Is Push to Lower Local Tax Threshold About Funding Vital Projects or Funding Public Pensions?

Is Push to Lower Local Tax Threshold About Funding Vital Projects or Funding Public Pensions?

Yesterday, my colleague Rowena Itchon wrote about Sacramento’s “taxfest” – the various proposals introduced this year to raise taxes on hard-working Californians.  That’s only part of the story.  A group of lawmakers wants to make it easier to raise local taxes.

Thanks to Proposition 13, a two-thirds vote of the people is required to enact local “special taxes” for a specific purpose.  A two-thirds vote is also required to enact most local bond measures (the threshold to pass local school bonds is 55 percent.)

Assembly Democrats have proposed a “#Build2020 Plan,” which would – if approved by voters in 2020 – lower the voter approval threshold to 55 percent to pass “general obligation (GO) bonds and special taxes for affordable housing and public infrastructure projects.”

At a Capitol press conference, Assemblywoman Cecilia Aguiar-Curry, said that, “this measure will put power into the hands of local government and local voters.”  Really, this is about changing the balance of power to give local governments more power over residents.

Voters have significant power at the ballot box – and aren’t afraid to use it – to reject local taxes and bonds viewed as excessive or unnecessary.  Local government officials and those who stand to benefit from the taxes and bonds don’t like voters saying no to millions in new spending.

It should be hard to impose local taxes and bonds because significant consensus should be required to fund major community investments.  It should also be difficult pass new bonds as incurring more local debt isn’t something that should be taken lightly.

Keep in mind that taxes and bonds are still being approved despite the two-thirds vote.  According to data from the State Treasurer’s office, 1,110 local tax and bond measures across the state have received a two-thirds vote for approval since 1998.

Supporters highlighted a list of “near miss” approvals for measures across the state to fund library, fire protection, park, hospital, and other infrastructure projects.  Surely, we can’t be against those things?

But this debate is not about that.  The real problem is fiscal mismanagement and poor spending priorities at the local level.  City officials bemoan the lack of funding for critical priorities, but they didn’t bother to fund these projects in their municipal budgets.  So, they want local taxpayers to bail them out for their poor budget priorities.  Since too many say no, they want to change the law so it is easier to impose their will over a reluctant electorate.

Never mind the fact that the state has a $21.4 billion surplus, for which local communities should be lobbying the state to get their fair share of funding.  In addition, the Los Angeles Times notes that voters approved $167.7 billion in statewide bond measures between 1986 and 2018 for many of these same priorities – transportation, parks, libraries, hospitals and housing.  Just last November, voters approved $4 billion in bonds for affordable housing programs, $2 billion for mental health housing, and $1.5 billion for children’s hospitals – all measures that will benefit communities statewide.

Another major reason for this push is California’s growing pension crowd out.  As PRI’s Wayne Winegarden has written, California’s unfunded public employee pension obligations stand at nearly $1 trillion using the most realistic estimate.  As local public pension spending grows, available dollars to fund critical priorities are crowded out.  Connect the dots, making it easier to raise taxes for important priorities frees up other money to spend funding unsustainable public pensions.

ACA 1 will put local taxpayers on a slippery slope for more taxes and debt in every election.  This year, we need a tax increase to fund libraries.  Next year, it will be a bond measure for new public hospitals.  Then, it will be a tax for public safety.  If ACA 1 passes, overtaxed residents will soon find themselves saying – when will it end?

The constant push for higher taxes and spending will never end unless the two-thirds threshold to enact local taxes and bonds is kept on the books to protect taxpayers.

Tim Anaya is the Pacific Research Institute’s communications director.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.