Parcel taxes are the only way for California school districts to get additional tax funding beyond their allocation from the state. Parents, and educators want more money for schools— and parcel taxes are a way to do that. But they are also legally required to be fundamentally unequal. Proposition 13, passed in 1978, caps property taxes at 1% of assessed value, prohibits any additional ‘ad valorum’ taxes— taxes based on the value of the property— and requires a ‘uniform rate’.  That left a flat rate per parcel— a ‘parcel tax’— as the only way to increase local school funding. 

Two recent court decisions have chipped away at the restrictions on parcel taxes.  In one, the court recently ruled that a parcel tax in Alameda USD based on the square footage of the property was in fact a ‘uniform rate’— creating a way to make parcel taxes a little less unequal. We can expect this to be the formula for most parcel taxes going forward— if that decision stands. In the other ruling, parcel taxes put on the ballot by ‘citizen initiative’ and not by the school district now only require 55% to pass. Since there are plenty of citizens willing to sponsor a parcel tax for schools, this will also be the model for most future parcel taxes. Predictably, the California Business Roundtable, the Howard Jarvis Taxpayers Association, and the Commercial Real Estate Development Association— the exact alliance behind Prop 13 forty-five years ago— is putting an initiative on the November ballot requiring that all new taxes pass by two-thirds. But no matter how they are tinkered with, parcel taxes create inequality in two fundamental ways:

Inequality within districts. 

A parcel tax is by definition a regressive tax: the poorer you are, the higher the percentage of your income you owe. The 600 sq ft house in the flats pays the same amount as the 3,000 sq ft house in the hills. Less noticed, though, is that a high rise office building also pays the same as the 600 sq ft. house.  (That was the exact intent of the ‘no ad valorum‘ clause in Prop 13, written and financed by commercial real estate interests)

How regressive a parcel tax is depends on the district.  A  parcel tax in Oakland, where home values vary by a factor of 10, and with many large commercial properties worth far more than the mansions, is regressive on a scale that’s hard to wrap your brain around (rough calculation: 1,000:1). A parcel tax in Piedmont, with few multiple unit or commercial properties and with most home values in a relatively small range (x3?) is not as unequal. That makes it easier to pass a substantial parcel tax; Piedmont USD gets 28% of its total budget from two parcel taxes. And that brings us to the other kind of inequality:

Inequality between districts

In 1971, the California Supreme Court ruled (Serrano vs. Priest ) that school funding based on local property taxes was inherently unequal and in violation of the California constitution; the  same tax rate would produce much more school funding in wealthy districts.  Parcel taxes were not part of that decision but they raise many of the same problems. Wealthy districts can raise parcel tax money far more easily than poorer districts.

Voters in some poorer districts have passed parcel taxes; an Oakland parcel tax recently passed by 82% (impressive) with a thirty-year term (unheard of).  But in contrast to the 28% boost that Piedmont USD gets, the Oakland tax only increases the budget by about 2.5%

If we look at which districts in California have parcel taxes, the pattern is clear. Only 10% of CA districts have a parcel tax and they are heavily concentrated in the wealthier parts of the Bay Area— Santa Clara County has the most, followed by San Mateo, Marin, Contra Costa— and then Los Angeles.

Not a solution

Parcel taxes function as a safety valve, allowing wealthy communities to improve their schools without having to join with poorer districts to fight for more state funding. Poorer districts can use them, but they gain less and require more inequality. For all but the wealthiest districts they are not a solution to class size, educator pay or anything else substantial. They make school funding seem like a local issue when the only way to really change school funding is to make it a state issue.

Getting local educator unions to oppose a parcel tax would be nearly impossible, especially those where the stated purpose is raising educator salaries. We can’t oppose school funding without confusing other educators and the public. 

So what can education union activists do? Educate! Point out the built-in inequalities of a parcel tax. Keep insisting that the real problem is state funding and that our unions need to work together to find ways to change that. Keep reminding everyone that the billionaires and the developers and the real estate holding companies are not paying their share— and that a parcel tax won’t  change that.

       David  de Leeuw    OEA retired

Also see the article on Basic Aid, October 2024

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