For millions of California homeowners, Saturday was a day that will live in infamy. Without a single public hearing, the California Assembly passed Assembly Constitutional Amendment No. 8 (ACA 8), the most egregious attack on Prop. 13 ever to come out of the Legislature.
ACA 8 would repeal Prop. 13’s requirement that local “special taxes” (taxes intended for a specific purpose or purposes) be approved by a two-thirds vote. Instead, special taxes imposed for the repayment of local bonded indebtedness would be reduced to 55%. The ostensible justification for ACA 8 is to make it easier to finance local “infrastructure.”
There are several reasons why ACA 8 will inevitably inflict severe harm on California homeowners. First, while state bonds are repaid out of the state’s general fund – into which most Californians contribute through income or sales taxes – the same is not true for local bonds. Local bonds, usually referred to as “general obligation” bonds, are repaid exclusively by property owners. That means that voters who do not own property can vote to raise taxes on those who do.
Second, making it easier to pass local bonds will only add to California’s debt crisis. A recent study from the California Public Policy Center calculated total government debt in California as being $1.1 trillion. This figure dwarfs the $27.8 billion “wall of debt” Governor Brown himself has acknowledged as part of budgetary borrowing. Making it easier to incur local debt for “infrastructure financing” raises the obvious question: Does any sane person believe that California needs even more debt?
Third, while building local roads and libraries may be a worthy cause, the interests backing ACA 8 are hardly motivated by the goodness of their hearts. The usual cabal of unions, construction interests and the Wall Street bond industry all are chasing more tax dollars. The amount of money at stake – your money – is staggering. They care not a whit for the broader interests of California’s fiscal health or the interests of citizen taxpayers.
Is there any good news here? Yes. First, the passage of ACA 8 occurred in just one house of the Legislature. It must also pass in the Senate. There are a lot of reasons to believe that passage in the Senate is anything but automatic. The details of the politics here are too complex to go into at this time. But suffice it to say that liberal members of the California Senate might not be so quick to drink the anti-Prop. 13 KoolAid as did their colleagues in the Assembly.
Second, we are heartened by the fact that all Republican members of the California Assembly voted against repealing one of Prop. 13 most important protections. We say this as non-partisans as more than a third of HJTA’s members are registered Democrats. However, it has usually been the Republicans who have stood up to defend Prop. 13.
Just three weeks ago, my weekly column was entitled “Will Republican Legislators Betray Taxpayers?” While Republican support for homeowners can’t be taken for granted, on Saturday, the Republicans in the Assembly forcefully defended Prop. 13 on the floor of that chamber. We couldn’t be more pleased for their courage for standing up to the special interests.
Finally, because Prop 13. defenders – in this case, Republicans – spoke as one voice, this forced Democrats who portray themselves as “moderates” to either stand up to their ultra-liberal leadership and vote “no” on ACA 8 or cave to the pressure of Speaker Perez and the special interests and vote “yes.” This time, the so-called “moderate” Democrats failed – miserably. ACA 8 passed with zero votes to spare.
While passage of ACA 8 is a horrible insult and injury to homeowners, at least now we know who our friends are. Come election time, when some “moderate” Assembly Democrat tells you how much he or she represents citizen taxpayers and homeowners, you will now be armed with the truth. After all, elections have consequences.