BILL ANALYSIS �
ACA 18
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Date of Hearing: June 18, 2012
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Henry T. Perea, Chair
ACA 18 (Swanson) - As Amended: April 30, 2012
2/3 vote.
SUBJECT : Taxation: parcel tax.
SUMMARY: Amends the California Constitution to lower the vote
threshold for a city, county, and special district to levy a
parcel tax for the purpose of funding fire or police protection
services. Specifically, this constitutional amendment :
1)Allows for the imposition, extension, or increase of a parcel
tax on real property by a city, county, or special district,
for the purpose of funding the maintenance or improvement of
fire protection services or police protection services, or
both, by approval of a majority, instead of two-thirds, of the
voters in the city, county, or special district voting on the
proposition.
2)Defines "parcel tax" to mean a special tax imposed upon a
parcel of real property at a rate that is determined without
regard to that property's value.
3)Makes technical and conforming changes to Section 4 of Article
XIII A, Section 2 of Article XIII C, and Section 3 of Article
XIII D of the California Constitution.
EXISTING LAW:
1)Authorizes cities, counties, and special districts to impose
general taxes for general governmental purposes, in accordance
with specified procedures, including the approval of a
majority of voters.
2)Prohibits special districts and agencies, including school
districts, from levying a general tax.
3)Authorizes cities, counties, and special districts to impose
special taxes for specified purposes, in accordance with
specified procedures, including the approval of two-thirds of
the voters.
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4)Does not allow cities, counties, or special districts to
impose an ad valorem tax on real property or a transactions
tax or sales tax on the sale of real property within that
city, county, or special district.
5)Allows school districts, community college districts, and
county offices of education to issue bonded indebtedness for
school facilities with 55% approval. (Proposition 39, 2000).
FISCAL EFFECT : None
COMMENTS :
1)Author's Statement . The author states that, "Since 2008,
state and local governments have faced multi-billion dollar
budget shortfalls. Local governments across the state have
implemented cuts in core-public services including public
safety to accommodate the falling revenues. This has resulted
in firefighters and police officers facing a record number of
layoffs. Fire Departments are also increasingly relying on
hiring freezes, reductions in salaries and benefits, and
"brown-outs." The risks posed by these cuts are passed on the
citizens, who have seen an increase in response time, fewer
investigations and patrol units, and station closures. ACA 18
allows local communities to impose a parcel tax by majority
approval of the voters for the purpose of funding, maintaining
or improving fire and police services."
2)Arguments in Support . The proponents of this measure state
that, as "a direct result of the economic downturn, local
governments throughout the state have struggled to provide
essential public safety services." They argue that "in these
times of budget deficits, layoffs, and cutbacks, we need all
options on the table for raising the funds necessary to keep
our communities safe."
3)Arguments in Opposition . The opponents believe that ACA 18
"would make it easier for local governments to obtain funding
for public safety from a flawed revenue source" because
"parcel taxes are not an equitable method of funding local
public safety." The opponents state that parcel taxes "are
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highly regressive" and are levied "on every property in a
given taxing district without regards to a taxpayer's income."
Thus, parcel taxes "run counterintuitive to a basic
fundamental theory of taxation - that is, taxes should be
based on an individual's ability to pay the tax." The
opponents argue that "a two-thirds requirement on taxes
ensures that no group or individual dominates quieter voices
in a democracy" and ACA 18 "would make it easier for
individuals or groups to exert their political will over the
well-being of all individuals in a given jurisdiction."
4)Proposition 13 and Its Progeny : In 1978, California voters
passed Proposition 13 which, among other things, limited
property tax rates and imposed supermajority voter approval
requirements for the passage of special taxes. In 1996,
California voters passed Proposition 218, which reduced the
revenue-raising authority of local governments by prohibiting
the imposition of any general tax without the approval of a
majority of voters. As a result, the Public Policy Institute
of California notes that California has some of the strictest
rules in the nation for raising local revenues. �Ellen Hanak,
Paying for Infrastructure: California's Choices, Public
Policy Institute of California, 2009].
5)General vs. Special Taxes: Background. Under existing law,
cities, counties and special districts have limited authority
to generate local revenues from special taxes. While
Proposition 13 did not define the term "special tax", the
courts, over time, have opined that a tax is a "special tax"
whenever expenditure of its revenues is limited to specific
purposes, i.e. the proceeds of the tax are earmarked or
dedicated in some manner to a specific project or projects.
In contrast, a tax is a "general tax" only when its revenues
are placed into the General Fund and are available for
expenditure for any and all governmental purposes. �Bay Area
Cellular Telephone Co. v. City of Union City (2008) 162
Cal.App.4th 686; Howard Jarvis Taxpayers Assn. v. City of
Roseville (2003) 106 Cal.App.4th 1178]. Special districts and
agencies, including school districts, are prohibited from
imposing general taxes (Proposition 218), and thus, by
definition, any tax levied by a special district is considered
to be a special tax subject to a two-thirds voter approval.
Furthermore, school districts are not allowed to impose a
special tax that is imposed on a particular class of property
or taxpayers. Therefore, thus far, school districts have only
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imposed "qualified special taxes", under Government Code
Section 50079, in the form of a parcel tax.
6)Parcel Taxes. A parcel tax is a flat fee imposed by a city,
county, or special district on each parcel, residential as
well as commercial, rather than on the assessed value of
property located within the local entity's jurisdiction.
Because the same dollar amount of tax is assessed on each
parcel of property, whether the parcel is one acre or 100
acres, parcel taxes are generally regressive, which means
owners of smaller parcels of land pay a larger percentage of
tax as compared to owners of larger parcels of land. Some
districts levy a rate at a fixed amount per square foot of
taxable land, and many include an annual inflation adjustment.
Parcel taxes are flexible ways of raising revenues at the
local level, but are subject to certain requirements.
Existing law does not prescribe a maximum rate of tax nor does
it limit the period within which the special tax may be
imposed. Therefore, the rate of parcel taxes varies
significantly among different districts. Parcel tax proposals
voted on in the last 10 years varied from $26 per parcel to
$765 per parcel. Existing law does not limit how the special
tax proceeds may be spent, and therefore, a local board can
specify in the ballot measure how the funds will be used.
In 2006, the California voters rejected Proposition 88 that
would have amended the California Constitution to levy an
annual $50 real property tax on most parcels with the funds
allocated to specified K-12 education programs.
7)Voting (but not paying) and Paying (but not voting). In the
last few years, local governments have struggled to provide
the necessary services to protect the safety of their
communities. For example, the City of Merced recently
eliminated one-third of its police force, the City of Half
Moon Bay has recently disbanded its police department and
begun outsourcing law enforcement services from the San Mateo
County Sheriff's Office, and the City of Sacramento will have
to issue pink slips to 167 police officers. ACA 18 is
designed to make it easier for voters to approve parcel taxes
for the purpose of funding the maintenance or improvement of
fire or police protection services.
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The incidence of a parcel tax is borne by landowners.
Generally, nonresident landowners are not registered voters
and are not included among the voters voting on the proposed
parcel tax. On the other hand, some registered voters who do
not own land within the district's boundaries are able to vote
on the parcel tax even though they will not be paying that tax
(at least not directly). While all residents of a district
would benefit from improved fire and police services, the
responsibility for paying for these services will fall only on
property owners, including non-residents. The Committee may
wish to consider whether it is equitable to lower the vote
threshold for new parcel taxes when some voters will not bear
the costs and some of those who bear the tax burden are
precluded from voting.
8)Accountability. Special taxes are subject to additional
oversight and accountability provisions. Local agencies must
issue a statement indicating the specific purpose of the tax
and use the proceeds only for that purpose. In addition, the
agencies must create an account in which to deposit the
proceeds. Finally, they must issue an annual report that
includes the amount of money collected and expended, along
with the status of any project required or authorized by the
tax measure.
9)Effective date. If approved by the Legislature, this measure
would appear on the next statewide election ballot and, if
approved, would take effect as soon as the election results
are certified.
10)Related Legislation .
SCA 5 (Simitian), introduced in the 2011 legislative session,
would lower the vote threshold for school districts, community
college districts, and county offices of education to levy
parcel taxes from a 2/3 vote to 55% of the voters in the
district or county under specified circumstances. SCA 5 is
currently pending in the Senate Committee on Elections and
Constitutional Amendments.
ACA 10 (Torlakson), introduced in the 2009-10 legislative
session, would have amended the California Constitution to
lower the constitutional vote requirement for approval of a
special tax to be levied by an education finance district from
two-thirds to a majority of the district voters. ACA 10
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failed to pass out of the Assembly by the constitutional
deadline.
ACA 9 (Huffman), introduced in the 2009-10 legislative session,
would have made changes to the voting requirements contained
in the California Constitution for special taxes and bonded
indebtedness for local government. ACA 9 failed to pass out
of the Assembly by the constitutional deadline.
ACA 15 (Arambula), introduced in the 2009-10 legislative
session, would have lowered the constitutional vote
requirements for approval of a special tax, specifically for
providing funding for local transportation projects from
two-thirds to a 55% majority. ACA 15 failed to pass out of
the Assembly by the constitutional deadline.
SCA 6 (Simitian), introduced in the 2009-10 legislative session,
amends the California Constitution to authorize school
districts, community college districts, and county offices of
education to impose a parcel tax on real property by a 55%
vote of the voters in the district or county. SCA 6 failed to
pass out of the Senate by the constitutional deadline.
11)Double-referral . This bill is double-referred with the
Assembly Committee on Local Government and passed out of that
Committee with a 6-2 vote.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
(AFSCME), AFL-CIO
Association for Los Angeles Deputy Sheriffs
California Fire Chiefs Association
California Special Districts Association
Fire Districts Association of California
Los Angeles County Probation Officers Union, AFSCME, Local 685
Los Angeles Police Protective League
Orange County Professional Firefighters Association, IAFF Local
3631
Riverside Sheriffs' Association
San Mateo County Board of Supervisors
Solano Board of Supervisors
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Opposition
California Chamber of Commerce
California Taxpayers Association
Howard Jarvis Taxpayers Association (HJTA), on behalf of 34
individual HJTA Members
California Association of Realtors
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098