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Sorting Out Prop 13’s Impact On Education

Audio

Aired 3/29/10

Prop 13 has had a profound impact on California. We'll examine the huge savings to property owners and the negative impacts on education.

MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. Tracing the source of California's fiscal problems is not easy. Our state has developed a particularly complicated way of both collecting revenue and allocating funds. But there is one date in California's budgetary history that is often cited as a watershed. It was the passage of Proposition 13. When that initiative was approved by voters in 1978, it capped property tax at one-percent of purchase price and limited yearly increases to 2%. The results of that measure have affected our schools, local governments and homeowners, both positively and negatively ever since. Joining me now is KPBS reporter Joanne Faryon. She hosts the Envision special on KPBS-TV tonight called “The Legacy of Prop 13.” Joanne, good morning.

JOANNE FARYON (KPBS Reporter): Hi, Maureen.

CAVANAUGH: Now I’d like to invite our listeners to join the conversation. Do you think Prop 13 is working the way people expected it to or is it time to change it? Give us a call with your questions and comments. Our number is 1-888-895-5727, that’s 1-888-895-KPBS. Now, Joanne, San Diego County is taking in less money in property taxes for the second year in a row. Why is that?

FARYON: Mainly, it’s because of the housing slump. As we all know, in the last few years house prices have taken a nose dive and that affects how much is collected in property taxes because taxes are based on 1% of your purchase price. There’s also another twist to this story, that let’s say you bought your house three years ago and you paid $500,000 and today that house is worth $400,000. Well, you can actually have your property taxes lowered. Your original bill would have been based on that purchase price of $500,000, well today you can contact the County Assessor and they will readjust your property tax bill to reflect the $400,000 market value, and that’s been happening for the last couple of years countywide where there’s been this sort of downing of – or that lowering of the property assessment throughout the county.

CAVANAUGH: So it could be some people are actually paying less than 1% of the purchase price on their property taxes.

FARYON: Oh, there’s a lot of us paying less than 1% and, in fact, more than half the people who own homes in this county pay less than 1% of market value and that’s because they would’ve bought their homes for less than even what they’re assessed at today, and I’m one of those people. I bought my house nine years ago so even though there’s this big housing slump right now, my house is still valued at more than what I paid for it but my tax bill is based on my purchase price way back nine years ago. There’s another little twist. It gets really complicated, I know, but to top it all off, not only are taxes going down because of assessments and market value going down, but for the first time in 32 years since Prop 13 passed, nearly 70% of the tax roll will also see a decrease, the average homeowner by about $10.00 and that’s because under Prop 13, the assessor’s allowed to increase your assessment by 2% a year, no more than by 2% and that’s only if inflation is going up. If, though, inflation goes down, if there’s a negative number, Prop 13 says well then you have to lower that property tax bill, so for the first time in more than 30 years, that’s happened. So in this entire state, a number of property owners are going to see a very small decrease actually in their assessment and, again, for the people who’ve owned their homes for years and years, even your property tax bill’s going to go down by about $10.00 this year.

CAVANAUGH: Now, I know you’ve done a lot of research into this and this is sort of an unfair question but I’m going to ask it anyway, Joanne. How has – what are the ways Proposition 13 has actually been good for California?

FARYON: Well, if you’re a homeowner, it’s hard to argue that this hasn’t been a good thing. And when I say good I want to kind of qualify that as a homeowner, first of all, so there’s good and bad. That, you know, you know from year to year what your tax bill will be. So, again, if you’re buying a home, you’re buying a condo, you know what your mortgage is, there’s a fixed interest rate. You know, when you buy your home also, your – really, your tax bill’s going to stay pretty much the same. Again, that two – it can increase by about 2% if inflation goes up but let me give you another example. My house, I’ve owned it nine years, my tax bill in those nine years, even though my house value has doubled, and my taxes have only gone up by $570.00 in those nine years. So when you spread that out over 12 months, I mean, it’s, you know, what is it, less than fifty bucks a month. So you have this certainty. Also, I spoke to a number of people who are in the situation, when you – let’s say you’ve paid off your house, you’re retired, you’re on a fixed income, and your house might be worth a million dollars in this county, you know, if you’ve owned it 30 or 40 years. Well, how – paying the taxes on a million dollars if we didn’t have Prop 13, how many people can do that? That would be thousands of dollars a year. A lot of people who own homes worth that much are quite literally paying a thousand dollars a year because of Prop 13. Now, having said that, does that mean – why’s it bad? Well, where do you think we get our money from to fund services, school districts, firefighters, our police force, our libraries. I mean, we have to get the money from somewhere. And before Prop 13, this is where most counties got more than half their budgets, from collecting these local property taxes. So I think it’s only common sense that tells us that if we went from, you know, paying this much money in taxes to fund services, now we say forget it, we’re not going to do that anymore, well, something’s got to give eventually.

CAVANAUGH: I want to talk more about where the funding for our local schools come from because I know that’s – you found out that that’s more complicated than we realize. Let’s take a couple of calls, however. There are a number of people want to join the conversation at 1-888-895-5727. Harry is calling us from Shelltown. Good morning, Harry. Welcome to These Days.

HARRY (Caller, Shelltown): Well, thanks for taking my call. I want to talk about Prop 13. I thought it was originally just for your primary residence. And I know people have five, 10 houses, even real estate trusts, and I find that’s very unfair. I also believe it makes slums in the neighborhood because when you have – just paying four or five hundred dollars for two houses on a lot, why bother fixing it up? Just – They’re just run down because they’re not paying any taxes and they get the rent they want.

CAVANAUGH: Harry, thank you for that. And I’m going to have you comment, Joanne.

FARYON: Yeah, Prop 13 applies to all property, commercial, and throughout this project, we’ve had a lot of people contact us and say, what about commercial? What about commercial? And that’s a really good point, and I can tell you Amita Sharma’s working on that report as well. That’s going to be on radio tomorrow. But it – Prop 13, that’s for everyone. And I think a lot of people also believe that it was only for the people who owned their homes in 1978, that somehow they got this special protection. No, it covers all of us. It doesn’t matter when you buy your house or if you’re a commercial owner, when you buy your property. The day that you buy it, that price that you paid for it, it gets locked in. That’s what your assessment gets locked in at. So if you bought it 15 years ago or 30 years ago or 5 years ago or 10 years ago, you get that same protect – I call it protection—I don’t know what other word to choose—that the Prop 13 affords you.

CAVANAUGH: Let’s take another call. Susan is calling from Murietta. Good morning, Susan, and welcome to These Days.

SUSAN (Caller, Murietta): Good morning. Thank you very much.

CAVANAUGH: You’re welcome.

SUSAN: I have several points that I would like to make. I would like to make the point that when people buy their homes in good faith with a budget that they know that they can pay the property taxes and then to change the rules in the middle of the game and have an enormous rise would drive many people right out of their homes and I feel that would not be a good idea. I also feel that housing values really bear no relationship to income because we’ve had this crazy blow-up in housing prices caused a lot by investors and financial institutions that were not doing their proper job, and it would make people suffer terribly by the bad decisions of others.

CAVANAUGH: Susan…

SUSAN: So I really feel we need another way to fund essential services and I think an income tax would be a much fairer way of doing things because it has – bears some relationship to your ability to pay.

CAVANAUGH: Susan, thank you for those comments. I appreciate it. We only had time to get two in but I’m going to have you comment, Joanne.

FARYON: Yeah, on income tax, great point. Well, that’s what California actually does and started doing after Prop 13 passed. We talked about – so we have some of the lowest property tax rates in the country but we have some of the highest, excuse me, income tax rates well, that California shifted a lot of our tax burden to income tax. In fact, more than half of the state budget relies on income taxes. In terms of house values, yes, that’s a good point. Here in California, in a matter of a few short years, it can double or sometimes even triple and that’s what happened back in the seventies and that’s what helped get this proposition passed. A lot of people that I spoke to, though, in doing this research, Prop 13 was sort of like the one extreme where it’s, okay, forget it, we can’t afford these taxes, this is crazy, so let’s just cap them at 1%. People suggest there might be some place in the middle. Maybe there’s a compromise. Maybe that there are caps but they’re not quite as extreme or maybe once you’re on a fixed income or you’ve lived in your home for so many years that somehow your rate gets adjusted, some sort of tax release – relief. But to give you some history and some context, back in the seventies, during this sort of tax revolt, the revolt that ushered in this proposition, the state legislature failed to pass any legislation to offer taxpayers tax relief, that there were compromises suggested, there were other options because, like you say, caller, that the people were actually losing their home and – because they were getting taxed out of their houses. So there were sort of these compromise solutions but they couldn’t get passed in the legislature so people just got very angry. The state, at the time, had a $5 billion surplus, and here you were, people who couldn’t afford the taxes on their homes. So this was really a revolt and now, more than 30 years later, we’re trying to still make it work.

CAVANAUGH: I want to ask you, Joanne, what you found out about how Prop 13 has, indeed, impacted, affected the – our education spending in California.

FARYON: Right, and education, again, before Prop 13, more than half of school budgets came from local property taxes. Today, that’s down to 20% so, again, a dramatic shift that before Prop 13, I believe the state had a $10 billion education budget, after Prop 13 they lost, overnight, a third of that, more than $3 billion. So education seemed to be the biggest loser in all of this. So what happened? Well, the state had to take over, that you couldn’t just say, okay, we’ve passed this proposition now, schools, we don’t have any money for teachers. So through a series of laws and ballot measures, a different form of funding for education came into play. And I have to tell you, I’ve been exchanging e-mails with somebody who studies this and he – it’s so complicated, his joke was that only five people in the state of California understand education funding and they can never be on the same plane together. So it’s a very complicated formula. But the bottom line is, the state is now on the hook for more than half of school budgets. What’s happening? What do we see today? Well, more cuts to education. Why is that? Well, if the state is relying so much on income tax and sales tax and corporate tax for its money—and we’re in a recession—all of those taxes get decreased. So you really have this ballooning affect, lower property taxes, lower income taxes, less money for the state, less money for the county, and education really ends up suffering because of it.

CAVANAUGH: And I believe that you found out some statistics about the spending per pupil, how California’s amount has gone down over the last 30 years.

FARYON: Yes, and so, again, we got really great comments throughout this project, people asking questions and it was, again, an e-mail that kind of prompted this research. And somebody wrote to me and said, look, I really want to know per pupil are we really spending less? Have we been spending more every year? What’s the deal? So what we can tell you is every year California does spend more per pupil than the year before. I think I might’ve seen one or two years where you saw that number either decrease or stay about the same but overall every year we spend more. But relatively speaking, in terms of the rest of the country, what are they spending? We’re not. We are increasingly spending less than other states and so we looked for the past more than 40 years. 1965 was the last time California actually was at the top of the heap and we were number five in terms of the rest of the country in what we spent per pupil. At the time, in 1978, when Prop 13 passed, I think we were 14th. Immediately after, after the proposition went through, we fell to 22. In the eighties, we dipped below the national average, and we’ve never recovered. We’re now at number 43. I do want to make the important distinction, this is relatively speaking, so you have to understand, this is a bit of a race, a spending race between the states. I spoke with an expert in education funding, Julian Betts, and he’s a professor, economics professor at UCSD. He studies this. He looks at our local districts, school districts, in terms of what they spend their money on. And he puts a finer point on this, that even if we’re spending less, you still have to ask the question: Are we spending it well? What are we spending it on? And what are our outcomes? But are we losing the race in terms of spending? Yes, we are relative to the rest of the country.

CAVANAUGH: And whose fault is that?

FARYON: Well, that’s the question I asked Julian Betts. And so I want to toss to a clip to him (sic) but before I do, I want to let you know what I asked him so you can hear what he said. Basically, he describes the complicated formula for education, also about a number of historical decisions that kind of occurred roughly at the same time in the late sixties, early seventies, to kind of get education where it’s at today. And – But the bottom line is, I asked him, okay, do we have only ourselves to blame for this crisis in funding when we go and we pass measures such as Prop 13, and here’s Julian Betts’ answer.

JULIAN BETTS (Professor of Ecomonics, University of California San Diego): About 100%, absolutely. Spending on K-to-12 in California dropped by about 15% compared to other states. It was a direct result of all these things put together. People put most of the blame on Prop 13 but as I’ve explained, Serrano versus Priest, which called for equalization, Prop 13, which capped and actually lowered property tax revenues, and then the Gann Limit, which basically put a lot of pressure on the state because you couldn’t really increase the spending in the bottom-funded districts beyond the rate of inflation. The state found various ways to get around that but it never completely did and so, yes, we fell behind in the spending race.

FARYON: And I want to clarify a couple of things that he – Julian mentions, which is Serrano versus Priest. Just to let our audience know, that was a court case in the late sixties and basically it challenged the gap between rich schools and poor schools and said, wait a minute, California, you can’t do that. Just because property is valued at such a high level here, these people can raise more money for schools compared to other neighborhoods. So you have to find a solution. Part of that solution was, again, Julian mentions these revenue limits, so the state said, okay, well, then you can only spend so much and not more on education. And then the third thing, to top it all off, was Prop 13. So a number of historical decisions that really affect how our schools are funded today.

CAVANAUGH: But it kind of all hinges on that Prop 13.

FARYON: That’s right.

CAVANAUGH: We have to take a short break and when we return, we’ll continue to talk about Prop 13’s impact on California, and take your calls. Our number is 1-888-895-5727. You can also post your comment online, KPBS.org/thesedays. You’re listening to These Days on KPBS.

CAVANAUGH: I'm Maureen Cavanaugh. You're listening to These Days on KPBS. And my guest is KPBS reporter Joanne Faryon. We’re talking about the investigation that she’s done for the Envision special that airs on KPBS television tonight called “The Legacy of Prop 13.” And we are taking your calls at 1-888-895-5727. Before we go to the phones, I just want to clarify one thing with you, Joanne. I think you mentioned in our conversation other states have not, of course, capped their property taxes and, therefore, we’re in a race with some states that have much more money to spend on education than we do. You looked at the state of New Jersey and what did you find there?

FARYON: That’s right. And we looked at New Jersey because it seems for the last couple of years when we cover education stories we keep hearing people saying New Jersey’s at the top of the list and we’re at the bottom. So we wanted to find out, is it true? Yes, it’s true that no matter which list you look at, New Jersey repeatedly comes up at the top of the list in terms of per-pupil funding. However, New Jersey is not a state with property tax limits. New Jersey pays among the highest property tax rates. And county by county, you look, New Jersey counties, according to the Tax Foundation, ranks right at the top in terms of what they pay in property taxes and when you look at the list in terms of what they spend on education, it’s at the top as well. In fact, New Jersey homeowners pay more than twice as much per capita in property taxes than people in California. We also looked at student-teacher ratios. This is also where California really lags, that we have a 21-to-1 student-teacher ratio in California; New Jersey has a 12-to-1. And, really, I think that you can link this, again, in terms of that spending race.

CAVANAUGH: That’s a big difference.

FARYON: Yes.

CAVANAUGH: Let’s take a call. Tony is calling us from Lemon Grove. Good morning, Tony, and welcome to These Days.

TONY (Caller, Lemon Grove): Good morning, everybody. How are you?

CAVANAUGH: Great.

TONY: I’m just fascinated how you still want to tamper with this Pandora’s Box and I hope you’ll let me finish my comment.

CAVANAUGH: Please.

TONY: The problem is when you start eroding Prop 13, you talk so calmly and jokingly about it. People’s moms will be in a death struggle to pay their property tax. And you won’t have any discussions like this at the sales of their homes. I mean, really, this was voted on 35 years ago. No other politician is still discussing like this. This is the fly-curveball that KPBS is doing, still discussing it. This has been decided. They fought it in the courts until 1993.

CAVANAUGH: Gotcha, Tony, and we’re talking about it because of its impact on a very – number of things, including San Diego County schools. But we’re also talking about the benefits that…

FARYON: Well, and…

CAVANAUGH: …Prop 13 brought.

FARYON: …not just that. And I understand your point and not to make light of it and I don’t think this is KPBS saying, oh, we ought to…

CAVANAUGH: Change it.

FARYON: …change it. This is KPBS saying I don’t know how we can make informed choices in the future or how we can sort of gauge how we’re doing right now unless we know where we’re – where it all came from. So I think this is an effort, you know, to say look, we are where we are, let’s find out why. It troubled me to repeatedly hear about these lists, we’re at the bottom, they’re at the top, and not really understand why. It also – it seemed as though nearly every story that Envision has tackled in the past two years, whether it be housing prices, jobs, everything seemed to come back to Prop 13 and we couldn’t figure out why. Even the kind – If we looked at – there’s these unintended consequences and that’s really what we want to discuss when we do these kinds of stories. It’s not saying we shouldn’t have Prop 13. I’m a homeowner. I’m really – I benefit from Prop 13, and I benefit from knowing what my tax bill is year to year and knowing that it’s not going to go up dramatically. However, when we look at something like why does the County of San Diego, why do 40% of the jobs in San Diego County not pay enough for people to live here? Well, you know what, you talk to economists, and it goes back to Prop 13. Before Prop 13, when a county looked at how they were going to zone property and how many homes they were going to built (sic), well, they knew they could generate revenue through property taxes, through homes. What we have over the decades is a fiscalization of land use so now how does a county raise money to keep their libraries open? Well, if you have larger convention centers and you have more hotels, you can generate hotel tax, you can generate sales tax. At least that’s, the county knows, it will get a portion of that revenue. It’s a way to keep this county afloat. So I think we have to know why we’re making the decisions we’re making today. If you have new propositions that you’re going to be faced with, that you’re – you’re probably going to be faced with, at some point, a proposition that says should we have a parcel tax in our local school district. You ought to know why your school district wants a parcel tax. So – And I have to tell you, Tony, I think Prop 13, there’s no politician in this state who’s going to touch it. I mean, it’s been called the third rail of politics. Poll after poll suggests that would pass with an overwhelming majority if put on the ballot today. I think this KPBS effort is more to tell you why things are the way they are so as we move forward you can make choices based on that information, that context, that historical perspective.

CAVANAUGH: And also, to go on Tony’s comment, a lot of people who are concerned about talk about Proposition 13 even my – changing it, think about completely getting rid of it rather than perhaps modifying it, and there are some people who want to modify one part of Proposition 13 and that is the part that requires the two-thirds majority in the legislature to approve taxes. There’s a lot of effort underway to see what might be done to modify that.

FARYON: Absolutely. So Prop 13 did something else. It didn’t just cap your property taxes, it imposed a supermajority on any vote that – for a tax increase. So in this state, if anybody wants to raise taxes, you need a two-thirds majority vote in both Houses. That has made it nearly impossible, really, for legislators to do – to impose these kinds of increases. It’s really changed the way we look at taxation in this state. So, again, I think people ought to know why are things the way that they are. Why is it if a school district, for example, does want to raise a parcel tax, why can’t they pass it? Well, this two-thirds majority rule is also, in fact, in effect for things like that as well. So, again, Prop 13, I think a lot of people who owned a home throughout the Prop 13 debate, many aren’t even aware of that two-thirds majority clause that was part of that ballot measure.

CAVANAUGH: We are taking your calls at 1-888-895-5727. You can also go online and post your comment, KPBS.org/thesedays. Mike is calling us from the north county. Good morning, Mike, and welcome to These Days.

MIKE (Caller, North County): Good morning. Thanks for taking my call. I’m a retired appraiser and appraisers do not look at a property the same way the County Assessor does. You would never find an appraiser that would bring a value in higher than the sale price. But let’s look at how values – we had a big bubble. I bought a foreclosure in the late nineties, and I was also a contractor at the time so I built up a tremendous amount of what you would call sweat equity in my home. It’s not reflected in the assessed value because I paid such a low price for my home initially. Now my home is actually dropped down to what – less than the assessed value and I face sort of a jeopardy there. To get it reassessed, I risk having it actually assessed higher than it is right now, and I was told that by the assessor’s office. But one point that I think you guys are skipping over a little bit—and I love this discussion—is that look at where the money is spent by the school districts. This whole conversation seems to revolve around the schools and their lack of money. Vista Unified School District, for example, has three people on payroll right now as superintendent of schools and two of them are retired. But guess what? Those two that are retired are receiving two hundred and seventy-some thousand dollars a year, and the current superintendent gets in excess of $300,000 a year. The teachers are getting $40,000 to $60,000. So your payroll is super-top heavy at the top in administration. You got as many people working in administration as you have out there in the classroom. That’s wrong. It can’t work. It’s not sustainable. It’s the same kind of pyramid structure all across the country…

CAVANAUGH: Thank you, Mike.

MIKE: …and as long as you have…

CAVANAUGH: Thank you. We got your point. Thank you so much for calling. There are so many people who want to join us. Let’s take another call. Michael is calling from Pacific Beach. Good morning, Michael. Welcome to These Days.

MICHAEL (Caller, Pacific Beach): Yeah, thanks for taking my call. I just want to address something. Earlier you had a caller named Tony and he’s talking about kicking grandmothers out of homes, that is totally not the point of the people who are against the Prop 13. We’re looking at splitting the roll between private homeowners in their primary residence and the corporate investors that are creating shell corporations that own their – these properties both commercial properties and investment properties like the one that I rent that have gained from Prop 13 and not paid their fair share of the logistical cost of our society over the last 30 years and have just ranked – just raped us, you know, and destroyed our public education system, our hospitals, our libraries. Everything is dropping because these people will not pay 1%, not even 1% of the total value of their investment property. These shell corporations, you need to address this tonight in your overview of Prop 13.

FARYON: And I want to tell you – okay, you might be disappointed but there’s hope tomorrow. Okay, in terms of this loophole and shell corporations, yes, I can tell you that tomorrow morning Amita Sharma is going to have a report on that, and we’ve heard that over and over. That you raise a couple of points – First of all, I think the big question is how come commercial property was included under Prop 13. Again, if this was a proposition that really tried to keep the senior in their homes, why is it commercial property’s included under this as well? And I’ll be frank with you, it’s a question that we were never really able to answer. The second thing is, yes, there is absolutely a loophole that allows corporations when they change hands to not actually have their property assessed at the new market value and that – and apparently does happen in California, that if this loophole was closed that the state could raise billions of dollars more every year in new assessments, in new assessed values. And also a third point when it comes to commercial, there is the suggestion that okay, we keep it at 1% purchase price assessment but maybe for corporations they pay 1.5% or they pay 2% or they have a different rate. We split the tax roll. But, again, it becomes such a political issue – we can tell even by the people calling in it’s a very emotional issue. So in terms of looking at this—and this is part of the reason for this discussion—if we can just get the facts out there, get people talking about this so we know what our options are, we know what we think might make sense for the State of California.

CAVANAUGH: Let’s take another call. Richard is calling from El Cajon. Good morning, Richard. Welcome to These Days.

RICHARD (Caller, El Cajon): Good morning. I was lucky enough to go to school in the fifties and sixties when we were the best education system in the country or the world, and at that time the sales tax rate was four and a half percent. Now it’s 10%. And then they decided to have a lottery and they said all of the profit from the lottery is going to go to education. The lottery makes billions of dollars but it’s all – it’s all going to go to education and now I understand that only about 10% of the real estate, for tax purposes, is undervalued. Clearly, we’re paying a lot of money. Where is the money going?

FARYON: Well, actually lotteries – lotteries, I think, only account for one and a half percent of total education budgets. Where’s the rest of the money going? I don’t know but I know you’re right; it’s a very small fraction of education funding. Property taxes, where does the money go? Great question. So it’s more than half the people actually in this county who are paying taxes on less than market value. Our property taxes that the county will collect about $4 billion this tax year. 44% of it will go to schools in the county, about 20% to the county government, less than 20% to all of the cities, 11% to special redevelopment agencies, the remainder to special water districts, sewer districts, fire districts, and actually less than 1% to our libraries. Less than a percent.

CAVANAUGH: What are we going to find out tonight, Joanne, on the Envision special?

FARYON: You’re going to meet a lot of people who were in their homes in 1978 and you’re going to hear firsthand what this debate was really like. You’re going to meet some of those people who if not for Prop 13, they would lose their homes. You’ll hear more about education and funding. You’ll learn more about where our money does come from and how we fund our services and, hopefully, at the end of it, you’ll sort of walk away, again, with just some – a sense of context in terms of why we’re where we are today. Tomorrow, you’ll hear from Amita Sharma and she is going to be discussing that very hot topic about commercial property and actually Ana Tintocalis on Wednesday, on radio, will report on the parcel tax, again, another way around Prop 13.

CAVANAUGH: Right. Our largest local school district, the San Diego Unified, is considering that parcel tax as part of a proposition on the November ballot. And, as you heard, on Wednesday, KPBS education reporter Ana Tintocalis will bring us more on that issue. I want to let everyone know you can see our Envision documentary special, “The Legacy of Prop 13,” it airs tonight at 9:00 p.m. on KPBS Television. And to see our complete series on this topic, you can go to KPBS.org/prop13. And if you’d like to comment on this segment, another thing to jot down, KPBS.org/thesedays. Joanne, thank you so much.

FARYON: Thanks for having me.

CAVANAUGH: You have been listening to These Days on KPBS.

Comments

Avatar for user 'philosopher3000'

philosopher3000 | March 29, 2010 at 10:15 a.m. ― 4 years, 8 months ago

This is not a complicated issue, there is not going to be any change in the TAX PROTECTION afforded home owners by Prop.13.

However, Prop.13 affects ALL property, including second homes, investment property, and commercial property, and our state government is facing bankruptcy from underfunding. SHELL CORPORATIONS created as holding companies for commercial real-estate are responsible.

Homeowners sell their homes on average ever 5-7 years, even elderly homeowners die every 30-50 years, but CORPORATIONS NEVER DIE!

Under Prop.13, I can form a corporation, buy a property, live in that property, write off all costs of that property as "business expenses", and never have that property re-assessed for tax purposes.

When I'm tired of that property, or the property value has increased enough that I want to sell it and enjoy the equity, then I can simply sell the HOLDING CORPORATION. The property never technically changes hands, and is thus never re-assessed for tax purposes. The new owners simply keep the tax protection of Prop.13.

If I die, the corporation is passed to my heirs, without any loss of tax protection. And CORPORATIONS LIVE FOREVER.

Paying 1% on the value of Capital Investments is not extreme, it is the cost of government, the cost of schools, hospitals, libraries, roads, and other vital government services.

If your business can't afford to pay 1% property taxes, then it isn't a very good business, sell the property, and let someone else have the chance to make it work for them.

Split the Roll, stop the Property Tax Loophole for Corporations.

http://obamaed.blogspot.com/2009/01/prop-13-after-31-years.html
http://www.lifeguardadventures.com/mer/documents/Prop13brief.pdf

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Avatar for user 'oldexpat'

oldexpat | March 29, 2010 at 1:34 p.m. ― 4 years, 8 months ago

On your program you hold up New Jersey as the number one in spending on education because they pay double the per capita property tax compared to CA.
You fail to point out that NJ is also broke in spite of double the taxation and is now making enormous cuts in education. The outcome has been worse since the citizens have been paying even more and getting less.
Higher taxation hasn't saved them..and won't save us.
San Diego has enjoyed enormous increases in realestate tax income, but they have spent every cent without regard that the economy does have cycles.

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