The California Teachers’ Association (cta) has decided to work with a statewide taxpayers’ group to press for a state constitutional initiative that would alter some provisions of Proposition 13 and make available substantial amounts of money for public education and other government services.
The cooperating organization, called Taxpayers for California, is a coalition of public6employee associations, private labor unions, and other groups.
The proposal, which would establish a “split-roll property tax” distinguishing various types of properties, was endorsed at the October meeting of the cta It would attempt to shift the property-tax burden away from home owners and back to businesses--a change it says would provide as much as $750 million in revenues to the state’s general fund.
The proposal is a general one which itscta proponents admit will probably be shaped by organized labor, renters’ associations, tax reform groups, and other school-employee groups that are potential friends or foes of such an amendment.
Nonetheless, they say, the amendment will probably retain basic elements of the proposal. The legislation is to be drafted within a month.
The proposal, according to the teachers’ organization, is designed to correct “three major problems: homeowners’ inequities, corporate tax burden inequities, and lack of adequate state revenues.” It would:
Eliminate the provisions established by Proposition 13 to reassess all agricultural and residential property (including apartments) retroactive to 1975, and it would reevaluate the property at the 1975 level, adding only 2 percent yearly growth thereafter.
The measure would provide California homeowners tax relief of about $2.4 billion. Under current law, when property changes ownership it is reassessed to full market value, with the result that new homeowners pay more property tax than residents of similar homes who have not moved.
Reappraise business property at full market value and set additional tax-rate increases on a sliding scale, from 1.35 percent to 1.75 percent, over the next several years. That would “recapture,” according to a cta newspaper, approximately two-thirds of the relief which Proposition 13 provided to businesses, because it would generate an additional $3.15 billion in business taxes.
Increase in Revenues
According to general figures developed by the cta, these two actions would result in a net increase of $750 million in revenues--$3.15 billion more tax funds from business, minus $2.4 billion in tax relief for homeowners.
But, said Ralph J. Flynn, executive director of the cta, the figures could change significantly. “The net increase may be as low as half a billion,” he said, depending on how “agriculel5ltural” property and “rental” property are defined. “The question,” Mr. Flynn said, ''is do we exclude huge agri-industry operations or just family-sized farms. And there will be a difference if a line is drawn between owner-occupied property or that owned by an absentee landlord.”
Joyce Fatem, a governmental-relations officer for the cta, said that the funds recovered would be returned to the state’s general fund for allocation through the normal legislative process. “Hopefully, education will get its share,” she says, “but we’ll have to go fight for it.”
Richard P. Simpson, assistant vice-president of the California Tax Association, which organized the campaign for Proposition 13, said the association will actively oppose the idea should it become a constitutional initiative. Mr. Simpson said the problem of unequal homeowners’ assessment was one the voters were aware of when they approved Proposition 13. “The voters didn’t seem to particularly care about that,” he asserted.
Mr. Simpson nonetheless agreed that the unequal assessment was “a problem--the most serious one they raise,” but he said the cta’s claim that two-thirds of the benefits have gone to business-property owners was “a convenient use of data. Businesses paid two-thirds of the taxes before Prop 13, and it was an across-the-board cut,” he said.
With the depletion of the revenue surplus in the California treasury that softened the initial effects of Proposition 13, and two proposals for further tax cuts (involving tax-indexing and the inheritance tax) scheduled for a vote next June, the cta commissioned Fingerhut-Grandos Opinion Research, a Washington polling firm, to assess the political feasibility of various revenue-raising options.
Mr. Flynn, who would not speak in specific terms about the poll because of the involvement of other groups, said the most significant findings were “that Californians now do believe that the surplus has been exhausted and they recognize there have to be alternative sources of income.”
