The unfairness of parcel taxes is obvious. With them, owners of every piece of property in a city or school district almost always pay an identical levy, no matter what their holdings are worth. A 700-square-foot one-bedroom house pays the same as a huge indoor mall.
But these have been the rage in recent years among California school officials because the money they raise stays home, unlike more general tax increases based on property value or sales prices, much of which goes to Sacramento for distribution to poor districts under terms of a 1971 court decision.
One small district tried five years ago to make things a little more fair. It has now failed and may have to pay back as much as $7 million in taxes collected under its now-illegal plan.
That district is the Alameda Unified School District across the Bay from San Francisco, where voters in 2008 favored a local parcel tax proposition called Measure H by a margin of 66.9-33.1 percent, barely over the two-thirds threshold set by the 1978 Proposition 13 for passage of most new taxes.
The measure imposed a $120-per-year parcel tax on residential property atop a pre-existing $189 per year levy on all properties. At the same time, commercial and industrial properties were required to pay 15 cents per square foot if they exceeded 2,000 square feet.
This was a classic example of the split roll form of taxation — commercial properties taxed more than residential — which some critics of Proposition 13 have advocated ever since that landmark property tax limitation initiative passed. The split roll is not authorized under any California law even if legislators have occasionally tried to adopt it.
For sure, it offers more fairness than the Proposition 13 formula of taxing all properties at 1 percent of their most recent sales price, with maximum increases of 2 percent of the tax bill each year. And it’s much more fair than parcel taxes.
But Measure H is no more. It was struck down first last December by a state appeals court, and the ruling was upheld by the state Supreme Court early this summer.
This could have led to desperate times for the Alameda schools, which had come to depend on the parcel tax money. Suspecting Measure H might be struck down, school officials proposed another parcel tax in 2011, and it won by a 68-32 percent vote. This one also may prove problematic, taxing all property owners 32 cents per square foot of structure on each parcel. Residents with homes of 1,600 square feet, for example, would pay $512 per year, while owners of larger properties might pay much more, up to a per-parcel cap of $7,999 per year.
That’s also more fair than either standard parcel taxes or the Proposition 13 formula, but it might stand up under legal fire.
All this leaves a few other parcel tax plans aiming for more fairness in an uncertain state. In Davis, for example, voters last year approved a school parcel tax of $204 per year for single-family homes and $20 per unit yearly for multi-unit apartment buildings. The school board recently decided to scrap the multi-unit charge and go with a blanket $204 annual fee for all properties.
Some state legislators want to end the confusion, at least in the parcel tax realm. One bill introduced in January would let school districts assign different tax rates for various types of properties. But that proposal was shelved, at least for this year, when critics asserted it would conflict with Proposition 13, whose basic rules can be changed only via a statewide ballot proposition.
This proposal might come back next year, but if it does, there’s no reason to expect it to get any farther than it has so far. That’s because 2014 is an election year and few lawmakers will want to be accused of tampering with Proposition 13, as sacred a cow as there is in California politics.
All of which puts hopes for tax fairness in California on hold for quite a while.
— Reach syndicated columnist Tom Elias at email@example.com