BILL ANALYSIS �
ACA 21
Page 1
ASSEMBLY THIRD READING
ACA 21 (Feuer)
As Introduced January 5, 2012
2/3 vote
REVENUE & TAXATION 6-3 APPROPRIATIONS 12-5
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|Ayes:|Perea, Beall, Charles |Ayes:|Gatto, Blumenfield, |
| |Calderon, Cedillo, | |Bradford, |
| |Fuentes, Gordon | |Charles Calderon, Campos, |
| | | |Davis, Fuentes, Hall, |
| | | |Hill, Cedillo, Mitchell, |
| | | |Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Fletcher, |Nays:|Harkey, Donnelly, |
| |Nestande | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY: Amends the California Constitution to lower the vote
threshold for a school district, community college district, and
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
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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
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
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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.
FISCAL EFFECT : None
COMMENTS :
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
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."
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."
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
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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."
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.
"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", the
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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.
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.
Districts have increasingly turned to parcel taxes in recent
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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.
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.
Accountability . Special taxes are subject to certain 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
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$250 per parcel each year, adjusted for inflation.
County Offices of Education . ACA 21 gives the power to enact
parcel taxes to County Offices of Education, which currently
enjoy no taxing powers. If ACA 21 is enacted, the Legislature
may need to specify statutory procedures for County Offices of
Education to levy parcel taxes.
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.
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098
FN: 0004967