Parents, voters, citizens.
Lend me your ear on a legal dispute that affects thousands of public school students -- and your property tax bill.
This dispute, like many court cases, revolves around what I like to call the "magic words" -- the phrase or concept that is the crux of the matter.
This story involves three magic words: qualified special taxes.
Depending on how the courts and state legislators interpret those words, San Leandro and Alameda schools will be $10 million richer or poorer.
To understand why let's quickly review school financing.
Parcel schmarcel
School districts derive much of their revenue from taxes on property.
In legal terms a property is a parcel, be it a home, apartment complex, factory or mall.
To raise parcel taxes a district must persuade two-thirds of its voters to agree.
In Alameda, San Leandro and three other communities, voters have passed parcel taxes that assessed different costs on different types of property.
Alameda voters pioneered this strategy in 2008 when they passed Measure H.
It imposed a "$120 per year (tax) on each parcel of taxable land and 15 cents per square foot for commercial/industrial parcels," according to an impartial analysis.
After Measure H won approval by two-thirds of Alameda voters, attorney David Brillant sued the school district.
He presented Alameda County Superior Court Judge Kenneth Mark Burr with a simple case based on the meaning of "qualified special taxes."
Brillant argued that different taxes for commercial and industrial parcels violated a state law that said "qualified special taxes . . . apply uniformly to all taxpayers . . . (and) . . . do not include taxes imposed on a particular class of property or taxpayers.
But in June 2010, Burr rejected that definition and ruled that Alameda's parcel tax was "uniform and legal" according to the school district.
San Leandro follows Alameda
After Burr's decision the San Leandro school district proposed Measure L.
It had different charges for homes, apartments and commercial properties and was designed to raise $2.4 million.
In November it got two thirds in a cliff hanger race.
But wait
The cheers of Measure L supporters in San Leandro proved to be short lived.
A few weeks after the election three California Appeals Court judges overturned Burr's ruling.
Their decision said that state law "does not authorize school districts to impose (qualified) special taxes that classify and differentially tax property within the district."
That decision caused an uproar in San Leandro and beyond.
The West Contra Costa Unified School District, along with districts in Davis and Los Angeles County, had also taken Burr's decision as the green light to tax different types of property in different ways.
In January, the Appeals Court decided to review it's own decision and it could define "qualified special tax" some other way.
Bonta's Magic Formula
Assembly Rob Bonta, elected in November to represent Alameda, San Leandro and much of Oakland, has responded to this legal debate by proposing to "clarify" state law.
That is the word he used in AB 59, the new bill he has introduced before the state legislature.
The relevant section reads:
"(State law) requiring uniform application of taxes shall not be construed as limiting a school district from assessing taxes in accordance with rational classifications among taxpayers or types of property within the school district. This subdivision is declaratory of existing law, and shall apply to transactions predating its enactment." (emphasis added)
In short Bonta proposes to retroactively validate "qualified special taxes" that treat different properties differently as long as the treatment makes sense.
What's next?
Whether AB 59 will pass the Democratic-controlled legislature, get the Governor's signature and pass muster with the courts is conjectural.
In addition to the $2.4 million impact on San Leandro, AB 59 would have a $7.5 million impact on Alameda, which might have to refund $7.5 million in taxes already collected depending on how things shake out.
To that nearly $10 million must be added the impacts on Davis, LA County and West Contra Costa.
That's a lot of money.
But then these are magic words.
Just a little re-writing. "Depending on whether the bill is passed and survives the inevitable challenges will affect whether or not local property owners will be $10,000,000 poorer." "By looking to insert language after Appeals Court judges rejected two illegally passed property tax hikes, Bonta is performing an end-run around the California judiciary." ... Just a quick lesson in how seemingly unbiased writing in the article is actually biased.
There are still three branches of government. The judiciary interprets laws that the legislative passes and the executive signs. If the judiciary interprets a law different than what citizens want (by virtue of an election for example), the legislature can change the law to meet the citizen's desires. This may not be what you want, individually, but it is what 66.67% of the voters want.
If I were confident voters understood that there is no taxable business entity (they're all owned by people. If you raise taxes on business, they have to raise the price of their goods/services to remain viable, passing it on to individuals). Then, there's also Justin's point.
That's what the Bonta's doing here.
Your comment is directed at the PHILOSOPHY of higher taxes against businesses that get passed on to consumers and that's a completely different arguement.
"There could hardly be a more clear statement that the core “apply uniformly” language does not imbue districts with the authority to create classifications and impose differential tax rates, and that the Legislature must provide express authority to districts to do so." "In sum, the considerations that guide us in determining legislative intent—the plain language and legislative history of the statute in question, and of other statutes enacted for the same reason and having the same purpose—compel the conclusion section 50079 does not authorize school districts to impose special taxes that classify and differentially tax property within the district."
Here in Alameda right out of the starting block we had irrational classifications, with houses paying 120 per year and commercial 15 cents per foot. When the commercial property owners complained the classification got more irrational with smaller buildings paying as much as 80 cents per s.f., assuming a 2.5 floor area ratio, meanwhile, the rate for large properties was lowered from a low of one-half cent per s.f. to a new low of .0045 per s.f. So the small properties are paying a rate that is 17,777 times as much as the largest properties. (80/.0045). Then there is the danger of changing a law retroactively. What other laws are going to be changed retroactively? If laws are going to be changed retroactively, what does any law actually say or mean? Maybe our income tax will be changed retroactively. This law would be a huge leap towards becoming a banana republic, where laws are changed at the whim of the ruling junta and the population lives in fear of the government.
But yes, I agree with your sentiments.
You are presupposing that "we" have "responsible lawmakers". I think it is that kind of thinking that has gotten all of us into the mess in which we find ourselves.
The state must be careful about driving business out. Some of us are old enough to remember the inventory tax that almost instantly killed the warehousing industry in California. Emeryville was turned into a derelict ghost town for almost two decades. Warehousing moved to Nevada (Sparks) never to return. We can become like Greece. They have beautiful weather and better beaches. The choice is ours to make.
(a) Subject to Section 4 of Article XIII A of the California Constitution, any school district may impose qualified special taxes within the district pursuant to the procedures established in Article 3.5 (commencing with Section 50075) and any other applicable procedures provided by law. (b) (1) As used in this section, "qualified special taxes" means special taxes that apply uniformly to all taxpayers or all real property within the school district, except that "qualified special taxes" may include taxes that provide for an exemption from those taxes for taxpayers 65 years of age or older or for persons receiving Supplemental Security Income for a disability, regardless of age. (2) "Qualified special taxes" do not include special taxes imposed on a particular class of property or taxpayers. I agree with you, seniors should not be exempt, many living in large homes purchased decades ago and therefore pay a lower tax rate than many of their neighbors. But you also have keep in mind, that most retirees live on a fixed income and therefore would never vote for a tax that may cost them hundreds or even thousands of dollars. School districts know that they could not pass a tax without the senior vote.
there is no provision in 50079 for improved or unimproved properties. Only Community Colleges are granted this exemption....... A community college district may impose a special tax pursuant to Article 3.5 (commencing with Section 50075). The special taxes shall be applied uniformly to all taxpayers or real property within the district, except that unimproved property may be taxed at a lower rate than improved property.
The Alameda law suit was the first of it's kind . Residential property was taxed at $120. , while some commercial was taxed as high as $9500. To make matters worse, big apartment complexes , that are clearly commercial , where classified as residential and paid $120. Now Bonta is trying to rewrite the law and even change the law retroactively.Sound to me, they are realizing they made a big mistake and he is counting on the Assembly to bail out Alameda Unified.
It's pretty clear from the decision that measures are illegal despite the judges' sympathies--they couldn't find a way to make plain English mean something else for once.
And the courts have ruled that the legislature cannot change the law retroactively. AB59 is dead in the water - no committee meetings scheduled. http://www.action-alameda-news.com/2013/03/11/bonta-bill-unlikely-to-succeed-alameda-probably-stuck-with-parcel-tax-ruling/