Multiple Entities Could Gain Power to Increase Property Taxes with Just 55% Vote of Approval

Hundreds of local special districts could gain the ability to increase property taxes with just a 55% majority vote if a proposed constitutional amendment becomes law.

The proposal, ACA 1 (Aguiar-Curry; D-Winters), is opposed by the California Chamber of Commerce and fell short of passing the Assembly last week. The author requested that the bill be reconsidered.

If ACA 1 is approved, voters will be asked to decide whether property tax increases for affordable housing and infrastructure can be approved by just a 55% vote instead of two-thirds.

When the lower vote requirements outlined in ACA 1 take effect, local taxpayers could face property tax increases—by a 55% vote—from numerous overlapping jurisdictions, including a city, county, school district, community college district and one or more special districts.

California has an estimated 2,071 independent special districts, many with the power to collect property taxes, according to the Little Hoover Commission.

The Senate Local Government Committee found that about three-quarters of all special districts are supported in whole or in part by property taxes. These special districts provide services such as fire protection, flood control, cemeteries, and road maintenance.

ACA 1 undermines the protections of Proposition 13 and permits discrimination against certain classes of taxpayers.

The increased tax authority for numerous special districts could result in a single taxpayer being burdened with uncoordinated and ill-advised layering of new taxes from multiple special districts.

As a result, ACA could reduce even further the percentage of California households that can afford to buy an existing, median-priced home. A recent report from the California Association of Realtors puts that figure at 30%.

ACA 1 also seeks to amend Proposition 13 by lowering the voter threshold for long-term indebtedness that is paid for by an increase in ad valorem property taxes.

For more than a century, two-thirds voter approval has been required for general obligation bonds. The debt obligations backed by the increased property tax ACA 1 seeks to allow often would be in place for as long as 30 years.

The stronger consensus among voters implicit in a two-thirds vote margin is appropriate given that taxpayers would be obligated to an increased tax rate for such a long period
ACA 1 awaits action on the Assembly floor.

Staff Contact: Sarah Boot

 

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