By Sheryl Hamlin
Ventura County Tax Association (VCTA) 2020 Board Chair Ron Golden introduced Dan Walters, famed journalist of many years in California, and Jon Coupal, President of Howard Jarvis Taxpayers Association (HJTA), speakers for the Zoom event of September 24, 2020. The event was co-hosted by ColabVC.
California in Crisis?
Six to seven months ago, said Walters, California was awash in cash, the unemployment was less than 4% and tech was golden. Governor Newsom even spoke of the country of California.
Overnight with the Covid-19, the lightning fires, blackouts, homelessness (150,000 in California), double digit unemployment and record heat waves, the state’s fortunes turned with California asking the federal government for $14 billion in aid on top of the CARES package. The State of California lost 3 million jobs with 11.4% unemployment as of August.
The State legislature convened and recessed several times with truncated sessions and nothing accomplished. With personal feuds, bills died.
Can California sustain itself with high energy, housing and taxes as its economy drifts downward, he asked rhetorically?
Local school districts particularly are pinched. The State budget shorted the schools $11 billion. In a sleight-of-hand, the money appears to be there, but they are not able to spend it, so they look to borrowing. Municipal revenue is down with pension obligations up, so there are several hundred parcel taxes, sales taxes or new bonds proposed.
Praying the economy will pick up or the Federal government will bail out Califoria, the state is in an unpredictable situation. Which candidate in November will smile on California?
Because the state is short on funds, it is demanding the companies pay benefits to employees, such as family leave. So how much can the State impose on business, he said? Some may be pushed over the edge. Some may leave the State.
Yet, in spite of this precarious financial situation, Governor Newsom declared the end to combustion vehicles and told the three major pension systems (CalPERS, CalSTRS and UC System) to reinvest in “green investments”. With such systems under stress, they will turn to the cities for more money.
Taxpayers at Risk
Jon Coupal, President of Howard Jarvis Taxpayers Association, reminded that HJTA and its 200,000 members exist to defend California homeowners. Prop 13 continues to be popular according to PPIC. He congratulated VCTA for its work with Simi Valley and its negative decision on risky Pension Obligation Bonds (POB).
The 2020 Prop 15 (Split Roll) is an attempt to tax commercial and residential categories of property with different methodologies. California has had a unified tax roll since the 1800’s, which the original Prop 13 did not change, he said.
Prop 13 provides predictability and stability for homeowners, business and municipalities.
The proposed “Split Roll” will affect businesses with triple-net leases (like restaurants) where the property tax is passed through from the property owner to the lessee. The $3 million floor is not just for a single property, but for an aggregate of one owner.
Prop 15 calls for re-assessing commercial property every 2-3 years, so where will the army of assessors be found for this massive task? Will counties have to hire new people? And, the property owner may contest the assessment, thus delaying the new tax until the contested assessment is adjudicated.
Prop 15 Title: Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative
This title has already been proven misleading by the LAO (Legislative Analyst Office) of California in their analysis. According to this report:
Overall, about 60 percent of property taxes go to cities, counties, and special districts. The other 40 percent goes to schools and community colleges. These shares are different in different counties.
With the majority of Prop 15 taxes going to cities, counties and special districts, it is no wonder that all unions support Prop 15, because the cities, counties and special districts can use this new revenue to pay their growing pension obligations.
Diverse Coalition Against Prop 15
The list is long and diverse of those who realize that a state in a downward spiral with the highest taxes in the nation does not need new taxes. See this list.
Prop 19 Generational Warfare
Jon Coupal pointed out that HJTA supported the concept of allowing seniors to carry their property assessments across counties when they moved when it was proposed previously. But this time, there is a new wrinkle. In order to pay for this tax relief, the offsetting bargain is the elimination of the original Prop 13 feature which lets families pass homes to children or grandchildren, so HJTA is not supporting Prop 19 in 2020.
Questions to Speakers
There were many questions to the speakers. One in particular was about the “wealth tax” which has received much press. Dan Walters feels that since Governor Newsom is against this tax and has no appetite to tax wealthy people who pay the bulk of the State’s revenue, this will die, but the alternative from Senator Hertzberg (D-Van Nuys) is the tax on services which has been proposed for years and would adversely affect service businesses.
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