BILL ANALYSIS Ó
REVISED SUPPORT/OPPOSITION
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SCA 3 HEARING: 5/15/13
AUTHOR: Leno FISCAL: No
VERSION: 12/3/12 TAX LEVY: No
CONSULTANT: Grinnell
TAXATION: EDUCATIONAL ENTITIES: PARCEL TAX
Lowers the vote threshold for school districts, community
college districts, and county office of education to levy
special taxes from 2/3 to 55%.
Background and Existing Law
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 2/3 vote (Article XIII C). Proposition 13 (1978)
required a 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 a 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).
Current law additionally allows school districts and
community college districts to levy qualified special taxes
that are uniform as applied to all taxpayers with 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. The Legislature also
SCA 3 - 12/3/13 -- Page 2
allows school districts to exempt recipients of Social
Security Disability Income (SSDI) (SB 874, Hancock, 2012).
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.
Proposed Law
SCA 3 amends the Constitution to authorize 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 majority 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 committee 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.
The constitutional amendment states that the governing
board of the school or community college district or county
office of education must set a maximum amount of tax
imposed, increased, or extended, and adjust that maximum
amount for inflation according to the Consumer Price Index
published by the United State Department of Labor.
The measure also defines "parcel tax" as a special tax
SCA 3 - 12/3/13 -- Page 3
imposed upon real property at a rate determined without
regard to the property's value. Tax proceeds may not be
used to fund administrative salaries. SCA 5 also makes
clarifying and conforming changes to the Constitution.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . According to the author, "SCA 3
provides parents, teachers and school districts with more
local control and much-needed flexibility in raising local
education funding. The measure would allow communities to
augment the resources available for direct education and
support programs, and increase accountability. The current
2/3rds vote requirement for passage of a local parcel tax
allows a relatively small minority of voters to block a
local education funding proposal that may have the support
of more than a majority of voters. This measure would allow
a supermajority of 55 percent of local voters to approve a
local parcel tax for educational purposes. This measure
would allow local educational leaders to solicit community
support for additional revenue to help fund local
educational priorities. SCA 3 gives local voters a voice
in setting priorities and will hold district and county
officials directly accountable for the use of the funds.
California voters have consistently designated education as
a chief priority in recent years. In 2000, voters approved
an initiative lowering to 55 percent the threshold for
passing education capital facilities bonds. SCA 3
conforms the vote threshold for parcel taxes to the same
level."
2. Who pays ? An old piece of tax policy wisdom attributed
to Louisiana Governor Russell Long states that, "Don't tax
you, don't tax me, tax the man behind the tree." SCA 3
lowers the vote threshold to enact parcel taxes, which
landowners who own property in the jurisdiction imposing
the tax must pay. Therefore, resident non-landowners, like
renters, can vote in the election, but do not pay the tax,
except to the extent that property owners can pass them on
in rents which depends on supply and demand of housing in a
given area. In the reverse, non-resident landowners are
SCA 3 - 12/3/13 -- Page 4
not able to vote in the election, but must pay the tax if
voters approve the measure. In addition, districts may
exempt taxpayers 65 years or older or who receive SSI
income, 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 cannot vote.
3. Signed, sealed, delivered . California 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. While they require a 2/3 vote, 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 measure 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 2012,
voters approved 322 parcel taxes in 584 elections, with
more than 90% of proposals receiving at least a majority
vote from the electorate during that time. However, in the
last two elections, voters have indicated an increased
willingness to approve the tax at the current vote
threshold: in 2011, 18 out of 27 districts approved the
tax, plus 27 out of 41 in 2012. Most districts levying
parcel taxes are economically better off: As of 2010, 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. EdSource also indicated that
the districts that had successful elections generally serve
SCA 3 - 12/3/13 -- Page 5
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.
EdSource includes the following table showing the variety
of rates, terms, and election results for parcel tax
elections in November, 2012:
--------------------------------------------------------------------------------------------------------
|County |District/Measure |Amount |Passed (2/3 needed) |% Yes vote |
--------------------------------------------------------------------------------------------------------
|------------+-------------+------------+------+-------|
|Alameda |San Leandro |$39/yr for |No |65.6% |
| |Unified/L |5 yr (new) | | |
|------------+-------------+------------+------+-------|
|Contra |Martinez |$50/yr for |Yes |67.7% |
|Costa |Unified/C |5 yr | | |
| | |(extension) | | |
|------------+-------------+------------+------+-------|
|Contra |West Contra |7.2 cents |Yes |74.7% |
|Costa |Costa |sq. ft for | | |
| |Unified/G |5 yr | | |
| | |(extension) | | |
|------------+-------------+------------+------+-------|
|Humboldt |Arcata |$49/yr for |Yes |77.3% |
| |Elementary/E |5 yr (new) | | |
|------------+-------------+------------+------+-------|
|Kern |Mojave |$42/yr for |No |50.4% |
| |Unified/N |5 yr (new) | | |
|------------+-------------+------------+------+-------|
|Los Angeles |Local |2 cents/sq. |Yes |69.5% |
| |Classrooms |ft | | |
| |Funding |(residential| | |
| |Authority CL |); 7.5 | | |
| |(4 |cents/sq. | | |
| |elementary |ft (other | | |
| |districts + |property) | | |
| |Centinela |for 12 yr | | |
| |Union High) |(new) | | |
|------------+-------------+------------+------+-------|
|Los Angeles |Little Lake |$48/yr for |Yes |74.1% |
| |City |5 yr(new) | | |
| |Unified/TT | | | |
|------------+-------------+------------+------+-------|
|Los Angeles |Westside |$96/yr for |No |53.6% |
| |Union School |4 yr (new) | | |
SCA 3 - 12/3/13 -- Page 6
| |District/WP | | | |
|------------+-------------+------------+------+-------|
|Marin |Mill Valley |$196 yr/8 |Yes |70.4% |
| |Schools/B |yr (in | | |
| | |addition to | | |
| | |a $731 tax | | |
| | |through | | |
| | |2018 that | | |
| | |increases | | |
| | |5% a yr) | | |
|------------+-------------+------------+------+-------|
|Marin/Sonoma|Shoreline |$184.70/yr |Yes |71.5% |
| |Unified/C |for 8 yr | |(Marin:|
| | |(extension) | | |
| | | | |76.8%; |
| | | | |Sonoma:|
| | | | | |
| | | | |63.2%) |
|------------+-------------+------------+------+-------|
|Monterey |Pacific |$65/yr for |No |65.1% |
| |Grove |5 yr | | |
| |Unified/A |(extension) | | |
|------------+-------------+------------+------+-------|
|Nevada |Pleasant |$92/yr |No |36.7% |
| |Ridge |(new) | | |
| |Union/K | | | |
|------------+-------------+------------+------+-------|
|San Mateo |San Bruno |$199/yr for |No |58.5% |
| |Park School |5 yr (new) | | |
| |District/G | | | |
|------------+-------------+------------+------+-------|
|Santa |Santa |$48/yr for |Yes |68.6% |
|Barbara |Barbara |4 | | |
| |Unified |yr(continuat| | |
| |(high |ion) | | |
| |school)/A | | | |
|------------+-------------+------------+------+-------|
|Santa |Santa |$45/yr for |Yes |69.6% |
|Barbara |Barbara |4 yr | | |
| |Unified |(continuatio| | |
| |(elementary)/|n) | | |
| |B | | | |
|------------+-------------+------------+------+-------|
|Santa Clara |Berryessa |$79/yr for |Yes |77.3% |
| |Union |8 yr | | |
| |Schools/K |(continuatio| | |
SCA 3 - 12/3/13 -- Page 7
| | |n) | | |
|------------+-------------+------------+------+-------|
|Sonoma |Fort Ross |$48/yr for |No |65.4% |
| |Elementary/L |8 yr | | |
| | |(renewal) | | |
|------------+-------------+------------+------+-------|
|Sonoma |Sebastopol |$76/yr for |Yes |71.4% |
| |Union/O |8 yr | | |
| | |(renewal) | | |
|------------+-------------+------------+------+-------|
|Sonoma |West Sonoma |$48/yr for |Yes |72.3% |
| |County |8 yr | | |
| |Union/K |(renewal) | | |
|------------+-------------+------------+------+-------|
|Tulare |Three Rivers |$60/yr |No |61.6% |
| |School |(new) | | |
| |District/I | | | |
|------------+-------------+------------+------+-------|
|Ventura |Ventura |$59/yr for |Yes |67.1% |
| |Unified/Q |4 yr (new; | | |
| | |voters | | |
| | |rejected | | |
| | |$96/yr in | | |
| | |2010) | | |
|------------+-------------+------------+------+-------|
|Yolo |Davis Joint |$204/yr for |Yes |68.9% |
| |Unified/E |4 yr | | |
| | |(renewal | | |
| | |plus $242 | | |
| | |more; | | |
| | |contingent | | |
| | |on Prop 30 | | |
| | |failing) | | |
------------------------------------------------------
4. Uniformity ? As noted above, the parcel tax statute is
very thin when compared to other taxes. One requirement
the law places on the district is to impose the tax
"uniformly to all taxpayers or real property within the
district, except that unimproved property may be taxed at a
lower rate than improved property." However, the
definition of "uniformly" was recently changed by the First
District Court of Appeals when it decided Borikas v.
Alameda Unified School District (CASE# A129295). The Court
held that the uniformity requirement did not allow
SCA 3 - 12/3/13 -- Page 8
districts to classify property by use, such as residential,
commercial, or industrial, and measure the tax differently
for each class as the District's Measure H, enacted in
2008, did. The Court didn't strike down the tax; instead
ordering refunds to owners of commercial and industrial
property equal to the difference between the tax paid and
the amount the taxpayer would've paid had then property
been classified as residential. While the District has
asked the California Supreme Court to review the decision,
districts have started avoiding enacting parcel taxes
applying different rates or measurements of tax based on
the property's use. AB 59 (Bonta) would change parcel tax
law to bless the differential treatment of property, but
has not yet been heard in Committee, and may not be able to
do so retroactively to the tax's enactment date.
5. If at first you don't succeed ? SCA 3 is substantially
similar to SCA 5 (Simitian, 2011), SCA 6 (Simitian, 2009),
SCA 17 (Simitian, 2008), SCA 8 (Simitian, 2005), and ACA 4
(Simitian, 2003), all of which were not enacted.
6. Dueling exemptions . SCA 3 requires that parcel taxes
enacted by 55% vote exclude persons over the age of 65 and
those receiving SSI from the tax, exemptions that are
permissive for local agencies seeking to enact the tax at
the 2/3 vote threshold. Such a requirement reduces local
flexibility, and reduces the tax base, causing the tax to
be higher for each parcel assuming an equal revenue goal.
SCA 3 parcel taxes must exclude persons who may have plenty
of income and wealth because the exemption is based solely
on the person's age. The Committee way wish to consider
whether this requirement is necessary given districts'
existing flexibility.
7. First time for everything . SCA 3 gives the power to
enact parcel taxes to County Offices of Education, which
currently enjoy no taxing powers. School districts,
community college districts, and other specified special
districts may enact these taxes by statute, but never
before has the Legislature allowed the powers to tax to
this branch of county government. If SCA 5 is enacted, the
Legislature may need to specify statutory procedures for
County Offices of Education to levy parcel taxes.
8. Join the party . The Committee will hear five other
measures that change the vote threshold for special taxes:
SCA 3 - 12/3/13 -- Page 9
SCA 4 (Liu) - allows local agencies to levy,
extend, or increase special taxes at 55% vote for
local transportation projects.
SCA 7 (Wolk) - lowers the vote threshold for bonded
indebtedness incurred to construct, reconstruct,
rehabilitate, or replace public libraries; allows
local agencies to levy, extend, or increase special
taxes at 55% vote to fund public libraries.
SCA 8 (Corbett) - allows local agencies to levy,
extend, or increase special taxes at 55% vote for
local transportation projects.
SCA 9 (Corbett) - allows local agencies to levy,
extend, or increase special taxes at 55% vote for
community and economic development projects.
SCA 11 (Hancock) - allows local agencies to levy,
extend, or increase special taxes at 55% vote for any
purpose.
9. Technicals . Committee staff recommends the following
amendments:
Add SSDI on Page 3, line 10 to ensure consistency
with SB 874.
Use California Consumer Price Index as published by
California Department of Industrial Relations instead
of federal measure.
Support and Opposition (05/09/13)
Support : Association of California School Administrators;
Bayshore Elementary School District; Brisbane Elementary
School District; Burlingame Elementary School District;
Cabrillo Unified School District; California Association of
School Business Officials; California Coalition for
Adequate School Housing; California County Superintendents
Educational Services Association; California Federation of
Teachers; California School Boards Association
(co-sponsor); California School Employees Association
(CSEA), AFL-CIO (co-sponsor); Fremont Unified School
District, Firebaugh/Las Deltas School District; Jefferson
Unified High School District; Los Altos School District;
Mountain View School District; Pacifica School District;
Palo Alto Unified School District; Portola Valley School
District; Redwood City Elementary School District;
Riverside County Superintendents of Schools; San Carlos
School District; Sequoia Union High School District; San
SCA 3 - 12/3/13 -- Page 10
Francisco Unified School District; San Lorenzo Valley
Unified School District; Silicon Valley Leadership Group;
Small School Districts' Association; Torrance Unified
School District; South San Francisco Unified School
District; Woodside Elementary School District.
Opposition : Apartment Association of Greater Los Angeles;
Apartment Association, California Southern Cities;
Associated Builders and Contractors of California;
Association of California Life, Health, and Insurance
Companies; California Ambulance Association; California
Apartment Association; California Asian Pacific Chamber of
Commerce; California Association of Realtors; California
Business Properties Association; California Chamber of
Commerce; California Charter Schools Association Advocates;
California Grocers Association; California Restaurant
Association; California Retailers Association; East Bay
Rental Housing Association, Howard Jarvis Taxpayers
Association; National Federation of Independent Business;
Nor Cal Rental Property Association, Orange County Business
Council; San Diego County Apartment Association; Santa
Barbara Rental Property Association; Southwest California
Legislative Conference; Western Manufactured Housing
Communities Association,