Opinion: Voters should reject this Proposition 13

Photo: Andrew Reed/EdSource

The confusingly numbered “Proposition 13” on the March 3 statewide ballot will waste taxpayer dollars, needlessly increase the state’s debt burden and encourage school districts to issue more debt, raising property tax bills. Voters should reject it.

Jon Coupal

Passed in a rush by the Legislature as Assembly Bill 48, this Prop. 13 is a grab-bag of goodies for the well-connected.

For Wall Street bond underwriters and investors, it’s $15 billion in general obligation bonds that will cost taxpayers about $26 billion when decades of interest costs are added.

The Legislative Analyst’s Office estimates that Prop. 13 will cost taxpayers $740 million per year for 35 years.

For construction trade unions and the contractors that employ them, the measure requires the state to give funding priority to projects in districts that sign a project labor agreement.

These are agreements that limit competitive bidding and require districts to pay the highest labor costs in the region, raising the cost of every school construction project. This is an inefficient use of the taxpayers’ hard-earned money.

Unlike the more famous Proposition 13 passed in 1978, this Prop. 13 would nearly double the debt caps that currently limit how much bond debt local school districts may incur.

Under this Prop. 13, the caps on local bond debt would go from 1.25 percent of assessed property value to 2 percent for elementary and high school districts, and from 2.5 percent to 4 percent for unified school districts and community college districts.

That means districts can issue bonds that were previously authorized but unissued because the debt would have put them over the cap. They also can put new bond measures on the ballot. School bonds need only 55 percent approval to pass unlike other local bonds, which require a two-thirds vote of the electorate.

The cost of local school bonds is borne by property owners; it shows up at the bottom of tax bills as “voted indebtedness” for schools.

However, not everyone will have to pay. The well-connected developers of multifamily housing projects near transit were granted an exemption from the higher taxes that will be added to property tax bills of other residents. Other developers of multifamily housing would get a 5-year, 20 percent reduction in their development fees. This is profoundly unfair.

New housing construction drives the need for new school buildings. Why should the developers of new housing get a special tax break while existing property owners, who have been paying for school bonds all along, are asked to pay more?

Prop. 13 puts taxpayers on the hook for more debt at a time when more debt shouldn’t be necessary. The state has record revenue and a record-shattering $222 billion proposed budget.

We’ve seen in the past that good times don’t last forever and, in an economic downturn, bond debt and interest payments take priority ahead of spending for basic government services.

Investors must be repaid before money is spent on Medi-Cal, public safety, roads and every other priority in the budget. Too much debt puts the state at risk of having to raise taxes in the middle of a recession, just to pay for the fundamental services of government.

If there’s a familiar ring to the arguments in support of Prop. 13, then it may be because we heard these same stories in 2016 when voters approved a $9 billion school facilities bond to fix the same problems of poor school conditions.

This time, proponents say, the state will use a special scoring system to make sure that problems such as asbestos in classrooms will receive priority. Removing asbestos from classrooms already should have been a priority, and there’s no reason that such repairs can’t be funded from existing state revenues.

A $15 billion bond measure that also raises local debt caps and provides favors for unions and developers is unnecessary and unwise. At a time when the state is facing a housing affordability crisis, this measure would raise property taxes, a cost that in many cases will be passed through to tenants as higher rents as well as burdening homeowners with higher tax bills. Voters should just say no.

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Jon Coupal is president of the Howard Jarvis Taxpayers Association.  The association is named after Howard Jarvis, a major force behind the passage of the original Prop. 13 in 1978, which imposed strict limits on property taxes in California.

The opinions in this commentary are those of the author.  It is one of a series of commentaries EdSource is publishing expressing a range of views on the school bond measure on the March 3 ballot. As a nonpartisan, nonprofit organization EdSource takes no position on the ballot measure. Read other perspectives here.

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