Issue link: https://digital.copcomm.com/i/50712
ACTION TAX UNFAIRNESS LOWER REVENUES TRIGGER CUTS 30 32 SUPPORT CTA'S TAX REFORM EFFORTS. SEE WWW.CTA.ORG/TAXFAIRNESS AND CALTAXREFORM.ORG. Prop. 13 gives corporations an unfair tax advantage: The landmark Anheuser-Busch brewery in Van Nuys pays about $18,000 in annual taxes for 3 million square feet of land. That's less than a penny a square foot. TAX UNFAIRNESS IT'S FAILING OUR SCHOOLS AND CRIPPLING OUR STATE IN THE 1960S and early '70s, California schools were among the best funded and top rated in the country. The state's college and university system expanded. Tuition rates were low, in many cases free. Through that period, the state also had enough money to expand its freeway system, develop needed water resources, and invest in other huge infrastructure projects. Flash forward to 2011: Despite being the eighth-largest economy in the world, Cali- fornia has sunk to the bottom, or nearly so, in per-pupil funding, class size, and the number of counselors and librarians per student. Public college and university fees rocket higher and higher, and the state con- tinues unsuccessfully to try to dig itself out of an ongoing massive budget hole. According to the Los Angeles Times, if the property were assessed at current market value — 44 cents a square foot for the land — the tax bill for the land alone would be over $1.3 million, said Lenny Goldberg, executive director of the California Tax Reform Association, basing that estimate on values of comparable properties. (He could not estimate the tax for the brewery itself.) So what happened? How did the rela- tively wealthy Golden State lose so much of its luster and end up making students and schools pay a large part of the price? While the 2008 market crash and subse- quent recession have aggravated California's budget woes, they don't explain the state's four-decade fiscal slide. The state has had an ongoing revenue problem exacerbated by a broken tax system that unfairly benefits the few, hurts the poor and the middle class, and lets many who benefit the most from our system escape paying their fair share. An examination of just a few of the contrib- uting factors to California's broken tax sys- tem shows us in part how the state got into this fix and may give us some ideas on how to get out of it. PROPOSITION 13 CUT PROPERTY TAX INCOME, SHIFTED SCHOOL FUNDING RESPONSIBILITIES, AND STRANGLED THE ABILITY TO INCREASE REVENUES. In 1978 voters approved Proposition 13, a bal- lot measure that reduced property tax rates to their 1975 levels, capped future increases at 2 percent per year, and prohibited reassessing property values except in cases of ownership change or new construction. It shifted edu- cation funding responsibility largely to the state, slashing local taxes an average of 60 percent. Proposition 13 also blocked school districts from raising local property taxes for operational revenues, and it dramatically changed the requirement to pass a state budget and increase taxes from a simple majority to a nearly unobtainable two-thirds. Proposition 98 The Constitutional Guarantee Compared to Actual Funding 65 60 55 50 45 2005–06 2006–07 2007–08 2008–09 2009–10 2010–11 2011–12* Proposition 98 Guarantee Actual Funding *Per LAO Estimate Proposition 98 has protected schools, but hasn't generated new funding In 1998, voters approved CTA-backed Proposition 98, the school funding initiative guaranteeing that K-14 schools receive approximately 40 percent of the state bud- get. CTA members worked tireless to pass that measure, in part as a response to the rapid decline in public school funding brought on by Proposition 13 throughout the previous decade. In lean years, triggers in the Proposition 98 formula have meant schools have often not gotten their full share of revenue. Over the years CTA has fought vigorously to pro- tect Proposition 98 from frequent attacks, because its suspension would mean even deeper and more devastating education cuts (if that's possible to imagine). But while Proposition 98 has given schools more funding than they would have had otherwise, it has not been able to do much about an unfair tax system that shortchanges state coffers. Proposition 98's effectiveness is limited by the size of the state revenue "pie." 40 percent of a smaller pie means less money for schools. Only by growing state revenues and increasing the size of the pie will Proposition 98 work to its full potential. Revamping California's tax system would increase state revenues and allow students and schools to enjoy an adequate and more filling share of the state budget. 30 California Educator / December 2011 • January 2012 annual salary in thousands