California’s Proposition 13 is the bane of public education in the state – and for the most part benefits the richest single segment of the population, relying on the old straw man of "senior homeowners on fixed incomes" (when tax credits for that demographic would be far more equitable in keeping folks in their homes). However, it’s only one of many archaic and unethical pieces of the tax code keeping our public schools underfunded.
The whole story is much more complicated, but a recent grand jury report in San Diego took the focus off Prop 13 and turned that energy to vilifying owners of historic homes – only it turns out they got the story wrong. Kelly Bennett of Voice of San Diego reports:
One of the most heartrending arguments for dramatic changes to the
city of San Diego’s historic preservation program is that its tax
discounts for homeowners results in an annual revenue loss to the San
Diego Unified School District of nearly $1.5 million.That
sum factored in media reports, propelled damning rhetoric in a county
Grand Jury report and became a talking point of Mayor Jerry Sanders in
press conferences and on the Roger Hedgecock radio show earlier this
month. And so, the city’s Mills Act program looked quite like a fat tax
break to homeowners in some of San Diego’s wealthiest neighborhoods at
the expense of schoolchildren. And this at a time when schools are
preparing to slash staff levels and budgets.But it’s not true.
The
school district didn’t lose $1,486,317, as was claimed in the Grand
Jury’s report titled "History Hysteria." The state reimburses the
district to make sure it has a particular level of funding for schools,
even if property tax revenue drops, according to the state Department
of Finance and San Diego Unified School District. The program does mean
losses for the city of about $600,000, for the county, and for several
other municipal agencies due to the tax discounts.The number
blunder exemplifies some of the confusion swirling in the debate over
one of the few programs for which San Diego leads the state. San Diego
has entered into far more Mills Act contracts, more than 800, than any
city in the state. The contracts with homeowners of historically
designated homes trade a break in property taxes for a homeowner’s
promise to keep the facade up to snuff.
Read the full story at VoSD; photo by Sam Hodgson.
Yes, the children. Let’s quadruple our population without thought to how we’re going to get water to them, or food, or police them, or where we’re going to put the garbage. Or school them.
Certainly it’s my fault because I’m Mills Act! My property taxes were cut in half from 5k a year to 2500. What percentage of that 2500 savings makes up what I put into keeping up a 5000sf landmarked 1907 masterpiece that suffered decades of neglect? Not much. But it helps. Granted, I’m not in San Diego, but LA. Maybe that’s the reason I don’t fall under the “wealthiest neighborhood” rubric.
And being in LA, I can tell you something about Prop 13…bane of children? Benefitting the wealthy? A lot of folk I know can barely afford their homes now without a reappraisal on their taxes, given as values have soared in the last ten years. And they ain’t seniors. And bane of children? The LAUSD has a 7.5 billion dollar budget with a 19.3 billion public works deal underway to build new schools…they just spent 55million for new software, which overpaid teachers 53million while not paying others, and has now spent 14million of a budgeted 35million to fix the system, and nearly a million so far preparing the lawsuit against the guy they hired. I’m gonna go ahead and say taxpayers aren’t exactly at fault here. Other than their being the ones, you know, breeding.
In CA under Prop 13, homes are reassessed whenever they are sold and taxes can only increase as much as 2% per year. The new owner pays property taxes based on the new sale price. You only need to look back a few years to see huge churn in real estate and dramatically increasing values. Proponents of Prop 13 point to studies like one from the Center for Governmental Analysis, that shows between fiscal years 2000 and 2005 property tax revenue has increased 22.11%, while personal income per capita has increased 13.80% and general per capita revenue 21.93%.
So the tax base is growing and the counties and schools should be getting enough money. 22% over five years is definitely beating inflation. The real losers are not the schools but the people whose property taxes are based on housing bubble prices from 2005. They might be paying taxes on a phantom $100-150k of value they no longer have.
The Mills Act is an economic incentive with a payback. It helps homeowners clean up neighborhoods and increase property values. That means more money for schools when those owners eventually sell. It likely reduces crime and the need for city services to boot.