The Proposition 13 on the March 3rd primary ballot is bad for taxpayers.It will directly result in significant increases in property taxes and in additional assessments on properties to pay off the $27 Billion in bond payments that will be payable by taxpayers over the next 30 years. This will cause a reduction in real estate values and an increase in annual property tax assessments.
This is not a partisan issue and will affect everyone, so let your friends and family know no matter what their political party preference is.
Below is an editorial from the Orange County Register which gives a good explanation as to why to vote NO on this proposition.
The latest Prop. 13 is bad for taxpayers. Vote No on March 3.
By THE EDITORIAL BOARD | email@example.com |
PUBLISHED: February 2, 2020 at 9:00 am | UPDATED: February 2, 2020 at 11:14 am
There’s no better-known statewide ballot measure than Proposition 13, which in 1978 capped property tax rates at a time when soaring property values were literally taxing people – especially the elderly – out of their homes. Thanks to the state’s cyclical system for assigning ballot numbers, a measure named Prop. 13 is once again on the ballot, in March. It’s the only statewide measure on that primary ballot.
Instead of protecting California taxpayers, however, this $15 billion school bond threatens to significantly increase local property taxes – and embodies the opposite idea from the original Prop. 13. Specifically, it earmarks $9 billion for preschools and K-12 building modernization and $6 billion for public universities and community colleges.
It’s commonplace for the state to float debt to pay for long-term construction projects – for schools, transportation and other infrastructure. That helps explain why the Legislature was able to place this measure on the ballot on a bipartisan basis, with only five lawmakers voting “no” on floor votes on the underlying legislation (Assembly Bill 48).
State general-obligation bonds don’t directly raise taxes even if they create some pressure for new taxes because they boost spending and crowd out other spending programs. Instead, the debt payments come out of the state’s general fund. During a recent Editorial Board meeting, Prop. 13 supporters argued that California’s bonded debt burden has fallen from 6 percent to 3 ½ percent, suggesting the state can now afford to take on Prop. 13’s added debt payments.
Yet this is no ordinary school-construction bond. In addition to creating state debt, it has a hidden and pernicious provision that raises the debt limit for local districts. School districts have repeatedly asked voters to approve facilities bonds – so much so that many school districts have bumped up against state-imposed caps on local indebtedness.
Unlike the old Prop. 13, which capped property tax valuations, this new Prop. 13 would raise those caps from 1.25 percent of assessed property value to 2 percent for elementary-school and high-school districts and from 2.5 percent to 4 percent for unified school districts and community-college districts. These local bonds lead to direct and significant property-tax increases. [Emphasis added]
There are myriad other problems with this bond. If facilities upgrades are such a priority, then why hasn’t the state funded them from its record-setting $220-billion budget? Furthermore, bond funding is a particularly expensive form of spending given the long-term interest payments.
As opponents note in the official ballot argument, “Instead of spending the state’s $21 billion surplus on upgrading school facilities…, the governor and the Legislature are wasting our money on their own pet projects.” One need only think of the high-speed rail project or look at the new spending proposals included in the budget.
Prop. 13 also mandates the use of project labor agreements – union-only construction deals that limit contractor competition and increase the costs of projects by as much as 20 percent. Furthermore, the state passed a $9 billion school-facilities bond in 2016 that promised to fix these same school conditions, yet officials are back asking for more. [Emphasis added]
Here is what the Howard Jarvis Taxpayers Association says about Proposition 13:
NO ON 13 ON MARCH BALLOT
More debt and higher taxes? Vote NO on 13 on the March 3 ballot!
The “Proposition 13” on the March 3, 2020, ballot is a $15 billion school construction bond, but it would cost taxpayers far more than $15 billion. That’s why the Howard Jarvis Taxpayers Association is opposed to this Proposition 13. This measure would increase the state’s debt and interest costs, raise the caps on local school district borrowing and put a thumb on the scale in favor of costly Project Labor Agreements that sharply raise the cost of construction projects and use taxpayer dollars inefficiently.
Too Much State Debt
The March ballot’s Proposition 13 is a $15 billion General Obligation (GO) bond that will cost $27 billion with interest to pay off over 35 years. The cost to the General Fund will be about $740 million annually. This debt has first call on General Fund revenue, meaning that this bond debt interest needs to be funded first before any other programs, including Medi-Cal and law enforcement, can be supported.
Currently our debt service ratio (the amount of the General Fund that goes exclusively to paying off GO bond debt) stands at about six percent. While it can be debated whether this number is too high or too low, it’s important to keep this figure in mind before we obligate ourselves to more debt. This is especially true with a looming recession always on the horizon.
Costly Increase in Local Debt
The current local school district debt cap is 1.25 percent of the total assessed value of taxable property in the district. The March ballot’s Proposition 13 increases this amount to two percent for elementary and most high school districts. The cap applies to cumulative outstanding debt from all school district bonds regardless of when they were approved by voters.
By way of example, let’s say a school district approved three local Proposition 39 bonds between 2010–2016 and hit their debt cap. While voters could approve bonds after that point, the school district wouldn’t be able to sell them unless a) taxable property value increased or b) debt was paid down. If approved, this Proposition 13 would allow the school district to sell more existing bonds or put new ones on the ballot. Regardless, this will increase property taxes on all homes and businesses as more bonds will be sold.
Costly Project Labor Agreements
The March ballot’s Proposition 13 makes it clear that local school districts that apply for state matching funds will receive additional priority, especially in certain funding categories, if they use a Project Labor Agreement, or PLA. While this ballot measure only promotes and doesn’t mandate a PLA, the concern is that this will put greater pressure on school districts to approve them in order to receive these bond dollars should the measure pass. By freezing out non-union contractors and decreasing competitive bids, PLAs have been clearly shown to increase construction costs and are thus not an effective use of taxpayer dollars.