This past week, most California homeowners received the two most important pieces of mail they are likely to get all year. These are your property tax bill and your mailed ballot for the 2024 general election. While both deserve individual attention, let me suggest that you open them on the same day to put both in context.
When reviewing your tax bill, the best place to start is to pull out last year’s bill and make a side-by-side comparison. Typically, your tax bill will show three categories of charges: the General Tax Levy, Voted Indebtedness and Direct Charges and Special Assessments. Let’s break these down a bit.
The General Tax Levy is what most people think of when talking about property taxes. This amount is based on the assessed value of land, improvements and fixtures. It usually makes up the largest portion of the tax bill and it is the amount that is limited by Proposition 13. The annual increase in the General Levy of Assessment should be no more than 2 percent, unless there have been improvements to the property, like adding a room to the house.
The second category of charges is Voted Indebtedness. These charges reflect the repayment cost of bonds approved by the voters. Local general obligation bonds for libraries, parks, police and fire facilities and other capital improvements are repaid exclusively by property owners. Because a minority of the population is required to pay the entire amount, the California Constitution of 1879 established a two-thirds voter approval requirement for these bonds.
Until the year 2000, local school bonds also required a two-thirds vote, but the passage of Proposition 39 lowered the vote requirement to 55 percent. Because it is easier to pass school bonds, many homeowners are seeing a significant increase in the Voted Indebtedness column on their tax bills.
The third type of levy found on the typical property tax bill is for direct assessments. These include so-called “parcel taxes” which are taxes on property ownership but are not imposed as a percentage of taxable value. Although there is no upper limit on the amount of parcel taxes you must pay, they remain – for now – subject to Proposition 13’s two-thirds vote requirement. Other direct levies may include charges for services related to property such as street lighting, regional sanitation, flood control, etc. Most of these are restricted by Prop. 218, the “Right to Vote on Taxes Act,” an initiative sponsored by the Howard Jarvis Taxpayers Association and approved by voters in 1996.
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t is obvious from the above that homeowners are heavily taxed for the “privilege” of owning property. But there’s more. Our highest-in-the-nation income tax rate, state sales tax rate and gas tax makes California one of the most heavily taxed states in the union.
Now, knowing the above, open your mailed election ballot. Statewide, voters are being asked to approve more than 400 local tax and bond measures. On top of that, Propositions 2 and 4 are statewide bond measures each seeking $10 billion in additional indebtedness.
Even worse, Proposition 5 would repeal the two-thirds vote for local bonds that has been an important homeowner protection since 1879. This opens the floodgates for higher property taxes as even the California Legislative Analyst predicts that passage of Prop. 5 will lead to billions of dollars of additional tax burdens.
It is undeniable that your election ballot and your property tax bill are inextricably connected. One asks for more of your hard-earned dollars while the other reflects how much you are already paying. The question that bears repeating is what have our politicians and bureaucrats done to prove that they need more?
Jon Coupal is president of the Howard Jarvis Taxpayers Association.