$20 billion . . . would raise CA to national average spending per pupil. But “average spending” is insufficient to educate California’s students. Other states do not have half of their K-12 students growing up in poverty (a family of four with an income of $40,000 or less) and 40% English language learners.
PTA School Funding Goal: Long term, stable funding source for our schools. Unlike top performing education states, California relies heavily on income and sales taxes. Those taxes, however, unlike property taxes, are too volatile a funding source for schools. Long term, stable funding options, employed by other states to fund their schools include:
1. An Oil Severance Tax
Oil is extracted in 22 states in the U.S. California is the ONLY state not to impose this tax in the U.S., and the only place in the world. Texas has an oil severance tax and no income tax. 21 states rely on this tax to bolster the school funding. California has no oil severance tax and is 49th in school funding and has bottom performing schools in math, reading and science.
According to non-partisan analysis, an oil severance tax will not raise the price at the pump because the price at the pump is determined by the world market. Please see the analysis by the California non-partisan Legislative Analyst Office.
California PTA supported legislation to enact an oil severance tax in California – AB 1604 (Nava – 2010).
2. Commercial Property Taxes
In 1977, property taxes were 42% of California revenues and income taxes were 15%. In 2007, property taxes were 24% and income taxes were 31%. What happened?
In 1978, Property 13 removed half of county property taxes. It froze residential and commercial property taxes at 1975 levels. Properties are only re-assessed at sale.
As a result, the California property tax burden shifted from commercial property owners to homeowners in virtually every county. Homes are turning over, and being reassessed at sale. Commercial properties either (1) do not turn over (e.g. Disney) or do turn over but avoid re-assessment through a loophole in the definition of a commercial property “change of ownership.”
In 1977, In Santa Clara County, for example, the property tax burden shifted from a 50-50 even split to homeowners paying 2/3 the property taxes.
Since homeowners are paying more than their fair share – carrying 2/3 the burden – there are NO proposed adjustments to the homeowners property tax protections.
Proposed Commercial Property Tax Fixes Include:
1. “Close the Loophole” Fix the commercial property sales “change of ownership” loophole (AB 188- Ammiano).
Since Prop. 13 passed, many commercial properties have sold but not been reassessed due to a Prop. 13 loophole definition of what is a “change of ownership” for property tax reassessment purposes. A change of commercial property ownership for tax reassessment purposes does not occur unless over 50% of a property is purchased by a single owner. If three purchasers purchase 100% of a property, no change of ownership occurs. Examples of commercial property sales that did not change the commercial property tax assessment:
• 2005: Toys “R” Us and Babies “R” Us bought by 4 affiliates
• 2006: Albertsons bought by Save Mart
• 2007: Hilton Hotels bought by Blackstone Group
• 2007: Smart and Final bought by Apollo
• 2008: CVS bought Longs Drug Stores
• 2008: Wells Fargo bought Wachovia
California is losing billions of dollars annually through these commercial property subsidies. Our schools and our economy desperately need us to restore those funds.
California PTA supports AB 188, Senator Tom Ammiano’s legislation to close this loophole. Learn more
2. “Split Roll” Regularly re-assess commercial property so commercial property owners once again pay their fair share of property taxes. While homeowners pay $2 to $3 a square foot, many commercial property owners pay pennies per square foot – for example, Disneyland pays 2 cents a sq. ft.; IBM pays 5 cents a square foot; Apple pays 2 cents a sq. ft; Intel pays 5 cents a sq.ft., etc. Read more.
California PTA has not taken a position on a split roll tax.
3. Lower the 2/3 threshold to empower local communities to raise revenues for schools for more than just school bonds.
In 2000, PTA advocates successfully helped lower the Prop. 13 2/3 threshold to raises funds for school facilities.
Now let’s lower the Prop. 13 2/3 voter threshold so local communities, if they choose to do so, can raise the funds to fill those facilities with highly educated/trained/mentored teachers, school supplies and technology, and a full curriculum that helps every child meet his or her full potential.
California PTA supported legislation to reduce the 2/3 threshold to 55% for a local parcel tax – SCA (Leno); ACA4 (Simitian -2003)