BILL ANALYSIS
SENATE COMMITTEE ON ELECTIONS, REAPPORTIONMENT AND
CONSTITUTIONAL AMENDMENTS
Senator Loni Hancock, Chair
BILL NO: SCA 6 HEARING DATE:
6/11/09
AUTHOR: SIMITIAN ANALYSIS BY:
Darren Chesin
AMENDED: 6/8/09
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:
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 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 per Proposition 39 of
2000.
Existing law permits a school district to levy a special
tax that is uniformly applied to all taxpayers, except the
district may exempt persons over the age of 65, with a 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 Constitutional Amendment would 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
instead of a 2/3 vote. "Parcel tax" is defined as a
special tax imposed upon real property at a rate determined
without regard to the property's value. This measure also
makes other technical and conforming 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
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.
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
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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.
COMMENTS
1.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:
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
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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.
2.Who Pays? . SCA 6 lowers the vote 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. Ergo, many voters do
not bear the cost of the tax, and many who may bear the
cost cannot vote.
PRIOR ACTION
Senate Revenue and Taxation Committee:5-3
POSITIONS
Sponsor: Author
Support: Antioch Unified School District
Association of California School Administrators
Association of Low Wealth Schools
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California Association of School Business Officials
California Association of Suburban School
Districts
California Communities United Institute
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
FIRST 5 Santa Clara County
Fremont Union High School District
Jefferson Elementary School District
League of Women Voters of California
Long Beach City College
Los Angeles Unified School District
Los Gatos - Saratoga Joint Union High School
District
Numerous individual school board members
Palo Alto Unified School District
Riverside County Schools Advocacy Association
San Carlos School District
San Francisco Unified School District
San Mateo - Foster City School District
Scotts Valley Unified School District
Superintendent of Public Instruction
Oppose: California Association of Realtors
California Taxpayers' Association
Howard Jarvis Taxpayers Association
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