BILL ANALYSIS
SENATE REVENUE & TAXATION COMMITTEE
Senator Lois Wolk, Chair
SCA 6 - Simitian
Amended: May 6, 2009
Hearing: May 13, 2009 Fiscal: No
SUMMARY: Lowers from 2/3 to 55% the Threshold of Voter
Approval Necessary for School Districts to Enact
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:
Committee Staff estimates possibly significant future
revenue increases to local agencies resulting from lower
thresholds necessary to enact qualified special taxes.
COMMENTS:
A. Author's Statement
According to the Author, "SCA 6 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 6 does not raise taxes; it simply provides for
local choice and control. The measure would remedy several
conditions faced by educational institutions:
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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.
SCA 6 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
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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
years old and older from paying the tax. Interestingly,
school districts in some areas of the state seek to levy
parcel taxes more so than other areas.
------------------------------------------------------------
|County |No. of School |% of |Total Elections |
| |Districts |Districts |Passed Out of |
| | |that |Those Attempted |
| | |Held | |
| | |Elections | |
|---------+---------------+-------------+--------------------|
|Santa |32 |56% |13 out of 28 |
|Clara | | | |
|---------+---------------+-------------+--------------------|
|San |23 |57% |13 out of 22 |
|Mateo | | | |
|---------+---------------+-------------+--------------------|
|Sonoma |40 |38% |8 out of 19 |
|---------+---------------+-------------+--------------------|
|Alameda |21 |43% |13 out of 15 |
|---------+---------------+-------------+--------------------|
|Marin |20 |55% |12 out of 15 |
|---------+---------------+-------------+--------------------|
|Contra |18 |39% |8 out of 13 |
|Costa | | | |
|---------+---------------+-------------+--------------------|
|Los |84 |12% |5 out of 12 |
|Angeles | | | |
------------------------------------------------------------
C. "Don't tax me?
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Tax the guy behind the tree" posits an old piece of
tax policy wisdom. SCA 6 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 cannot vote.
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.
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
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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:California School Employees' Association
Small School Districts' Association
Association of California School Administrators
California Federation of Teachers
California Teachers Association
Riverside County Schools Advocacy Association
Antioch Unified School District
California State PTA
California Association of School Business
Officials
Jack O'Connell, State Superintendent of Public
Instruction
California Tax Reform Association
Los Angeles Unified School District
Children Now
California School Boards Association
San Francisco Unified School District
California Communities United Institute
California County Boards of Education
California Association of Suburban School
Districts
Oppose: California Taxpayers' Association
California Association of Realtors
---------------------------------
Consultant: Colin Grinnell
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