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Why I oppose the proposed amendment to Prop 13, called Prop 5
I oppose the proposed amendment to Proposition 13, which will appear on the ballot in November 2024 as Proposition 5. It will not only lower the percentage of votes needed to raise property taxes, but it also broadens the kinds of measures that property taxes can be raised for. It would create eight (8) new exceptions to the 1% cap on property taxes
Vote “NO.”
This measure was enacted by the Legislature as ACA 10.
https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240ACA10
It is not a citizen initiative. This amendment would make several major changes to Proposition 13. Most of the publicity has focused on the fact that it would lower the percentage of votes needed to approve not just the affordable housing bond, but also future bonds that are funded by ad valorem taxes (ad valorem taxes are taxes based on the value of real property).
The reduction in the percentage of votes needed for a bond to pass will be from 66.67% (2/3) to 55%.
Important additional amendments would also create a new exception to Proposition 13’s limit on property taxes to 1% of value and would broaden the uses to which property taxes could be put.
A little known but very important detail regarding the proposed Amendment to Proposition 13 (Proposition 5), is that besides lowering the percentage of votes needed to pass, it is an attack on, and a weakening of, Proposition 13 (1978) cap on ad valorem taxes. That proposition generally limited ad valorem property taxes to 1% of the “full cash value” of real property, plus 2% annual increases. Initially, it only had one exception:
“An exception to the 1% limit is provided for ad valorem taxes or special assessments to pay interest and redemption charges on indebtedness approved by the voters before July 1, 1978.”
Proposition 46 (1986) added a second exception to the 1% limit; the limit would be inapplicable to bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition.
Proposition 39 (2000) created a third exception for school district funding for facilities.
Proposition 5 would amend to Prop 13 by creating a fourth exception to Prop 13’s 1% cap:
“Bonded indebtedness incurred by a city, county, city and county, or special district for the construction, reconstruction, rehabilitation, or replacement of public infrastructure or affordable housing, or the acquisition or lease of real property for public infrastructure or affordable housing…” (Emphasis added.)
https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240ACA10
Two things about this amendment containing a fourth exception to Prop 13’s 1% cap are remarkable.
The first remarkable thing to note is the exception for “affordable housing,” which is defined to cover fairly high income.
“‘Affordable housing’ shall include housing developments, or portions of housing developments, that are affordable to individuals, families, seniors, people with disabilities, veterans, or first-time homebuyers, who are lower income households or middle-income households earning up to 150 percent of countywide median income….” (Emphasis added.)
The second remarkable thing to note is that the definition of “public infrastructure” is very broad:
“(iv) ‘Public infrastructure’ shall include any of the following:
“(I) Facilities or infrastructure for the delivery of public services, including education, police, fire protection, parks, recreation, open space, emergency medical, public health, libraries, flood protection, streets or highways, public transit, railroad, airports, and seaports.
“(II) Utility, common carrier or other similar projects, including energy-related, communication-related, water-related, and wastewater-related facilities or infrastructure.
“(III) Projects identified by the State or local government for recovery from natural disasters.
“(IV) Equipment related to fire suppression, emergency response equipment, or interoperable communications equipment for direct and exclusive use by fire, emergency response, police, or sheriff personnel.
“(V) Projects that provide protection of property from sea level rise.
“(VI) Projects that provide public broadband internet access service expansion in underserved areas.
“(VII) Private uses incidental to, or necessary for, the public infrastructure.
“(VIII) Grants to homeowners for the purposes of structure hardening of homes and structures, as defined in state law.”
Note that “public infrastructure” is not limited to, or connected with, affordable housing. Thus, future property taxes could be used for a new airport, for protection from sea level rise, and even “private uses incidental to …the public infrastructure” without being subject to Proposition 13’s 1% limit.
Look at “(VII) Private uses incidental to … public infrastructure”— what is that? A private use being funded by our tax dollars!
There would be a new exception to Prop 13’s 1% cap for bonds funded by ad valorem taxes for any public infrastructure, unrelated to affordable housing. Including “private uses”. There is virtually no limit. Ad valorem bonds for public infrastructure would only need 55% of the vote to be approved.
This authorizes future ad valorem taxes for bonds for many purposes beyond original Prop 13, and without being subject to its 1% cap.
The broad definition of “public infrastructure” in Prop. 5 would make a permanent inroad in Prop 13’s 1% cap for all future bonded indebtedness for infrastructure, independent of affordable housing.
It is informative to look at who the supporters and opponents are.See
Sadly, Attorney General Rob Bonta, whose legal responsibility includes drafting the “ballot title and summary” and “ballot label” for Proposition 5, chose to omit from the ballot label that current law requires approval by two-thirds of voters which Proposition 5 would reduce to 55%.
A suit was filed, and a respected Superior Court Judge ordered AG Bonta to add to the ballot label that the Proposition would reduce the percentage. Rather than comply, Bonta actually appealed, and incredibly, the appellate court sided with Bonta, ruling that the ballot label
“concisely and accurately describes Proposition 5 in terms that are not misleading…. [citation omitted] Moreover, [the superior] court failed to accord the discretion due to the Attorney General in drafting ballot materials, including the ballot label.”
No harm would have been caused had the ballot label been more clear. One can only speculate as to why Bonta fought the ruling, although if you look at the proponents of Proposition 5 (cited above) and understand how Sacramento works, the answer is clear.
Finally, I oppose Proposition 5 because we are already living in a high tax state, and we should not make it easier to increase taxes even further. The state government recently turned a $90 billion surplus into a $31+ billion deficit.
https://calmatters.org/commentary/2023/10/california-budget-whiplash-pitfalls-forecasting/
They cannot be trusted with more money.
Nick is a retired lawyer whose practice consisted of trials and litigation, primarily in real estate and doing pro bono work in his community. During the 11 years since retiring, he has been active in civic affairs and studied state housing laws in great detail.