Statewide messages in aftermath of LA parcel tax’s defeat

June 11, 2019

L.A. Unified Supt. Austin Beutner and UTLA president Alex Caputo-Pearl. Late Wednesday night,

The rout of Los Angeles Unified’s parcel tax last week will reverberate beyond L.A. to other school districts that had hoped a victory in Los Angeles might signal that their voters, too, would consider higher school taxes.

Think again, said Mark Baldassare, president and CEO of the Public Policy Institute of California, which regularly polls Californians on issues. The results in Los Angeles send a message that school districts “will have to lower expectations about whether the public connects the dots between wanting more money for schools and the willingness to raise their own taxes.”

The state’s business community, on the other hand, will be buoyed that a parcel tax that would have charged buildings by the square foot went down. It was designed to hit large commercial and business properties the hardest.

Now, the business community is heading into a mammoth fight over a November 2020 statewide ballot initiative to amend Proposition 13, the 1978 constitutional amendment limiting property tax increases. It’s called a “split roll” initiative because it wouldn’t affect residential property owners but would significantly raise taxes for business and commercial properties. Some of the Los Angeles social justice and community organizations that canvassed for Measure EE, including InnerCity Struggle and the Community Coalition, were instrumental in putting the split roll on the ballot.

Think of Measure EE as the first round in the bigger fight, and the business community won, said Dan Schnur, a longtime political observer and adjunct faculty member of the USC Annenberg School.

In a small turnout, Los Angeles Unified voters rejected a parcel tax that would have raised $500 million per year. Parcel taxes require the approval of two-thirds of voters. With 46 percent voting yes, Measure EE failed to win a majority.

The Los Angeles Unified Board of Education voted in March to put the parcel tax on the June ballot, leaving little time to organize. The board could have waited until the March 2020 Democratic presidential primary, assuring a big turnout in a Democratic city, or until the November 2020 general election. But they pressed ahead for a special June election, in the after-glow of a six-day strike by district teachers that had brought parents to picket lines and elicited what appeared to be widespread public sympathy. If the initiative had passed, it would have given the district an extra year of revenue to pay for higher salaries and smaller class sizes, promises spelled out in the 3-year teacher contract signed in January.

In a poll commissioned by the district soon after the strike, 74 percent said they’d back a parcel tax to help fund schools. That figure dropped to 69 percent, with 4 percent undecided, after presented likely arguments by opponents.

The board and L.A. Unified Superintendent Austin Beutner appeared to have backers working in sync. The district’s unions, United Teachers Los Angeles and Local 99 of the Service Employees International Union, campaigned hard for Measure EE, as did community groups and Mayor Eric Garcetti. With big donors like philanthropist Eli Broad and L.A. Clippers owner Steve Ballmer chipping in, the Yes on Measure EE raised at least $8 million — four times the amount raised by opponents. The L.A. Area Chamber of Commerce and the Valley Industry & Commerce Association had vowed to raise $4 million to defeat the measure, but, together with money from the anti-tax Howard Jarvis Association, raised half that.

Only about 15 percent of the district’s 2.5 million voters voted on what, for most of them, was the only item on the ballot.

Edgar Zazueta, senior director of Policy and Governmental Relations for the Association of California School Administrators, said given the turnout and the defeat of Measure EE he “questions that there is a bounce on the heels of a strike.”

In today’s news cycle, people quickly move on to other things, and it’s difficult to sustain energy weeks later, Zazueta said. The lesson for the education community would appear to be “not to rely on labor discord to build a campaign” for more money, he said.

At a post-election joint press conference, United Teachers Los Angeles President Alex Caputo-Pearl and L.A. Unified board members praised the work of a broad coalition of community groups, labor unions and elected officials who elevated the issue of underfunded schools. Caputo-Pearl called the defeat “the beginning of the fight for funding sparked by our strike.” In an interview, board President Mónica Garcia said the board has not ruled out returning next year with another vote on a parcel tax, even as it looks to Gov. Gavin Newsom and the Legislature to increase overall funding for schools.

Zazueta and Baldassare agree the focus should shift to Sacramento and statewide efforts requiring only a majority vote. Measure EE’s defeat affirmed how hard it is to pass a parcel tax — and virtually impossible if there is well-organized opposition, they said.

One proposed constitutional amendment before the Legislature, requiring statewide ratification by voters, would at least make it easier to pass a parcel tax. Senate Constitutional Amendment 5 calls for lowering the threshold from two-thirds to 55 percent — the same percentage needed to pass a local school construction bond. The California Local Government Finance Almanac analyzed school parcel taxes on the ballot since 2002 and found that 91 percent would have passed with the lower threshold, compared with 62 percent that actually passed.

For now the proposed constitutional amendment has stalled in the Senate, although the author, Sen. Jerry Hill, D-San Mateo, can revive it next year.

Focus shifts to the split roll

Most school parcel taxes impose a flat amount per property, a regressive form of taxation that doesn’t consider the value of the property; a 1,000-square-foot bungalow and a 25-story office building pay the same. Measure EE would have imposed a tax of 16 cents per square foot, meaning commercial real estate and businesses with larger buildings would pay more. Business groups took offense — not just because of the cost but how Beutner and the board treated them, they said.

“We said we want to be part of a solution for a plan to make schools better,” said Stuart Waldman, president of the Valley Industry and Commerce Association, based in the San Fernando Valley. But Beutner and the board didn’t compromise, perhaps by capping what a property owner would pay and restricting what the money would be used for, along with guarantees it would be used effectively, he said.

Rhetoric on both sides became heated. UTLA and community groups condemned businesses and their CEOs for dodging their fair share of taxes, dooming poor kids to crowded classes and underfunded, understaffed schools. In ballot arguments and TV ads, the business coalition dismissed the parcel tax as a bailout of an inefficiently and ineptly run district.

What caught the attention of Rob Lapsley, president of the California Business Roundtable in Sacramento, was the argument by Measure EE supporters that the parcel tax was the first of a two-pronged strategy, with the second being the split-roll initiative. Schools and Community First, the formal name for the split-roll initiative, could bring in $11 billion annually, with $4.5 billion dedicated to schools and community colleges. By requiring business properties to be reassessed regularly, not just when they are sold, properties’ taxable value would increase, generating more revenue.

The Business Roundtable, which has vowed to lead an $80 million effort to kill the split-roll initiative, had not gotten involved in a school parcel tax before, Lapsley said. Its $355,000 donation, the largest contribution to the No on EE campaign, turned the measure into an early skirmish on split roll — and signaled that there is more money coming. “We will not be outspent,” Lapsley said. “We will not; it’s too important to the California economy.”

In the aftermath of Measure EE, the coalition that could potentially support a future L.A. Unified parcel tax appears strong, but relations with the Los Angeles Area Chamber of Commerce, a prominent partner in district innovation and youth workforce initiatives, have soured. Citing the chamber’s anti-Measure EE efforts, Caputo-Pearl, Garcia, Garcetti and Beutner notified the chamber they were dissolving the joint LA Compact, a decade-old collaboration among two dozen organizations and institutions, including the chamber of commerce, to better prepare students for success in college and pathways to careers.

Meanwhile, at a meeting last weekend, L.A. community groups recommitted to working to support the split-roll initiative and called the organizing for Measure EE “good practice” for the campaign ahead. Unlike the parcel tax, a simple majority of statewide voters will be needed to pass the split-roll initiative.

Hector Sanchez, who directs engagement work for the Community Coalition, told EdSource the fight for full education funding isn’t over. The issue, he said, is “how much corporations are willing to fund measures to assure the success of the community” instead of putting “profits over people.” If the message is clear, “we have faith voters will come out,” he said.

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