Bond Issue Poppycock – Anti-Business Shenanigans - California Proposition 13

A tale of taxation controversies. In 1988 (in California) ballot numbers for propositions were re-set at one, and are reset each decade back to one. It is a quirk of fate that both the 1978 and 2020 Propositions are numbered 13. 

The new “Proposition 13” (Bonds for Schools and Colleges) is a devious attempt at an end-run around the 1978 law.  It authorizes $15 Billion general obligation bonds for schools and colleges, and $9 Billion for pre-schools, and $6 Billion for the higher education system. A general obligation bond is a municipal bond backed by the credit and taxing power of the issuing jurisdiction, in this case, the State of California. These bonds are issued with the belief that the issuing municipality will be able to repay the bond debt through taxation. 

California taxpayers said “NO” to out of control property taxes in 1978, when they passed Proposition 13. That Amendment limits the tax rate for real estate, not to exceed 1% of the full cash value of real property. This was contested, but upheld by the Supreme Court. 

Leftist news media claim that there is no connection between the 1978 Proposition 13 and the 2020 Proposition 13. That is false. The March 3rd proposition would double the rate of tax that could be authorized and collected. It would initially limit the increases to non-residential (business) property, but we know that lawmakers and taxes are like a camel’s nose under the tent; soon the entire camel is inside the tent. 

Governor Gavin Newsom (Nancy Pelosi’s nephew) and every elected state Democrat, state and local teachers’ unions, The League of Women Voters, Alliance of Californians for Community Empowerment, Bay Area philanthropic organizations, the San Francisco Foundation, the Chan-Zuckerberg Initiative (yes, Mark Zuckerberg), and many left-leaning groups support the initiative.

The Howard Jarvis Taxpayers Association, the California Chamber of Commerce, and the California business community do not want this proposition passed.

At stake here is a back door attempt to raise property taxes by contravening the 1978 Proposition 13. It would raise taxes on non-residential property to pay for proposed general obligation bonds. General obligation bonds are loans to bond buyers that must be paid back with interest. The money for this bond would come from taxes on business property owners. This is bad for business. Government taking more in taxes might require increased prices to customers, or to hire fewer people, or to leave this already high tax state for a more business-friendly setting. 

If this proposition passes, how long would it be until the homeowner’s exemption is also discontinued? The whole tax-increase camel could be inside of the tent before you can say abracadabra.