☆ Opinion: By letting local bonds pass with only 55%, Prop 5 is a risky end run around Prop 13 protections

 
 

In this Opp Now exclusive op-ed, citizen David Eisbach warns that, if Prop 5 passes, any other proposition that achieves 55% voter approval this November will become law—even if it was written to require two-thirds to pass.

I have been before various San Jose Housing Department staff presentations asking policy and cost explanations since 2015. I have usually been frustrated. Evidently, I am not the only one. On April 9, 2024, the State Auditor’s report on the State’s homelessness funding, (2023-102.1), showed that The California Interagency Council of Homelessness (Cal ICH) had not made a major report on homelessness spending in California since 2021. A second report (2023-102.2) showed that San Jose couldn’t adequately account for $300,000,000.

California’s homeless population, now 180,000, has increased over 50% from 2013. One of Mayor Mahan’s election promises was to hold department heads responsible for expenditures and results. Reports should show success and defeats clearly and accurately. I am not blaming Mahan; in fact, I think he has had a measure of success in the homelessness crisis. It’s clear that several forces are active in the housing field. 

One is the cost, service, and results of the non-profits. Even though a major part of non-profit money comes from and through the city, they lobby for their own interest and are not required to register as lobbyists. Non-profit CEO salaries (from a few years ago) range from $384,555 to $1,189,797 annually. Non-profits raise and manage revenue from $1,022,762 to $63,603,688. Every dollar that comes into the city from federal, state, county, and their own means before distribution is lessened by a 5 to 10 percent administration fee.

One should ask how the City Council would react to pressures to wisely dispense its homeless relief funds, especially in view of the near $50 million deficit. It would appear San Jose and most California counties subscribe to increasing the amount and scope of tax levies and adjusting balloting to favor such an expense.

There are two areas of taxation. Look at your property tax bill. It’s divided in two: the actual property tax, held in check by Prop 13, and the special projects taxes, like schools, libraries, and open space. You will notice that the special is almost the same amount as the tax.

Dave Cortese’s SB 335, passed by the Cal legislature on October 7, 2023, will allow Santa Clara County to schedule an election to change transactions and use taxes (general or specific) to increase the current 2% cap to 6.25%, with the approval of the voters. Although, money can only be raised by bonds, which cannot be used by the government to purchase single family homes, duplex, triplex, or fourplex. The types of projects are broadened to include almost anything: open space, fire house, city hall, flood control, and so on. Current law requires a two-thirds majority vote.

Herein lies the problem! If citizens vote yes on November’s Proposition 5 (the present Prop 13 dictates that tax and bond issues are to be decided by a citizens vote of two-thirds), SB 335 will be changed to require a vote of 55%. Any other proposition at the time of this election will pass even if it was meant to pass at two-thirds, but only achieved 55%.

I think that Prop 5’s required 55% vote is too risky. I do not trust the general descriptions given because they are deceptive and lack the big picture. Many voters will see Proposition 5 on their ballot for the first time on November 5, 2024. What they don’t tell you is that it expands the types of bonds and purposes. The next thing will be the passage of Don Corteze’s Senate Bill 335, which eliminates a 2% cap and replaces it with 6.25% on special taxation.

Remember Prop 19. How grand it was to allow seniors to sell their large home in San Jose and move anywhere in California and keep their same Prop 13 tax; how wonderful to aid those devastated by California’s wildfires. Wasn’t it terrible that actor Lloyd Bridges gave his kids a Malibu home worth tons of money with their father’s low tax rate?

What they didn’t tell you is that upon the death of a parent, the property tax will automatically be reassessed to market value. So, if $2 million is the going market value, you get it. If you as the child or grandchild move into the home within one year, you have this formula: the existing tax amount of $300,000 plus $1,000,000 equals $1,300,000. Subtract that from the market value of $2,000,000, and your new tax will be based on $700,000. If the heirs can’t move in and decide to rent it, they either have a $2 million tax base, or they sell. This eliminated Prop 13 protections.

California’s legislatures have been seeking ways to thwart Proposition 13, and Proposition 19 did that. Because it amended the constitution, it required only 50.1%. Why, with such financial significance, can this be changed by a mere majority?

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