BILL ANALYSIS �
ACA 21
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Date of Hearing: July 2, 2012
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Henry T. Perea, Chair
ACA 21 (Feuer) - As Introduced: January 5, 2012
2/3 vote.
SUBJECT : Property tax: educational entities: parcel tax.
SUMMARY: Amends the California Constitution to lower the vote
threshold for a school district, community college district, or
county office of education to levy a parcel tax, subject to
certain requirements. Specifically, this constitutional
amendment :
1)Allows for the imposition, extension, or increase of a parcel
tax on real property by a school district, community college
district, or county office of education, as may otherwise be
authorized by law, by approval of 55%, instead of two-thirds,
of the voters in that district or county voting on the
proposition, if all of the following conditions are met:
a) The proposition is approved by a majority vote of the
membership of the governing board of the school district,
community college district, or county office of education.
b) The proposition contains all of the following
accountability conditions:
i) A list of the specific purposes and programs to be
funded.
ii) A requirement that the proceeds be used only for the
purposes and programs specified in the proposition, and
not for any other purpose.
iii) A requirement that the governing board of the school
district, community college district, or county office of
education does both of the following:
(1) Conduct an annual independent financial audit
of the amount of parcel tax proceeds collected and
expended, and the specified purposes and programs
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funded.
(2) Establish a citizens' oversight committee to
review all expenditures of proceeds and financial
audits and report its findings to the governing board
and to the public.
c) Allows an exemption from tax, to be claimed under
procedures established by the county, for any parcel that,
as of January 1 of each year, is owned by, and upon which
is located the principal residence of, a person or persons
who satisfy one of the following requirements:
i) Are 65 years of age or older, or,
ii) Are receiving Supplemental Security Income for a
disability, without regard to age.
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)Limits the total amount of parcel tax impositions, increases,
or extensions submitted to the voters for approval by a school
district, community college district, or county office of
education to $250, but allows this amount to be annually
adjusted for inflation.
4)Prohibits the usage of proceeds of any parcel tax, as
specified, to pay salaries of any administrator of any school
district, community college district, or county office of
education.
5)Does not limit the authority of a school district, community
college district, or county office of education to impose a
special tax approved in accordance with California
Constitution Section 4 of Article XIII A or Section 2 of
Article XIII C.
6)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:
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1)Authorizes cities, counties, and special districts to impose a
general tax for general governmental purposes with the
approval of a majority of the voters.
2)Prohibits special purpose districts and agencies, including
schools districts, from levying a general tax.
3)Authorizes cities, counties, and special districts to impose a
special tax for specified purposes with the approval of
two-thirds of the voters.
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)Authorizes school and community college districts to impose
qualified special taxes, in accordance with specified
procedures, including the approval of two-thirds of the voters
in the district.
6)Provides that "qualified special taxes" must apply uniformly
to all taxpayers or all real property within the district and
do not include special taxes imposed on a particular class of
property or taxpayers.
7)Authorizes a school district to exempt from a "qualified
special tax" a person 65 years of age or older or a person
receiving Supplemental Security Income for a disability,
regardless of age.
8)Allows school districts to create Community Facilities
Districts and assess Mello-Roos Special Taxes for school
facilities and maintenance services for elementary and
secondary school sites and structures. Requires schools to
give priority attendance access to students residing in
community facilities districts.
FISCAL EFFECT : None
COMMENTS :
1)Author's Statement . The author states that, "If voters want
to invest in their local schools, they should have that
opportunity. Requiring more than 66 percent of voters to
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approve added funding unfairly burdens parents and communities
who just want to make sure their kids get a good education.
As a result of the economic crisis, school districts that
endured years of distressing cuts may need to cut even more.
Local communities should have a fair choice to decide whether
to fund their schools with their own tax dollars.
"According to EdSource, from 1983 to 2010, voters approved 289
parcel taxes in 542 elections (a 53% approval rate), but 92%
of the proposals received at least a majority vote. There are
approximately 980 school districts in California. Clearly,
there is a desire on the part �of] a majority of voters to
help fund their local school districts. This bill is designed
to help give voters that choice."
2)Arguments in Support. The proponents state that this measure
"could enhance the ability of funding resources and mitigate
the impact of the horrific cuts schools have taken these past
several years." They believe that a 55% vote threshold for
parcel taxes "to help provide additional funding for local
school districts, community colleges, and County Offices of
Education is a more realistic approach to the current funding
shortfall our schools are facing."
3)Arguments in Opposition . The opponents argue that, "While
funding for school districts, community college districts and
county offices of education may be a laudable goal, parcel
taxes promote inequities among property owners." The
opponents state that "a parcel tax promotes a highly
regressive, onerous tax structure that runs counterintuitive
to a basic fundamental theory of taxation - that is, taxes
should be based on an individual's ability to pay the tax."
Thus, a "high-income homeowner with a $1 million home would
pay the same parcel tax amount as a homeowner of modest means
with a modest residence." Finally, the opponents argue that
"lowering the threshold to 55% will increase housing costs in
California, even for renters, who will have to absorb costs
from apartment owners."
4)Background . Prior to 1970, the state's K-12 schools largely
relied on local property taxes levied at different rates and
yielding different amounts per pupil in more than 1,000
schools districts in this state. State court rulings in the
Serrano v. Priest equalization cases forced the state to
revise basic school finance and established the revenue limit
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system. �Serrano v. Priest (1971) 5 Cal.3d 584; Serrano v.
Priest (1976) 18 Cal.3d 728; Serrano v. Priest (1977) 20 Cal.
3d 25)]. In order to conform to the court's decision and
reduce the differences in per-pupil amounts, the state created
the revenue limit system that combines local property tax
revenues with state general aid and allows the state to
control the two revenue sources on a per pupil basis. The
state does not fund basic aid districts, where local property
taxes met or exceeded the revenue limit.
5)Proposition 13 and Its Progeny : In 1978, Proposition 13
limited both the tax rates and assessments, thus significantly
reducing property tax revenues, eliminating the ability of
school districts to levy an incremental ad valorem tax on real
property and forcing the state to replace the lost revenues in
district revenue limits. Proposition 13 also specified that
any local tax imposed to pay for specific governmental
programs--a "special tax"--must be approved by two-thirds of
the voters. It was followed by Proposition 62, which
guaranteed that all local general tax increases be approved by
voters. After Proposition 62, local governments resorted to
the use of fees and assessments, which did not require voter
approval, to fill the void. In November 1996, voters enacted
Proposition 218, a Constitutional amendment intended to close
the so-called "Proposition 13 loopholes" relative to excise
taxes, benefit assessments, and fees, and to settle arguments
over the applicability of Proposition 62, (the voting
requirement for general taxes). Proposition 218 applies to all
local government agencies, including charter cities, and
controls how general taxes are levied. 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]. In 2000, Proposition 39 provided a narrow exception to
the two-thirds vote requirement for special taxes by
authorizing the passage of local school construction bond
measures by approval of 55% of voters.
6)"Qualified Special Tax." School districts still have limited
authority to generate local revenues from qualified special
taxes, but most school funding is either received from the
state or federal governments, or controlled by the state
through revenue limits required to equalize per-pupil funding.
While Proposition 13 did not define the term "special tax",
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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].
School districts and special districts are prohibited from
imposing general taxes (Proposition 218) and thus, by
definition, any tax levied by a school district or community
school district is considered to be a special tax subject to a
two-thirds voter approval. Furthermore, a "qualified" special
tax must apply uniformly to all taxpayers (other than persons
over the age of 65) or real property within the district.
Therefore, thus far, those districts have only imposed
"qualified special taxes", under Government Code Section
50079, in the form of a parcel tax.
7)Parcel Tax. 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.
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.
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, in
comparison 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.
Existing law does not limit how the special tax proceeds may
be spent, and therefore, a local school board can specify in
the ballot measure how the funds will be used. Generally,
local parcel taxes provide secure funding for teacher
salaries, books, materials and supplies, computers, and art,
music and sports programs.
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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. Although all districts can propose a parcel tax
to their community, they are relatively rare in most of the
state. Between 2001 and June 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. 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. They are also disproportionately small,
with 66 (80%) of them serving fewer than 10,000 students.
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.
8)Voting (but not paying) and Paying (but not voting).
Currently, as a special tax, a parcel tax levied by a school
or community college district requires approval at an election
of at least two-thirds of the qualified electors of such
district. Courts have interpreted the phrase "qualified
electors of such district" to mean the registered voters
voting in the election concerning the proposed tax. �Neilson
v. City of California City (2005) 133 Cal.App.4th 1296, 1312].
ACA 21 would lower the threshold to 55% of the voters of the
district or county voting on the proposition.
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). 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.
9)Accountability. Special taxes are subject to certain
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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. Further, the
agencies must create an account in which proceeds are to be
deposited. 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.
ACA 21 contains additional accountability requirements, which
are identical to those included in Proposition 39. ACA 21
also limits the total amount of parcel tax submitted to the
voters to $250 per parcel each year, adjusted for inflation.
10)County Offices of Education . ACA 21 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 these powers to branches of county government. County
offices of education support school districts by performing
tasks that can be done more efficiently at the county level.
County offices often help formulate new curricula, staff
development and training programs, design business and
personnel systems, and perform many other services to support
school districts. They also provide a wide range of services,
including special education, career technical education,
programs for at-risk youth, and instruction in juvenile
detention facilities (court schools). Additionally, county
offices of education are responsible for monitoring districts
for adequate textbooks, facilities, and teacher
qualifications. There are 58 county offices of education.
They are governed by elected boards and administered by
elected or appointed county superintendents. If ACA 21 is
enacted, the Legislature may need to specify statutory
procedures for County Offices of Education to levy parcel
taxes.
11)Effective date. If approved by the Legislature, this measure
would appear on the next statewide election ballot and, if
enacted by the voters, would take effect as soon as the
election results are certified.
12)Related Legislation .
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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
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.
REGISTERED SUPPORT / OPPOSITION :
Support
California Catholic Conference
California School Employees Association
California Teachers Association
Community College League of California
Riverside County School Superintendents' Association
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San Diego Unified School District
Opposition
California Taxpayers Association
Howard Jarvis Taxpayers Association
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098