Confident that a new Democratic supermajority in the California Legislature will back them, two state senators are proposing to ask voters in 2020 to make it easier for school district voters to pass a parcel tax. Unwilling to await that outcome, Los Angeles Unified school board members are confident they can persuade their voters to pass an ambitious parcel tax now.
For several years, Bay Area Sen. Jerry Hill, D-San Mateo and Sen. Ben Allen, D-Santa Monica, have been looking for an opportunity to lower the threshold needed to pass a parcel tax. It’s now a two-thirds majority; they want to drop it to 55 percent — the same that it takes for voters to approve a school construction bond. But either the political timing has been off or they were just a vote or two shy of the two-thirds support required in the Legislature to put a constitutional amendment on a statewide November 2020 ballot, where it would then need only a simple majority to pass.
But with the November 2018 election providing enough Democrats — 28 of the 40-member Senate and 61 out of 80 in the Assembly — to overcome expected Republican opposition, Hill and Sen. Ben Allen, D-Santa Monica, are moving forward with Senate Constitutional Amendment 5, to establish 55 percent as the new majority.
“We need to have more opportunity to raise revenue for decent education,” Hill said. “Despite significant increases in state funding for schools in recent years, districts are struggling to maintain quality educational services and programs amid escalating costs and declining enrollment.”
A parcel tax is one of the few sources of tax revenue available to school districts. But, in line with Proposition 13’s strict limitations on raising property taxes, a parcel tax must have a flat dollar amount or a uniform rate, regardless of the value of the property or the owner’s ability to pay. That makes the tax regressive, like the sales tax.
The bill would require a school board’s approval before a parcel tax could go on a local ballot and revenue could be used only for the specified purposes listed on the ballot description. The bill is silent on sharing revenue with charter schools whose students reside in the district. That would be a local decision.
About 1 in 8 school districts in California have passed parcel taxes, mostly in the Bay Area. Most parcel taxes are under $200 per year, usually with an exemption for senior citizens. But some districts, including Berkeley and Alameda Unified, use a more progressive variation and charge by the square footage of habitable buildings. That alternative brings in substantially more money from commercial properties, industrial properties and multi-unit housing.
And that’s the option the Los Angeles Unified school board chose when it voted last month to put a 12-year parcel tax at 16 cents per square foot on the June 4 ballot.
Hill called the two-thirds majority requirement undemocratic, giving too much power to a minority of voters. Lowering the threshold would give non-affluent districts a better chance to bring in more revenue.
Emma Turner, president of the La Mesa-Spring Valley School District and new president of the California School Boards Association, said “it makes no sense to place arbitrary restrictions on local communities seeking to provide needed resources for their students” given the state’s “woefully inadequate” funding. And she agreed with Hill that a lower threshold “dramatically increases the likelihood that less affluent districts and districts with high proportions of African-American and Latino students will pass a parcel tax,” she said in a statement.
An analysis by Michael Coleman, the creator of California Local Government Finance Almanac, an online resource of data and analyses, found that the lower threshold would significantly increase chances of passage. Since 2002, 266 of 427 proposed parcel taxes in the state passed; an undetermined number were parcel tax renewals. Many of those that failed had come within a percentage or two of the 66.7 percent required. If the threshold had been 55 percent, 91 percent — 389 of 427 — would have passed. What is not known, however, is how many districts wanted to propose a parcel tax but backed out because of low polling numbers.
Of the 26 school parcel taxes on the ballot in the past two years, 21 got the required two-thirds majority but all received more than 55 percent of the vote.
Impact of L.A. teachers strike
Hill said that widespread community sympathy for recent teacher strikes in Los Angeles and Oakland sent a message to the Legislature that people want more money for schools. In moving quickly to put a parcel tax on the ballot, Los Angeles Unified Superintendent Austin Beutner and the school board are betting that the surge of public support for the strike will carry over to June. Pollster John Fairbank, principal of the firm FM3 Research, told the board he was confident it would.
In his surveys of Los Angeles Unified voters dating back to 2002, at least 70 percent said they believed there was a need for more funding for the district. In 2010, in the midst of the recession, the school board put a $100 parcel tax on the ballot, but, with a poorly financed campaign, it lost handily, with 53 percent support. The difference this time, Fairbanks concluded, is that a record 62 percent of voters indicated a great need for more money and an additional 20 percent saw some need for it in a survey in February. That correlated with the 85 percent who said they strongly backed the strike.
Asked about the specific 16 cents per square foot tax, about 75 percent of voters polled said they’d back it. But subtract the 6 percent of undecided voters leaning yes and the level falls dangerously close to the 66.7 percent needed to pass.
The parcel tax, which will appear as Measure EE on the ballot, is projected to raise $400 million to $500 million per year, starting in 2019-20 — a record amount for a California parcel tax. It would meet the district’s projected shortfall in the final year of a 3-year contract that the school board negotiated in January with striking teachers. The money would be needed to cover many of the nurses, counselors and teachers needed to reduce class sizes. Charter schools would be entitled to a proportional share of the revenue.
United Teachers Los Angeles will help get out the vote in what will likely be a low turnout, off-year election. And Los Angeles Mayor Eric Garcetti, who negotiated the teachers’ contract assuming more state and local revenue, is expected to help fundraise for a credible campaign. He was one of five signers of the official ballot argument for Measure EE, which the Los Angeles County Registrar-Recorder/County Clerk released on Monday.
But for a first-time parcel tax, this size tax is ambitious, especially for a big, diverse district. The median tax would be $235 for an owner of a 1,450-square-foot home. Most homeowners would pay between $100 and $450 annually, according to an analysis by Garcetti’s office.
Industrial, commercial and multi-unit residential properties would generate a little less than two-thirds of the revenue from the 16-cent-per-square-foot parcel tax, with single-family owned and rented properties about a third, with institutional properties making up the difference. Under a flat $537-per-parcel tax, the other option the board considered to raise $500 million, the burden would have shifted to single-family owned and rental properties. They would have generated nearly three-quarters of the revenue from the tax, with industrial, commercial and multi-unit residential properties generating only a quarter, according to L.A. Unified projections.
The influential L.A. Area Chamber of Commerce supported the option of a flat-rate parcel tax, but criticized the choice of a per-square-foot tax as “inconsistent with our principles on singling out the business community and commercial enterprises.” The chamber board has yet to vote on specifically what it will do next.
But a well-funded opposition campaign would likely defeat the proposed property tax. Whether the business community campaigns against the tax — or simply takes no position — could determine its fate.
A good indication of what to expect will come by March 25, the last day for opponents to file ballot arguments against the parcel tax.
To get more reports like this one, click here to sign up for EdSource’s no-cost daily email on latest developments in education.