Joel Fox, Editor and Co-Publisher of Fox and Hounds Daily, recently discussed tax increase proposals aimed at increasing revenues to pay for the Los Angeles school strike settlement. According to Fox, the plan apparently is to largely target business, which will add to the perception that Los Angeles and California are not business friendly. Two types of property taxes are aimed at raising school revenue, one weighted toward business, the second aimed exclusively at business.
The parcel tax put on the June 4 ballot by the Los Angeles Unified School District board affects both homeowners and businesses. However, instead of levying a flat fee on all properties, the tax is designed to charge 16-cents per square foot of building space (with exemptions for seniors and the disabled.) Going the per-square foot route means business properties will carry a heavier load than residential properties.
The Los Angeles Chamber of Commerce objected to the per square foot formula while the Valley Industry and Commerce Association flatly came out in opposition to the parcel tax stating in a release, "The rushed process to get this measure on the ballot did not allow for input from the community and VICA will be working with a coalition to defeat this tax, and move forward with a better solution for our students.”
The school board seemed ready to join the teacher’s union in support of a statewide ballot measure due to appear on the 2020 ballot that would alter Proposition 13 by splitting the property tax roll, raising property taxes exclusively on business properties with the revenue divided between schools and local governments.
As part of the strike-ending deal that he helped negotiate, Mayor Eric Garcetti also pledged support for the split roll property tax.
With recent demands put on business activity from setting wages to now discussing government regulations for employee work schedules and promoting additional taxes on business, the city shouldn’t even pretend to be business friendly.
The tax increase proposals that will be before voters won’t solve the schools deficit problem because the school district did not tackle the spending side of the budget, especially when it comes to employee health care and pensions costs. According to the county board of education, it is those costs that are driving the LAUSD toward insolvency.
The title put on the parcel tax ballot measure indicates the tax money is for quality teachers, class size reduction, school safety and all kinds of school services. There is not a word about the costs of pensions and healthcare. That was done purposely. Language related to pensions in the measure was dropped. It would hurt efforts to pass the measure.
But a boat full of positive goals for the schools can’t hide the truth. Money is needed for the deficits caused by the generous pension and healthcare benefits.
There are reasonable fixes if the school board would engage them.
According to Stanford lecturer and Govern for California president David Crane who analyzes government budgets, "One-third of LAUSD’s retirement spending is for unnecessary, duplicative or excessive health insurance subsidies provided to retirees entitled to Medicare or ACA coverage. Terminating those subsidies could provide an immediate $10,000 salary increase for LAUSD teachers.”
But the education establishment chose to go after more revenue rather than do the hard work of reforming the benefits package that is driving districts costs so high. And, in searching for new revenue, business becomes a juicy target.
After all, as the old political saying goes, businesses don’t vote.
CRA
http://www.calrental.org/