Dan Walters: Should property taxes be raised?
12/02/2012 12:00 AM
02/26/2013 8:19 PM
Voter approval of sales and income taxes and the advent of Democratic supermajorities in both houses of the Legislature have generated new hope among liberals that Proposition 13, the 1978 property tax limit they consider their bête noire, might be changed.
Not surprisingly, hope on the political left means fear on the right, which considers Proposition 13 to be its ideological touchstone.
Two events last week signal that property taxes are back on the political agenda.
First, Sen. Mark Leno, D-San Francisco, announced a constitutional amendment to lower voter approval on school district parcel taxes – a specialized form of property tax – from two-thirds to 55 percent.
Other legislative leaders, such as Senate President Pro Tem Darrell Steinberg, have already endorsed such a change.
It would be a modest change in one rarely used form of property tax, but its fate would signal whether enough Democratic legislators are willing to breach the property tax firewall, and if they are, whether voters would agree.
A change for school taxes would have the best chance of success, since education is the most popular government activity – which is why Brown & Co. used it in the campaign for higher income and sales taxes.
And should it go all the way, other changes in property tax restrictions would certainly follow. Cities, counties and special districts also would like to lower the vote margin for parcel taxes.
The second event was release of a report by the Legislature's budget analyst on the state's property tax system, suggesting that the way $55 billion a year in local property taxes are distributed, adopted 30-plus years ago, may be outdated.
The report, which delves deeply into the arcane property tax picture, could be considered a primer for any talk about changing it.
So should property tax restrictions be lowered or repealed? Should we adopt a "split roll" that would remove Proposition 13's limits for commercial property?
And, most important, are California's property taxes too low?
Proposition 13's property tax rate – 1 percent of value plus bonds – is 28th among the 50 states, according to a recent study by the Minnesota Taxpayers Association. The range is 3.5 percent in Michigan to 0.23 percent in Hawaii.
However, because California's property values are generally higher than those in other states, our actual bills are also higher than the rate would imply. The tax bill for a median-priced home in California is the 10th highest in the nation, the Minnesota study found.
Finally, the $55 billion in property tax revenue is 11 times what it was after Proposition 13's passage, slightly more than growth in state income and sales tax revenue during that period, despite the rate limit.
Let the debate begin.
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