, none of which were enacted.
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PRIOR ACTION
Senate Governance and Finance Committee:6-3
POSITIONS
Sponsor: Author
Support: Albany Unified School District
Alhambra Unified School District
Alpine County Office of Education
American Federation of State, County and Municipal
Employees
Arcata School District
Association of California School Administrators
Association of Low Wealth Schools
Azusa Unified School District
Baldwin Park Unified School District
Bear Valley Unified School District
Berkeley Unified School District
Beverly Hills Unified School District
Bishop Unified School District
Blake School District
Blue Lake Union School District
Briggs Elementary School District
Brisbane School District
Burlingame Elementary School District
Cabrillo Unified School District
Calaveras Unified School District
California Association of School Business
Officials
California Association of Suburban School
Districts
California Catholic Conference
California Community College League
California Federation of Teachers
California School Boards Association
California School Employees Association
California State PTA
California Tax Reform Association
California Teachers Association
Campbell Union High School District
Carlsbad Unified School District
Carmel Unified School District
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Carpinteria Unified School District
Cascade Union Elementary School District
Castaic Union School District
Castro Valley Unified School District
Chico Unified School District
Children Now
Cloverdale Unified School District
Colton Joint Unified School District
Community College League
Compton Unified School District
Cotati-Rohnert Park Unified School District
County Board of Education of Contra Costa County
Covina-Valley Unified School District
Denair Unified School District
Downey Unified School District
Dry Creek Joint Elementary School District
El Monte Union High School District
El Segundo Unified School District
Etiwanda School District
Evergreen School District
Farmersville Unified School District
Fillmore Unified School District
Firebaugh-Las Deltas Unified School District
Folsom Cordova Unified School District
Foothill - De Anza Community College District
Fremont Union High School District
Freshwater School District
Garfield Elementary School District
Goleta Union School District
Gravenstein Union School District
Hermosa Beach City School District
Hillsborough City School District
Hollister School District
Hueneme Elementary School District
Jacoby Creek Charter School District
Jefferson Elementary School District
Jefferson Union High School District
John Swett Unified School District
Juction School District
Kenwood School District
Keppel Union School District
Lafayette School District
Laguna Beach Unified School District
Lagunitas Elementary School District
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Lake Elsinore Unified School District
Las Lomitas Elementary School District
Las Virgenes Unified School District
Lawndale Elementary School District
League of Women Voters of California
Liberty Union High School District
Little Lake City School District
Loma Prieta Joint Union Elementary School District
Los Altos School District
Los Gatos Union School District
Los Gatos-Saratoga Union High School District
Manifee Union School District
Maple Creek Elementary School District
Mariposa County Unified School District
Mark West Union School District
Mendocino Unified School District
Menlo Park City School District
Merced Union High School District
Mill Valley School District
Moorpark Unified School District
Moraga School District
Mountain View Whisman School District
Mt. Diablo Unified School District
Napa County Office of Education
Newcastle Elementary School District
Newhall School District
Northern Humboldt Union High School District
Novato Unified School District
Oak Park Unified School District
Oakley Union Elementary School District
Old Adobe Union School District
Orinda Union School District
Oroville City Elementary School District
Pacific Elementary School District
Pacifica School District
Pajaro Valley Unified School District
Palm Springs Unified School District
Palo Alto Unified School District
Pittsburg Unified School District
Placentia-Yorba Linda Unified School District
Pleasant Ridge Union School District
Pleasanton Unified School District
Plumas County Office of Education
Point Arena Schools
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Pontana Unified School District
Poway Unified School District
Ravenswood School District
Riverside County School Superintendents'
Association
Salinas Elementary School District
San Bernardino County District Advocates for
Better Schools
San Diego County Office of Education
San Mateo County Board of Education
San Mateo-Foster City School District
San Rafael City Schools Joint District
San Ramon Valley Unified School District
Santa Barbara School Districts
Santa Clara Unified School District
Santa Monica-Malibu Unified School District
Sausalito Marin City School District
Scotts Valley Unified School District
Sebastopol Union School District
Sequoia Union High School District
Shasta Union High School District
Silicon Valley Leadership Group
Simi Valley Unified School District
Small School Districts' Association
Snowline Joint Unified School District
Solano County Board of Education
Sonoma County Office of Education
Soquel Union Elementary School District
South Bay Union School District
Sulphur Springs School District
Sunnyvale School District
Sunol Glen Unified School District
Tamalpais Union High School District
Templeton Unified School District
Torrance Unified School District
Tracy Unified School District
Trona Joint Unified School District
Twin Hills Union School District
Val Verde Unified School District
Vallejo Unified School District
Walnut Creek School District
Walnut Valley Unified School District
West Contra Costa Unified School District
West Sonoma County Union High School District
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Winship-Robbins Elementary School District
Woodland Joint Unified School District
Woodside Elementary School District
Yolo County Board of Education
Yucaipa-Calimesa Joint Unified School District
Oppose: California Association of Realtors
California Taxpayers Association
Howard Jarvis Taxpayers Association
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