☆ On outmigration, living standards, and (yes) taxes: What's really at stake with ACA 1?
Coalition of Sensible Taxpayers' president Mimi Willard gives Opp Now readers an exclusive lowdown on what she believes would follow the passage of ACA 1—and the State's proposed “affordable housing” bond (which would dedicate $2.2–4.4 billion specifically to Santa Clara County).
Opportunity Now: Moving forward, what should Santa Clara County residents expect if ACA 1 is given the green light?
Mimi Willard: If ACA 1 passes, residents should expect to see their tax burden rise substantially and repeatedly for the foreseeable future until something breaks.
Here's what's at stake. ACA 1, which will require only a simple majority of “Yes” votes to pass, will reduce the percentage of “Yes” votes required to pass new taxes so long as the proposed taxes include some funding for infrastructure or affordable housing. It is broadly expected that a large percentage of local and regional taxes can be crafted to fit through that new loophole. Currently it takes two-thirds approval to pass most taxes, except school bonds need only 55%, and parcel and sales/use taxes that go into agency/jurisdiction's general fund need only a simply majority.
ACA 1 will be on the Nov 2024 ballot. If it passes, it is immediately effective, lowering the hurdle for passage for all tax measures on that ballot that claim the tax revenues will help fund affordable housing and infrastructure.
So moving the threshold for most taxes from two-thirds approval to 50% or 55% is a huge game changer. Most taxes will pass until voter–taxpayers feel enough pain to start voting “No.”
ON: Some locals are concerned their taxes will skyrocket under ACA 1, worsening their standard of living in this already expensive area. Is this reasonable, do you think?
MW: Yes. Thanks to ACA 1, the cost of living in CA will become more and more unaffordable. The outmigration will accelerate. Friends and grown children will be gone. More corporations will move headquarters. Startups will incorporate elsewhere. This is already happening because CA is so unaffordable. It is about to get a lot worse. Yes, the average standard of living will decline because more people will be financially stressed.
Our organization, the Coalition of Sensible Taxpayers, is not reflexively anti-tax. We understand the need to fund necessary, vital government services. But we are alarmed by what will happen if ACA 1 passes.
At the root of this in CA is that our governments need ever more money. A big part of this is the expansion of government employee pension benefits in the early 2000s. This has resulted in a very large unfunded liability that crowds out other funding needs and results in agencies and jurisdictions (which don't want to cut services) asking for more money. In addition, our elected officials are continually enacting costly, ambitious new programs. When funds are needed to pay for all this, tax measures appear on the ballot. Often they are crafted in such a way that the voter thinks he is getting something for nothing (i.e., thinks someone else will pay). So renters think that they are unaffected by their “Yes” vote on a property tax (parcel tax or bond measure). Of course, it ultimately results in higher rent, as well as services and goods purchased, but the linkage is indirect. It is equally appealing for most people to vote for higher taxes on the wealthy or on businesses. This leads to outmigration of tax revenue and jobs.
ON: Also, what's the deal with the State's big bond measure? Is this just Chapter 1 of a long string of new “affordable” projects—and should taxpayers be wary of any unexpected consequences?
MW: The measure that we're watching is a regional initiative put forward by MTC (Metropolitan Transportation Commission) that likely will be on the Nov 2024 ballot. Note the above comments regarding the lower threshold for passage if voters approve ACA 1.
Regardless of whether you are a proponent of more housing, a regional bond measure isn't appealing. The funds would go through the Bay Area Housing Finance Authority. A better way to fund big undertakings is at the local level: city or county, where there is cost-efficiency and accountability by directly elected local officials. BAHFA's board is comprised of exactly the same region-wide governmental officials who are appointed to the Metropolitan Transportation Commission board. 20% of all the money in the BAHFA bond proposal ends up in BAHFA's hands for “regional projects.” That means they have a lot of discretion over what happens to 20% of the $10–20 billion pie. It seems likely some of that money will also go to covering the costs of administering the bureaucracy.
We don't know all the details yet, but this much seems pretty clear.
So yes, there are other consequences. But I wouldn't call them unexpected! BAHFA and MTC get more power and more money. There is even less control in the hands of local jurisdictions. The ultimate irony is that the taxes resulting from the “affordable housing” bond will make home ownership even more unaffordable for both current homeowners and those who hope to own someday.
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