CTA drops ballot issue
Teachers union abandons its commercial property tax initiative and will join other groups to submit legislative proposals.
By Peter Hecht -- Bee Capitol Bureau August 5, 2005

The California Teachers Association on Thursday announced that it was dropping a $2 million-plus effort to qualify a June 2006 ballot measure to hike commercial property taxes to fund education.

The announcement by CTA President Barbara Kerr, in a news conference with business leaders who had opposed the measure, averted what was shaping up as a particularly bruising and costly ballot fight next year.

But instead of preparing for battle, an unlikely set of political bedfellows - teachers, prison guards, commercial property owners and manufacturers - announced they would work together to submit new proposals to the state Legislature to help fund California schools.

"We've agreed that we're going to talk about adequate and equitable funding for our schools, and we have agreed to work together to make that happen," Kerr said, flanked by representatives of the California Business Properties Association and the California Manufacturers and Technology Association, two ardent opponents of the proposed measure.

The so-called "California Tax Fairness Act," backed by the teachers union and the California Correctional Peace Officers Association, would have rolled back protections under Proposition 13 - the 1978 property tax limitation measure - for commercial property owners. The initiative would have required annual assessments for commercial properties, triggering increased property taxes.

Proponents claimed the measure - if passed by voters - would have generated an additional $2.8 billion in state revenues, of which about 50 percent would have gone to K-12 schools and community colleges.

Rex Hime, president of the Business Properties Association, said the measure could have cost California commercial businesses "tens and tens of millions of dollars" from tax increases and lost revenues. The business association had already raised more than $500,000 and spent more than $425,000 to fight the initiative, according to state campaign spending reports.

Both Hime and Kerr denied that any deal had been worked out between opposing sides in exchange for dropping the initiative.

"It doesn't signal anything other than we're here and we're going to talk together," Hime said.

Kerr said teachers and business groups, as well as the correctional officers association, will hold a series of meetings in "an historic new joint effort" to address long-term education funding solutions and issues such as teacher training and class size. Hime and Kerr said they hope the discussions will produce consensus for a legislative package on school funding - instead of another divisive ballot measure.

"I want to applaud the decision by the CTA not to submit ... this measure," Hime said.

"We believe this initiative would have severely damaged business, costing jobs and threatening our economy."

The teachers association had raised more than $2 million, and Kerr said more than 900,000 signatures had been collected to date for the commercial property tax ballot measure. Meanwhile, the correctional officers union contributed another $250,000.

But both employee groups are already financially stretched by this November's special election.

The teachers association and the Alliance for a Better California, a coalition of Democrats and public employee labor unions, have raised about $22 million to fight Gov. Arnold Schwarzenegger's agenda.

The union groups are fighting Proposition 75, which would make it harder for public unions to use members' dues for political campaigns, as well as Proposition 76, which would give the governor broad powers to make spending cuts, and Proposition 74, which would make it harder for public school teachers to get tenure.

Now, THAT'S the start of a win-win situation.

Time to include social responsibility into the "Business as Usual" modis operadi.

Perfect model? Hewlett Packard.

Uh, oh Is this a cave in ?

(Cali, I am glad you posted under CA forum. KT was collecting signatures for the ballot initiative, I think. She was some kind of coordinator for her district.)

The only sympathy I have for not taxing commercial properties is a personal one. In Florida, apartment buildings of more than four units are taxed very heavvily- which creates a regressive de-facto tax on those who rent; those who rent here are generally those who cannot afford to buy.

Could you please explain more of what you from CA think about this development (in the first post), so those of us out of state can better understand.

The problems concerning Propostion 13 were known at the time, but there were no other alternatives. People were losing their houses because they couldn't pay the taxes.

The language of Prop 13 allows a reassessment for tax purposes only when there is "a change in ownership". This presents two problems for California homeowners. Homeowners sell their property on average about every 7 years. Thus, Person A who bought a home in '75, then sold it and bought a new one in '82, would pay the increased taxes on the new assessed valulation of the new purchase price. The same would be true for the person who bought the house from Person A.

Commercial and industrial property, however, may not be resold for decades. So, while a piece of residential property might be paying taxes for the valuation of a third or fourth resale since 1978, the commercial property is still paying the tax on its pre-13 tax basis. So, for example, a commercial piece of real estate purchased in 1977 for $500,000 (a big piece of real estate at that time) and never re-sold is paying less in taxes than a residential property originally purchased at the same time for, say, $100,000 (again, a really nice place in '77) but sold a month ago for $1.3 million.

The second issue has to do with large corporations. For example, Times-Mirror. In the early 1900's The Times-Mirror Corporation bought several hundred thousand acres of parched real estate near the Mission San Fernando- the San Fernando Valley- for a few dollars an acre. Water was eventually brought to the region and the rest is history: land values sky-rocketed, and have continued to sky-rocket since. Times Mirror still owns huge tracts of this land that has increased by perhaps 100,000 times since it was originally purchased.

The Times-Mirror Corporation was purchased a few years ago by The Chicago Tribune. There was never a reassessment done on the San Fernando Valley property because there was never a change in ownership! Times-Mirror, the landowners, were simply gobbled up whole by a bigger fish.

This is the problem which must be addressed. While our public services have taken a nose dive, people today are paying the lion's share of property taxes. Again, it is the middle class paying through the nose.