☆ Opinion: Is Measure E a general tax or a special tax?
With all the wrangling and jockeying about how to best spend “Measure E Funds,” local small property owner Dean Hotop unpacks what kind of tax Measure E really is, and wonders if something's amiss. An Opp Now exclusive.
What Measure E really, truly was
Measure E was a ballot measure asking voters to enact a real estate transfer tax ordinance, with proceeds paid into the General Fund. Period.
Measure E created and added chapter 4.59 to the SJ municipal code. Here’s what that code states (emphasis added):
4.59.010 - Chapter Title and Purpose.
A. This Chapter 4.59 may be cited as the "San José Real Property Transfer Tax Ordinance."
B. The tax imposed under this Chapter is solely for the purpose of raising revenue. This Chapter is not enacted for regulatory purposes.
C. The tax imposed under this Chapter is a general tax and is in addition to the special tax imposed by Chapter 4.58 of the San José Municipal Code, referred to as the "San José Real Property Conveyance Tax." The revenues from this general tax shall be deposited into the City's general fund and may be used for any City purpose.
The language of the actual ordinance is all that legally matters. The rest of the discussion is just words in space, unless, in fact, Measure E was really an illegally enacted special tax, which it is really starting to sound like it is!
Party like it's 1999 1996!
Just a quick nod to Prince (RIP) fans out there. In 1996, California voters approved Proposition 218, which requires 2/3 voter approval of any new special taxes—and if you really want a throwback to a proper disco era, Prop 13 requires the same of any real estate transfer taxes.
Yet somehow San Jose is now assessing a new transfer tax on real estate after only 53% of voters approved Measure E in 2020. For all the non-math majors out there, 2/3 = 66.666666%.
Measure E did not meet the 2/3 voter approval requirement for a special tax. But, since it was designed as a general tax—which “may be used for any City purpose,” only 50% + 1 was needed. Hence, Measure E passed and may be collected as a general tax.
Which is it, a General Tax or a Special Tax?
It sure sounds like the taxes collected from Measure E are, for all intents and purposes, being treated 100%, absolutely, positively like a special tax, collected for a special purpose. The discussions make it sound like the funds are segregated in a special fund for a special purpose, rather than in the general fund and available for any purpose.
If the above is not really the case and all the wrangling is really about a small portion of the general fund, then why not throw adding more police officers into the discussion mix?
After all, those funds may be used for “any City purpose.” Otherwise, SJ citizens should challenge the collection of the tax in court as an illegal special tax.
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Image by Nathaniel Currier
