☆ Opinion: Speaking Up(land) for taxpayer rights, as California awaits '24 Prop 13 battles
Matthew Hargrove is president of California Business Properties Association, a prominent pro-taxpayer org fighting for Prop 13 rights via the courts and ballot box. In this Opp Now exclusive, he analyzes Prop 13's popularity among CA'ns, the tricky Upland loophole that the Taxpayer Protection Act (TPA) would close, and why he believes lowering the voting threshold via ACA 1 would exacerbate housing unaffordability.
Opportunity Now: According to the latest research, Prop 13 remains popular with California voters. So what's up with city councils like San Jose's overwhelmingly opposing it (in rejecting pro-Prop 13 measures like the Taxpayer Protection Act)? Are they neglecting to listen to the folks they represent?
Matthew Hargrove: There has long been a core group of individuals who haven't supported Prop 13 since it passed. Over the years, many have attempted to undo Prop 13, both at the ballot box and in the courts. Prop 13 has withstood all of those attacks, but they've only accelerated in the last decade.
We saw Prop 15 in 2020, a split-roll property tax that would have undone one of Prop 13's key protections. Yet, if you look at the results for Prop 15—especially considering it was during the pandemic—it's clear that voters were overwhelmingly in opposition to changing Prop 13 at that time. Over and over again, spanning decades, the people in the State of California have declined to dismantle Prop 13.
Because of this, there's also been an ongoing effort through the courts to undo Prop 13 rights. This has been a little more successful. And there's lots of challenges out there.
ON: Notably, the recent Upland case. This was decided in 2017 through California's Supreme Court.
MH: We, along with Building Owners and Managers Association of California (BOMA) San Francisco and the Howard Jarvis Taxpayers Association (HJTA), were plaintiffs on this case. Upland upended Prop 13 by allowing (as some have interpreted) local special taxes to be passed with a 50% vote threshold instead of the two-thirds threshold you and I have known all our voting lives. As things stand, if the San Jose City Council puts a tax measure on the ballot, it needs a two-thirds vote. If a local neighborhood or activist group proposes the same measure, its threshold is a 50% vote. But a prevailing interpretation of Upland, which we (and HJTA, which wrote Prop 13) find ridiculous, is that even city councils' proposed special measures only need 50% voter approval. So we sued the City of Los Angeles after Measure ULA passed there with only a 50% threshold, thanks to Upland's precedent.
ON: So as we understand it, the Taxpayer Protection and Government Accountability Act sprung out of the desire to close Upland's newly-created loophole for voting thresholds. This seems a generally uncontroversial idea, to keep Prop 13 the same. How have State jurisdictions responded?
MH: Correct, the TPA restores the two-thirds vote requirement set by Prop 13 for local special taxes. It fixes the hole that was blown into it by the courts. That's what this is all about.
Initially, many cities and counties were with us on the TPA, agreeing that it's a bad idea to lower vote threshold on special taxes (because, for instance, city councils could lose control of where the tax base goes to non-elected entities). However, since Upland has been in effect (particularly the last major election cycle), many local governments and politicians have come to the view that Upland provides them an easy way to increase tax revenue. They can have an outside group run a campaign for them that raises taxes, and only 50% voter approval is required.
That's why you see cities like SJ in vociferous opposition to the TPA. They don't want to restore the two-thirds vote requirement.
ON: Let's imagine that the TPA is rejected by Californians next November. We already have high tax rates and unaffordable housing. How would defeat of TPA affect these issues?
MH: Plain and simple: it would exacerbate them. If TPA doesn't pass, California residents will continue to lose protections against higher taxes.
I believe this effect will be amplified if ACA 1 passes. ACA 1—which would be the nail in the coffin for Prop 13—lowers the two-thirds requirement to pass special (relating to infrastructure) taxes to 55%. Under the definition of the bill, “infrastructure” could encompass any kind of measure. It's intentionally vague. It could apply to any special tax.
ON: Vagueness aside, proponents of ACA 1 argue that it should be easier for governments to access taxes, if they'll go to important projects such as housing affordability.
MH: Even though they're portraying that these higher taxes will be a force of revenue for affordable housing, that's not the case.
Look at what's happening in Los Angeles. They passed Measure ULA last year (again, by a mere 57.77%). The funds from this 5.5% document transfer tax on real estate were supposed to go to affordable housing.
Not only has the tax not brought in near the amount of funds proponents said it would, but Measure ULA has made certain affordable housing projects (as well as housing in general, which, when plentiful, keeps a check on housing costs) outrageously more expensive. As a result, Los Angeles is struggling to get housing projects done.
The tax had the opposite effect of what was intended. It created a lot of lost opportunities. Proponents of ACA 1 should seriously reconsider what could happen if they give the government even easier access to their money.
Related:
SB 335 perspectives: Instead of raising taxes, why not streamline other activities?
Perspective: California “has a spending problem”—so expect frequent tax bumps if ACA 1 passes
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