Jon Coupal: The big switch

Proponents of the anti-Proposition 13 ballot measure Assembly Constitutional Amendment 1 (ACA1) are planning to amend the measure and replace it with another threat to taxpayers that only targets property owners. 

As currently submitted and approved for the ballot, ACA 1 repeals the two-thirds vote protection for both local tax increases and bonds in order to pay for “infrastructure,” a term so expansive that local governments would be able to raise taxes for almost any purpose with a vote of just 55% of the electorate. This would make it far too easy to raise local taxes that are currently subject to the higher threshold.

But the problem for supporters of ACA 1 has been the popularity of Proposition 13. Since it was enacted in 1978, voters have continued to support the important two-thirds vote protection as evidenced by numerous polls over the years. 

Various iterations of ACA 1 have been introduced in the Legislature over the last two decades but last year was the first time that legislative leadership – including the bill’s author and chief cheerleader, Assembly member Cecilia Aguiar-Curry – was able to jam it through both houses with the requisite two-thirds vote of each house. 

But a funny thing happened on the way to the ballot. Proponents of ACA 1 learned what taxpayer advocates have been telling them for over forty years – that direct attacks on Proposition 13 would result in severe opposition at the ballot box. Their own polling indicated that ACA 1 would fail in a statewide vote.

“Recent voter surveys have indicated a lack of support for the special taxes portion of the constitutional amendment,” according to agenda documents from a recent meeting of the Metropolitan Transportation Commission and Association of Bay Area Governments Joint Legislation Committee.

They are counting on ACA 1’s lower threshold for bonds to dramatically raise taxes in the Bay Area:

“Based on multiple polls conducted by EMC Research, it seems clear that a 55 percent vote threshold is critical to securing passage of the Bay Area Housing Finance Authority’s pending ballot measure for a $20 billion regional housing bond.”

Hence, Plan B.

Assembly Constitutional Amendment 10 is the new proposal that removes the provision in ACA 1 lowering the two-thirds vote for special taxes but retains the provision lowering the two-thirds vote for local general obligation bonds.

This revised version of ACA 1 is the polar opposite of “new and improved.” In many respects, it is much, much worse. 

Many people may not know that the two-thirds vote requirement did not originate in 1978 with Proposition 13. It has been in the California Constitution since 1879!  For more than a century, local property owners have been protected against excessive bond debt by the requirement that local bonds – repaid only by property owners – need a two-thirds vote of the local electorate to pass. 

But whether it is the two-thirds vote for special taxes or for local bonds, voters have continued to support the higher threshold. That support was reaffirmed with the passage of pro-taxpayer initiatives in 1986, 1996, and 2010.

The most important thing to remember about local bonds is that, while everybody pays sales taxes and other broad based taxes, only property owners are responsible for the debt incurred by local bonds. In fact, local bonds create a lien on property which, if unpaid, can result in foreclosure. 

Making it easier to approve hundreds of dollars a year in tax increases for new bonds won’t make it easier to afford a home. Nor will it make it easier for renters to save, a third of whom spend half their take-home pay on rent payments.

Even if ACA 1 is amended to remove the provision related to special taxes, it remains an unacceptable threat to all property owners. Here’s how: All those special interests who were counting on the passage of ACA 1 so they could more easily impose special taxes aren’t simply going to go away. Rather, they will quickly begin to recast their tax hike proposals as local bonds, attempting to saddle local residents with 30 years of debt for their spending desires. 

While anything can happen in the current chaotic political environment, all measures slated for the November ballot must be finalized by June 27th, just a few days away.

Taxpayers can rest assured that the Howard Jarvis Taxpayers Association is following this very carefully and will keep our members and other supporters informed.

Jon Coupal is president of the Howard Jarvis Taxpayers Association.