I suspect most of you haven’t heard of Senate Constitutional Amendment 5 (SCA-5). In a previous column I let it be known I am not fond of the property tax method of acquiring funds to finance county government. It lacks a sense of fairness.
Realistically, trying to convert from an entrenched tax method to some other method would cause more chaos than the amount of unfairness it would remedy. Our best option is to fix the system we have. This brings me back to SCA-5, which is working its way through the California Legislature.
When discussing taxes there is the argument of which tax method is better, followed by deciding on which priorities those taxes should be spent. But I have noticed that no matter what tax method one favors, everyone wants it to be fair and equitable.
Here is a summary of SCA-5 produced by Evolve, a nonprofit community organization.
SCA-5 would reform the commercial aspect of Proposition 13 by regularly reassessing commercial and industrial property at their fair market value. Introduced in the Senate by Loni Hancock and Holly Mitchell, SCA-5 marks the first attempt in the Legislature to exempt commercial properties from Prop. 13 protection. This reform would restore $9 billion annually to public schools and services by making some of the wealthiest corporations pay their fair share.
SCA-5 will not impact any residential property. Homeowners and renters will not be affected. Also, the measure will not affect agricultural property.
Property tax rates will not change. Property tax rates on California businesses will continue to be among the lowest in the country.
SCA-5 provides crucial tax relief for small businesses in California via a personal business property tax exemption of up to $500,000. This will benefit all businesses in California, whether they rent or own their property, taking 90 percent of businesses off the personal property rolls.
The measure provides for a two-to-three year phase-in of full market value payment of property tax for commercial and industrial property, and provides for a five-year gradual phase-in for some smaller businesses.
It distribute the increased revenue according to current property tax allocation among cities, counties, and school districts. It would require that the increment in revenue increase caused by this measure be identified yearly as well as implementation of new transparency and accountability measures for the new revenue for local governments and schools.
The increased funding for schools will be placed in the Local School and Community College Property Tax Fund and redistributed statewide in accordance with Gov. Jerry Brown’s Local Control Funding Formula. Also, increased funding from the measure will be prohibited from being used for administrative costs.
I like the fact that they used the term “restore” when speaking about the amount of money that will find its way back to our schools. Prior to Prop. 13, California schools were among the best in the country. The current state of our poorly funded school systems is a direct result of Prop. 13.
There is also a direct correlation between the underfunding of our schools and the over-crowding of our prison system. We can either educate our children or incarcerate them when they become adults. Guess which choice costs less? You need look no further than our Lompoc Unified School District to see what effect Prop. 13 has had locally. Our classrooms are at over-capacity.
Considering the tremendous benefit these various corporations derive from our state’s education system, it is time they start paying their fair share. Be Evolved and support the passage of SCA-5.