By Liska Koenig
California education advocates are spearheading a campaign to repeal Proposition 13, a property tax law they argue is costing the state billions in potential tax revenue that could aid struggling public schools.
Recent budget cuts to education stemming from California’s $20 billion deficit have resulted in soaring college tuition, public sector layoffs and the elimination of thousands of classes at colleges throughout the state. Formerly one of the leading states in the country, California has now sunk to 47th position in per-student spending, according to the National Center for Education.
Proposition 13 sets property tax rates at 1 percent of a property’s value for businesses and home owners and caps tax increases at two percent per-year until the property is sold.
“A great deal of funding for education comes from property taxes, and when property taxes are limited, then funding for education suffers,” said Gus Goldstein, president of the American Federation of Teachers Union, Local 2121.
AFT 2121 endorses a change to a split-roll tax, which would apply different taxes to residential and commercial properties, with special consideration for rental properties.
“We need a carefully crafted legislation so renters and owners of rental property won’t be penalized,” Goldstein said.
Until Proposition 13 was approved by California voters in 1978, the assessed value of a piece of property determined the amount of tax the owner paid to the state. When the booming housing market of the late 70s boosted property values, property taxes increased. For long term property owners, this translated to relatively low property taxes, but income property that changes hands more often was re-assessed with each change of ownership and incurred higher tax rates.
“Around the time of the housing boom in California, rents were increasing sharply in many urban cities like San Francisco, Berkeley and Los Angeles and proponents of the proposition marketed it to make it sound like tax savings for the landlord would have a positive effect on the tenant’s rent,” said Ted Gullicksen, president of the San Francisco Tenants Union.
The union is also advocating for changes in property law.
“We need to make sure that those who need those benefits from a new Prop. 13 get it and those who don’t need it, don’t get them,” Gullicksen said. “Prop. 13 definitely needs changes, but in the past it has pretty much been considered political suicide for politicians to even talk about it because so many politicians and members of the voting public have benefited from it.”
Owners of large commercial properties like office buildings, malls and apartment buildings are currently profiting the most from Proposition 13, Gullicksen said. But he believes a repeal could also hurt single home owners in lower income urban areas because home prices would be driven up by speculation and gentrification.
Goldstein thinks it’s not just up to politicians to change the political landscape in California.
“The average student can do something about these inequalities by getting registered to vote, being informed about the initiatives out there and voting,” Goldstein said. “Commercial property needs to be redefined and politicians in Sacramento need to find a new way to assess the value of a property.”