Up and down the state, politicians and bureaucrats were wringing their hands. Their ever-flowing magic wallet had snapped shut. Proposition 13 had cut off unbridled tax increases. "You poor dears," Big Governmenters whispered in their ears, "we'll think of something."
And think of something, they did. It's called assessments. The politicians were joyous. Instead of tax, tax, tax, it was assess, assess, assess.
In 1996, the Howard Jarvis Taxpayers Assn. came to the rescue with Proposition 218, closing Proposition 13's loopholes by limiting the authority of local governments and making them review how they were collecting money. But politicians are a wily bunch. They read and reread Proposition 218 to find a loophole to the two-thirds-vote requirement for special taxes. "All we have to do," they jubilantly shouted, "is call it an assessment! We'll say that all city services--landscaping, parks, park lighting, street lights, etc.--are 'special benefits' to property owners. Everything is a 'special benefit.' We'll get the money we would otherwise have to spend and blow it on whatever we want!"
Proposition 218 says assessments are allowed only if they provide a "special benefit" (for example, street lighting would be required to provide substantial illumination on a particular property), not a general benefit to the public or a general increase in property values. The bugaboo is whether a service should be classified as a "special tax" that provides benefits to the general public and requires a two-thirds vote of all local voters or an assessment providing a special benefit to particular parcels and requiring a majority approval of property owners by a weighted vote.
A weighted vote means that votes depend on the number of parcels owned. The fee for the special benefit must be billed on a parcel-by-parcel basis.
But Irvine is using a flat amount for every parcel on a public residential street throughout the city. It's currently $41.05, and the proposed increase is to $103.51.
On Feb. 5, 2001, the California Supreme Court addressed the general versus special benefit issue of Proposition 218, stating that to earn the special-benefit tag, an assessment had to be for particular and distinct benefits over benefits to the general public. Enhancement of general property values was not sufficient. The court concluded, "If everything is special, nothing is special."
To explain what is happening in California cities, look at Irvine. Normally, park maintenance, landscaping and street lighting is financed by special taxes requiring a two-thirds vote. In a compromise five years ago, Irvine voted to finance this by an assessment to end this July. Instead of letting it die, Irvine is mailing 35,498 ballots to Irvine property owners on Feb. 15, for approval of an almost threefold increase. Irvine says parks and lighting are a "special benefit" to property owners, which allows them to call this an assessment requiring only a majority vote. Admitting that street lights and parks benefit the general public would require two-thirds approval.
In assessment elections, ballots go only to property owners and are allocated by the number of lots owned. I own one lot, therefore I get one vote. The Irvine Co. owns 1,352 parcels, and gets therefore 1,352 votes. Cities realize that ordinary residents can be outvoted if land owned by the city and big landowners is assigned enough votes.
In the Irvine election, almost half the votes will be controlled by the city and developers and big landowners, including the Irvine Co., Irvine Apartment Communities, Koll Center, Lakeshore Properties, Spieker Properties, Jamboree LLC, Oak Tree Realty, Metropolitan Life, AXA Advisors and ERP Operating Limited.
Because developers and big landowners are dependent on the city for building permits and approval of their projects, it is likely they will vote for the city's position, especially considering that landlords can pass on increases to tenants and developers won't be paying the tax, purchasers will.
Increases like this are devastating to many senior citizens and families on limited incomes. Although Irvine calls it an "assessment," it is an unending, upwardly spiraling tax increase that will be added to the property tax bill.
Moreover, it is double taxation. About two-thirds of Irvine residents live in homeowners associations whose assessments already fund most Irvine landscaping. Not only is this Irvine election process unfair, the increase is unnecessary and greedy. Parks and lighting costs have not tripled. Irvine is awash in money, running a large surplus. The assessment is estimated to bring in $3.2 million.
The motivation for cities such as Irvine to use the assessment classification to shift costs from the general fund to the taxpayer is to provide a never-ending cash flow, thus freeing up money to be used for pet projects. California cities should be cutting taxes, not raising them--shrinking government, not expanding. They should be honest and submit tax increases to a two-thirds vote of all taxpayers.
What can the beleaguered taxpayer do?
Challenge classifying assessments like landscaping, park maintenance and park lighting as "special benefit assessments" requiring only majority vote when they should be special taxes requiring a two-thirds vote.
Go to city council meetings. In the case of Irvine, telephone those big landowners and tell them to vote "no."