DATELINE CHICAGO: Mayor warns property taxes could be going up 150%.
Suppose the mayor of your city announced a property tax hike of 150% or, stated another way – two-and-a-half times your current tax. A homeowner accustomed to paying $2,000, would see their next bill increase to $5,000, while a bill of $4,000 would jump to $10,000. Coincidentally, these amounts roughly approximate the average property tax rate in California just prior to Proposition 13’s passage in 1978 – a tax burden so high many homeowners were forced out of their homes.
A 2010 study of California’s pension obligations conducted by the Stanford Institute for Economic Research under the direction of Professor Joe Nation, a former Democratic member of the Assembly, showed California Taxpayers are on the hook for over $500 billion in unfunded pension liability.
This debt was created by public officials who promised more to their government employee union allies than they could reasonably deliver and they would prefer that the public remained in the dark about this looming crisis.
As these bills are coming due, the Sacramento politicians, most of whom owe their election to the political activism of government employee unions, are already thrashing about trying to find ways to raise revenue. For many, the logical target is Proposition 13’s taxpayer protections.
For taxpayers, Proposition 13 continues to act like a lifeboat in stormy seas. Because of Proposition 13, annual property tax increases are limited and predictable, voters have the right to decide on new local taxes, and the Legislature must achieve a two-thirds consensus to increase state taxes.
Without Proposition 13, Californians could soon experience what it is like to live in Detroit or Chicago, without ever having to leave their homes.
Who Cares About Homeowners?
One would think that last year’s passage of Proposition 30, which gave California the highest income tax and sales tax rates in America, would satiate politicians’ appetite for even higher taxes – if even for a moment. No such luck. Not only are legislators vigorously promoting changes to Proposition 13 that would make it much easier to raise property taxes by doing away with the two-thirds vote, there is almost no limit to the other current schemes designed squeeze more revenue from the public. Indeed, the California Taxpayers Association has identified 66 bills representing more than $11 billion in new revenue now moving in the Legislature.
One such bill, flying under the radar scene until recently, is a direct hit on property owners. Senate Bill 391 by Bay Area Senator Mark DeSaulnier places a $75 recording tax on documents filed in county recorder offices for items ranging from construction and business loans, liens and documents associated with refinancing. And the costs escalate rapidly because the tax is based on each filing. For example, refinancing a home can easily require up to six different documents to be recorded with the county. This would result in a $450 tax hike per transaction.
The greed of the majority of lawmakers for taxpayer dollars is such that their focus is almost exclusively on how much revenue a tax will raise, not on what the impact will be on those being taxed. All they are able to see is the $500-700 million the tax is estimated to bring in annually, not that the bill punishes those it is said to help. One of the stated purposes of SB 391 is foreclosure mitigation, but the bill places the $75 tax on both the recording and removal of a notice of default and a trustee’s sale. While home values have started to rebound, this is a punitive step to take against individuals still struggling with upside-down mortgages.
As troubling as this tax hike may be, even more alarming is the unscrupulous way in which the legislative leadership is attempting to secure its passage.
Earlier this year, SB 391 was “joined” to another piece of legislation, Senate Bill 30, a common-sense bill that eliminates income tax liability on mortgage debt that is forgiven when a homeowner engages in a bank approved short sale. For a taxpayer who cannot afford to keep their home to still be liable for income tax on debt that is forgiven by a lender is patently unjust. Recognizing this, Congress has already approved the elimination of this income tax liability for federal tax returns.
Although the State Senate unanimously passed SB 30 to conform state law to the new federal standard, Democratic leadership insisted SB 30 be joined to the SB 391 tax hike. Now, the favorable SB 30 cannot pass the State Assembly unless members also approve the draconian tax hikes in SB 391.
There is nothing that could justify this deal. The income tax suspension on forgiven mortgage debt in SB 30 is only for the remainder of the year and ends January 1, 2014. But the massive tax in SB 391 goes on forever.
Holding hostage reasonable and appropriate relief for struggling homeowners is one of the clearest examples of the arrogance of the current legislative supermajority. They just can’t seem to do the right thing without insisting on a major payoff in return.
Did you know that California cities, counties and special districts spent $96 million on Sacramento lobbyists in the last legislative session? This is outrageous. These local politicians spent $96 million TAXPAYER dollars lobbying to raise your taxes even higher!
The good news? While groups that spend the most too often win the biggest, California has one huge exception – your Howard Jarvis Taxpayers Association (HJTA) consistently gets the best of the big lobbies powered by thousands of individual donations from people like you.
I write hoping you’ll make a special HJTA donation of at least $335 today, but I’m really counting on your contribution of $500 or more because even after Proposition 30 increased state taxes by many billions of dollars, the tax-and-spenders are now even more aggressive in their attacks on homeowners and Prop. 13.
Don’t be fooled by media reports that California has somehow “turned things around.” State and local governments still have a mammoth long-term pension gap. If government had to use the accounting standards required by law for private business, California’s total debt would be revealed as a terrifying one trillion dollars. Every locality has a share of that overwhelming debt. They’re running scared, desperate for more revenue. But overspending is so deeply entrenched in California politics that these local taxing authorities spend millions of tax dollars every year lobbying to further increase Californian’s tax burden.
Local governments’ power to raise taxes is limited by Proposition 13. Prop. 13’s one percent cap protects homeowners and Prop. 13’s two-thirds vote requirement protects all taxpayers.
Local governments spend $96 million in Sacramento because only the State Legislature can really do damage to Prop. 13. When we passed Prop. 13, we wrote it into the California Constitution and now, only Constitutional Amendments can weaken or repeal it. That’s why local governments spend so much money to lobby in Sacramento, on their own or as members of the League of California Cities or California State Association of Counties. Their priorities are Constitutional Amendments to increase Homeowner Bond Debt and Parcel Property Taxes.
Both of these homeowner taxes appear “below the line” on your property tax bill, so Prop.13’s 1% cap does not apply to them. If lobbyists manage to remove Prop.13’s two-thirds vote protection – your “below the line” taxes could increase without limit and without any reasonable restraint.
So far this year, this local-government lobbying has been shockingly successful. In May, the State Senate advanced five anti-Prop.13 Constitutional Amendments. Senate Constitutional Amendment 3 (SCA 3) kills Prop.13’s two-thirds vote protection for Parcel Property Taxes, perhaps the most unfair homeowner tax. SCA 4, SCA 8 and SCA 9 remove the same Prop.13 protection for certain “special taxes” (taxes imposed for some specific purpose). Plus, SCA 7 eliminates the two-thirds vote protection for certain Homeowner Bond Debt.
The State Assembly is advancing ACA 3 to eliminate Prop.13’s two-thirds vote protection for certain Bond Debt and “special taxes.” Far worse … they just passed Assembly Constitutional Amendment 8 (ACA 8) – the nastiest attack on Prop. 13 ever to come out of the State Legislature. ACA 8 repeals Prop.13’s two-thirds vote protection for “special taxes” to repay local bonds. Property owners are ultimately required to pay these bonds. So ACA 8 really lets voters who don’t own property raise taxes on those who do.
Your special HJTA donation today will help us defeat ACA 8 as it now moves to the State Senate. Yet it will also help us fight all of these anti-Prop.13 Constitutional Amendments. And believe me, they are all direct attacks on Proposition 13 and YOUR wallet!
I’m proud to say that your Howard Jarvis Taxpayers Association is the local-government lobbyists’ worse enemy. We are certainly their biggest barrier to homeowner tax hikes because your HJTA is your most effective and efficient lobbying organization in Sacramento! We can win big without spending much at all, but we rely on donations for every successful defense of you and or Proposition 13.
Even after Prop. 30 handed them billions in new tax revenue, tax-and-spend politicians are determined to dig deeper into your wallet and to undermine and ultimately repeal Proposition 13.
Proposition 13 has saved homeowners more than $630 billion. That won’t pay off the debt politicians ran up. But it would offset overspending for years – if they could just get their hands on it. With your help, we’ll keep their hands off your wallet. But … we really need your help.
As you know, anti-Prop.13 factions have supermajorities in Sacramento. Two-thirds of the State Senate and two-thirds of the Assembly have voted to weaken Prop 13. The anti-Prop. 13 supermajority is shattered when your HJTA convinces even one or two state legislators to protect you, all homeowners and Proposition 13.
Your HJTA can win those votes by being aggressive, using “take no prisoners” tactics but mainly because politicians know we are backed by grassroots activistCaliforniahomeowners like you! Please join thousands of your fellow HJTA members today and
make an HJTA donation of $500 or at the very least $335 today!
P.S. Mr. and Mrs. Housing Provider: Proposition 13 saves YOU, personally, thousands of dollars every year. And anti-Prop 13 supermajorities in the State Senate and Assembly now put those savings seriously at risk. You know your HJTA fights hard and smart on your behalf winning major legislative battles to protect you and Prop. 13 year after year. Continuing success relies on your special HJTA donations – investments that keep Proposition 13 safe and your property tax savings locked in.
I ask for your investment in HJTA and Prop.13 today! Please send your donation TODAY made payable to HJTA to 621 S.
Westmoreland Avenue, Suite 202, Los Angeles, CA 90005-3971.
Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights. For more information, visit www.hjta.org.