November 3, 2000


Commentary

Proposition 39 — The Property Tax Increase Initative

By Jon Coupal
President of the Howard Jarvis Taxpayers Association

Taxpayers hold on to your wallets — again! This November, Californians will face another attempt to make it much easier to increase property taxes.

Proposition 39 is identical to Proposition 26, which taxpayers just defeated in March, except that instead of replacing the two-thirds vote requirement to pass local bonds with a simple majority, Proposition 39 would allow local school bonds to pass with a 55% vote. The 55% standard will provide little comfort to taxpayers because based on recent elections, more than 9 out of 10 (94%) bonds would pass.

The state legislative analyst estimates the cost to taxpayers of Proposition 39 at hundreds of millions of dollars annually. But Proposition 39 promoters have stated that, if Proposition 39 passes, it will bring in $20 billion in new revenue. Counting interest on the new bonds, that's nearly $40 billion in new property taxes.

Once the two-thirds vote is eliminated for local school bonds, every other agency will want the same easy access to taxpayers' wallets. State Treasurer Phil Angelides has already called for the total elimination of the two-third vote for all bonds and taxes.

The two-thirds vote requirement has been in the California Constitution since 1879 as a protection for property owners, who must pay the entire cost of new bonds. Everyone votes but not everyone pays. Hardest hit are single family homeowners, who, unlike businesses, have no way to pass on the increased costs.

Each bond becomes a lien on property, usually for 30 years, to guarantee repayment. Those unable to pay can lose their homes and property.

There is little doubt that if promoters of Proposition 39 were to campaign honestly on the issue of reducing the two-thirds vote, it would fail. This helps explain why Yes on 39 ads don't mention higher property taxes but talk of accountability measures and taxpayer protections. This is deception. These "protections" are either already in existing law, or are not contained in the measure itself. While Prop. 39 would become permanent, the "protections" are contained in separate legislation that can be changed at any time by the Legislature without a vote of the people. In fact, lawmakers have already removed the tax limits in response to complaints by bond brokerage firms.

If Proposition 39 promoters really want to protect taxpayers, why aren't the protections included in Proposition 39, which, if passed, will become part of the California Constitution? And why is it that voters must sacrifice an important constitutional protection against higher taxes in return for accountability from public officials?

The fact is school construction needs can be met under the current system. Since 1996, local voters have generously approved 62% of school bonds providing $13.4 billion for new school construction. State bonds that can be approved by a majority vote, that do not require a tax increase, and for which everyone pays through sales and income tax, can address additional needs.

Finally, if the need is so dire, why didn't the governor and Legislature dedicate some of the $12.3 billion state surplus to school construction instead of working so hard to make it easier to increase taxes on homeowners?

Is it any wonder that taxpayers are so concerned about Prop. 39? Twenty years ago, when the tax rate was nearly three times higher, people were literally losing their homes. If the proponents of Proposition 39 have their way, homeowners could again find themselves crushed by high taxes.

We can meet the state's school construction needs without jeopardizing homeownership in our state. On November 7, we at the Howard Jarvis Taxpayers Association urge you to vote no on Proposition 39.

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