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LAEDC Signs Onto Letter Opposing SB 1021, Split Roll Issue on Parcel Taxes

By July 1, 2014 No Comments

UPDATE  AUGUST 2014:  SB 1021 has been successfully defeated.  Below is the letter from June 16, 2014 that LAEDC and other organizations signed, recommending the legislation be opposed.

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June 16, 2014

The Honorable Lois Wolk
California State Senate
State Capitol, Room 5114
Sacramento, California 95814

RE: SB 1021 (Wolk): Split-Roll Parcel Taxes – OPPOSE

Dear Senator Wolk:

On behalf of the Regional Economic Association Leaders of California (R.E.A.L.)—an association of 21 of California’s most influential business and economic development organizations, representing more than 11,000 employers providing more than three million jobs across the state—we are writing to express our strong opposition to Senate Bill (SB) 1021 – a bill which would dramatically complicate an already convoluted tax regime and has the potential for myriad unintended and job-eradicating consequences.

SB 1021 would authorize 1,043 California school districts to impose unlimited, non-uniform, changeable and potentially inequitable tax increases on select property owners, such as commercial, industrial, multi-unit and -family residential. Under the bill, school districts could split parcel tax assessments within a district based on the square footage of a parcel, the square footage of improvement on a parcel, and/or the use of a parcel.

Specifically, pursuant to SB 1021’s wholly volatile and very random parcel tax regime:

– School districts would have no limits on what rates they could levy;
– School districts would have nearly unlimited discretion to decide who pays what tax (for example, a school district could pass a tax increase just against industrial property and assisted living facilities);
– School districts would be allowed to impose a different tax rate on unimproved parcels; and
– School districts would be permitted to aggregate multiple, smaller parcels owned by one owner to capture all the properties under a square footage parcel.

SB 1021 is an “end run around” Proposition 13 that singles out commercial and industrial owners, and offends notions of “competitive neutrality” by potentially forcing certain similarly-situated businesses to pay more, which puts them at a tax-induced competitive and economic disadvantage vis-à-vis other property owners. Rather than imposing such an inequitable “split roll property taxation” schematic, the Legislature should continue to require uniformity for parcel taxes imposed by school districts on all types of property owners.

One of the most regrettable unintended consequences of SB 1021 is its potentially negative social equity implications, specifically on equal [and fair] access to education. Variable parcel taxes have the very real and insidious potential to generate wide funding disparities among school districts and in the fulfillment of a child’s basic need for a good education, depending on the district in which a child resides; this most certainly raises a number of equal protection issues. In fact, the California Supreme Court already set the legal precedent and provided constitutional (and jurisprudence) guidance for such a funding proposal when it ruled in 1971 that California’s system of funding public schools through local property taxes was unconstitutional because it unfairly discriminated against children who live in low-income school districts. Indeed, non-uniform parcel taxes, such as those contemplated under SB 1021, would move the state backwards to an unfortunate period in time when an unconstitutional and inequitable system of school funding could go unchallenged.

In conclusion, SB 1021 is a problem, not a solution, at a time when our state’s economy continues to recover slowly and when our state’s legislators should be doing more – not less – to attract and retain jobs and close the ever-widening prosperity and education gap in our state’s most underserved communities. As such, the R.E.A.L. Coalition respectfully requests that you withdraw SB 1021, and protect jobs, businesses, property owners and children from bearing an unfair competitive and opportunity burden.

Sincerely,

Lucy Dunn Carl Guardino
President & CEO President and CEO
Orange County Business Council Silicon Valley Leadership Group

Bill Allen Gary Toebben
President & CEO President & CEO
Los Angeles County Economic Development Corporation Los Angeles Area Chamber of Commerce

Cynthia Kurtz Randy Gordon
President & CEO President & CEO
San Gabriel Valley Economic Partnership Long Beach Area Chamber of Commerce

Bob Linscheid Matthew R. Mahood
President & CEO President & CEO
San Francisco Area Chamber of Commerce San Jose Silicon Valley Chamber of Commerce

Cynthia Murray Al Smith
President & CEO President & CEO
North Bay Leadership Council Greater Fresno Area Chamber of Commerce

Ron Addington Kristen Connelly
President & CEO President & CEO
Business Council of San Joaquin County East Bay Leadership Council

Jim Wunderman Paul Granillo
President & CEO President & CEO
Inland Empire Economic Partnership Bay Area Council

Roger Niello
President and CEO
Sacramento Metro Chamber of Commerce

cc: California Governor Jerry Brown
Honorable Members of the Assembly Committee on Revenue and Taxation