SACRAMENTO – Senate Democrats today used their majority to pass SB1021, legislation that will raise taxes on homeowners and businesses of all sizes while hurting lower-income school districts. This “triple hit” on working families adds more red tape to the state’s complex tax system, and encourages more businesses to relocate outside California.
“The majority party today voted again to try to weaken Proposition 13, and California taxpayers need to hold onto their wallets,” said Senate Republican Leader Bob Huff (R-Diamond Bar.) Democrats claim this bill helps education but in reality it could have unintended consequences. That’s because the bill unfairly forces different tax rates on different size properties in a school district, which means some will pay more and some will pay less. That forces businesses in the school district to pick up the tab for the difference if voters pass a new tax increase. And if that isn’t enough, it may remove a critical homeowner tax deduction.”
Senate Bill 1021 by Senator Lois Wolk (D-Davis) allows school districts to use property classifications — commercial, industrial, single-family residential and multifamily residential — in order to impose different tax rates. The California State Supreme Court denied a request to hear a recent Appeals Court ruling that found this practice to be unconstitutional. Under state law, school districts that impose parcel taxes must apply them “uniformly to all taxpayers or real property within the school district.”
“Different parcel tax rates would likely target both small and large businesses,” Huff said. “Small businesses would be hit hardest, because they won’t be able to absorb higher lease costs that will be passed onto them. Large businesses which provide hundreds of jobs on a large piece of property – such as a manufacturing facility – take an even bigger hit. There is nothing to stop a school district from imposing a higher rate based upon square footage.
“We need to stop and consider how this benefits only upper middle class school districts,” Huff added. “Because low-wealth school districts are less likely to raise as much revenue as high-wealth districts, Proposition 13 balanced our per-pupil school spending. This bill throws that balance out the window because low-wealth districts would be able to raise only a fraction of the money that high-wealth districts would be able to raise. Finally, homeowners take a hit because they may lose their parcel tax deduction, and face higher state and federal income taxes. So let’s review: a vote for this bill raises taxes on homeowners, hurts low-income schools and drives more businesses out of California. Unfortunately legislative Democrats didn’t seem to care today, and that’s unfortunate.”
Senate Bill 1021 passed 21-15. All Republicans voted “No” and only Democrats voted “Aye.” It now moves to the California Assembly for consideration.