California voters turn down $15B bond issue for schools, higher ed facilities

Dive Brief:

• With more than 95% of precincts reporting as of Wednesday morning, California voters on Tuesday rejected a $15 billion statewide bond measure that would have funded facility projects at preschools, schools, community colleges and universities. The funds would have been used to cover removal of toxic mold and asbestos from aging buildings, more school nurse facilities, and fire and earthquake safety upgrades. Wednesday morning, the nos were leading with 56% of the vote.
• Also included in Proposition 13 would have been a provision that allows developers to build multi-family housing near subway stations and bus stops without having to pay school impact fees. The incentive ties to Gov. Gavin Newsom’s efforts to address the housing and homelessness issue in the state and reduces pollution caused by commutes to transit centers. But some argued the provision would have hurt school district finances.
• Opponents of the measure argued that the bond issue would cost have taxpayers $27 billion including interest, and that it saves money to pay for school construction and repairs out of districts’ general funds.

Dive Insight:

It’s unclear whether the fact that the ballot measure had the same number as California’s famous Proposition 13 — a 1978 initiative that forced limits on property taxes in the state — confused voters Tuesday. 

This fall, voters will face another property tax ballot question that affects education funding, which district leaders and advocates, including the California Teachers Association, see as a way to address the fact that per-pupil spending in California is more than $2,000 lower than the national average and about half of what New York state spends. 

The California Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative calls for a constitutional amendment requiring commercial and industrial properties, except those zoned for commercial agriculture, to pay taxes based on market value instead of their purchase price. Residential properties would continue to be taxed on their purchase price, which is why the plan is called a “split roll.”

The current tax structure dates back to the original Proposition 13 and requires that property taxes be limited to no more than 1% of the purchase price. Adjustments are limited to the rate of inflation or 2% — depending on which one is lower. This results in the taxable value of commercial and industrial properties usually being below market value.

If the measure passes, 40% of the revenue — about $4.8 billion annually — would flow to a new Local School and Community College Property Tax Fund. But the state Legislative Analyst’s Office (LAO) suggests approval of the measure could hurt the state’s economy.

“For example, the measure would increase taxes paid by many businesses, thereby increasing their costs of operating in California relative to other states,” according to a 2018 LAO letter on the proposal. “This would influence some businesses’ decisions about whether to expand in or move to California. Overall, the measure’s effect on the health of the state’s economy is uncertain.”