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Statewide Ballot Initiatives kickoff the 2020 Election Cycle It’s only August 1, 2019, but the impact of the 2020 elections is already evident at our State Capitol. The Attorney General and the California Secretary of State are currently reviewing a queue of state initiatives for circulation clearance. Political pundits and die hard activists across the country and in California are laser focused on the 2020 Democratic Presidential debates. Debates make for good real time entertainment regardless if you have a favorite candidate. The process is fastening to watch. Yes, there is no question that national interests can influence how we think about local politics whether it be a trade disputes with China, boarder control, immigration reform, foreign diplomacy or lack thereof — the list is endless. But in the throws of a 2020 March primary or the November general election the manufacturing of state initiatives is in full swing today. What qualifies for the statewide ballot is often a good indicator of what initiatives may be on our local ballot. Let’s take a closer look at the pending and cleared measures thus far. As anticipated, we see that environmental and housing concerns are at the forefront of this statewide election cycle. These concerns are very relevant in Santa Cruz County, where affordable housing is scarce and environmental integrity is crucial to our community. But before we do so, let’s put into perspective California’s economic picture. California is bulging with additional revenue, thanks largely to a still-vibrant economy. Yes, we know that some of our local government entities have deficits to address but in general terms — our economy is at an all time peak. Last week, the state Department of Finance closed the books on 2018-19 revenue and reported that the state collected $144.8 billion, $1 billion more than it had anticipated just weeks earlier, and $2 billion-plus more than the 2018-19 budget had originally forecast. It’s also a whopping 71.5% more than the state was collecting a decade ago, far outpacing both population growth and inflation. The state has enough money to max out its reserve funds and provide several billion dollars in extra cash to offset schools’ rising pension costs. Per-pupil spending on K-12 schools has risen by at least 50% in recent years as they collected their constitutionally mandated share of that rising revenue and benefited from ever-rising property-tax revenue. Speaking of which, the official line goes something like this: When voters passed Proposition 13, the historic property-tax limit law, in 1978, they hammered schools and local governments unmercifully. Is that really true? Once again, the reality is at odds with the comments coming from schools and local government. By imposing a 1% cap on taxing real property values (plus voter-approved bonds), rolling back taxable values to 1976 levels and limiting future increases to 2% per year, Proposition 13 did immediately and sharply reduce revenue. In fact, the measure cut it from $10.3 billion a year to $5 billion. Since then, however, property-tax revenue has steadily climbed, thanks to that automatic 2% annual raise, new construction and the reassessment of homes and commercial properties when they change hands. California’s county tax assessors have just closed out their rolls of taxable property for the 2019-20 fiscal year, and once again they are sharply higher, led by soaring property values in the booming San Francisco Bay Area. Overall, taxable property values are up by more than 6% to about $6.5 trillion, which will translate into about $75 billion in revenue. On average, property-tax revenue has increased by more than 7% a year since 1978, and overall revenue has expanded 15-fold since then. In the next few months, as the state initiatives begin to qualify for the 2020 March or November ballot, will local governments, who are enjoying increases in revenue, turn to the local initiatives to augment taxing us even more? The local rumor mill is beginning to turn out suggestions for school bonds and various tax measures, affordable housing and homeless services, another potential Transient Occupancy Tax (TOT), revenue enhancers for parks, another local rent control measure (in case the state measure fails), community college bond, and a host of other possibilities. The real question — do the voters have an appetite for more taxes for local services? Here is the preview of what is currently in play in Sacramento. Stay tuned for updates and Chamber insights on upcoming state and local initiatives. In the meantime, current measures are displayed below. PENDING 19-0003 — "Family Home Protection and Fairness in Proper” - Preserves and protects tax breaks that allow children to inherit and move into their family home while closing special tax loopholes frequently used by out-of-state residents and trust-fund heirs to improperly avoid paying current fair market taxes on vacation homes, luxury estates, beachfront rentals, and income-producing properties. - Closes special tax loopholes frequently used by multinational corporations, Fortune 500 CEOs, and venture capital firms to avoid paying current fair market taxes on business properties they acquire. - Gives the severely disabled, victims of natural disasters or hazardous waste contamination, and all California homeowners once they reach age 55, the right to transfer their existing property tax base anywhere in the state when they need to move to a replacement property-which benefits all Californians by expanding the overall housing supply on an ongoing basis and raising revenues for schools, police, fire, and other vital services. Click here for more information on this initiative measure. 19-0004 — "Property Tax Fairness for the Severely Disabled, Victims of Disaster, and Seniors Act” - Gives the severely disabled, victims of natural disasters or hazardous waste contamination, and all California homeowners once they reach age 55, the right to transfer their existing property tax base anywhere in the state when they need to move to a replacement property. - Creates new housing opportunities for first-time homeowners and families by creating new housing inventory available for purchase when seniors, retirees, and all Californians, once they reach the age of 55, are able to move to a replacement home without unfair price and location restrictions. Click here for more information on this initiative measure. 19-0005 — "Wildfire Prevention, Safe Drinking Water, Drought Preparation, and Flood Protection Bond Act of 2020” Authorizes $7,883,000,000 in bonds for projects related to climate resilience. Proceeds of bonds issued and sold would be allocated to the following purposes: - $3,508,000,000 for "wildfire prevention and community resilience from climate impacts" - $2,200,000,000 for "safe drinking water, protecting water supply and water quality from climate risks" - $975,000,000 for "protecting fish and wildlife from climate risks" - $200,000,000 for "protecting agricultural land from climate risks" - $770,000,000 for "protecting coastal lands, bays, and oceans from climate risks" - $230,000,000 for "climate resilience, workforce development, and education" Click here for more information on this initiative measure. CLEARED 1862. (19-0001) Expands Local Governments’ Authority To Enact Rent Control On Residential Property. Initiative Statute. - Amends state law to allow local governments to establish rent control on residential properties over 15 years old. - Allows rent increases on rent-controlled properties of up to 15 percent over three years from previous tenant’s rent above any increase allowed by local ordinance. Exempts individuals who own no more than two homes from new rent-control policies. - In accordance with California law, provides that rent-control policies may not violate landlords’ right to a fair financial return on their property. - Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Potential reduction in state and local revenues of tens of millions of dollars per year in the long term. Depending on actions by local communities, revenue losses could be less or more. Click here for more information on this initiative measure.
- $3,508,000,000 for "wildfire prevention and community resilience from climate impacts" - $2,200,000,000 for "safe drinking water, protecting water supply and water quality from climate risks" - $975,000,000 for "protecting fish and wildlife from climate risks" - $200,000,000 for "protecting agricultural land from climate risks" - $770,000,000 for "protecting coastal lands, bays, and oceans from climate risks" - $230,000,000 for "climate resilience, workforce development, and education" Click here for more information on this initiative measure. CLEARED 1862. (19-0001) Expands Local Governments’ Authority To Enact Rent Control On Residential Property. Initiative Statute. - Amends state law to allow local governments to establish rent control on residential properties over 15 years old. - Allows rent increases on rent-controlled properties of up to 15 percent over three years from previous tenant’s rent above any increase allowed by local ordinance. Exempts individuals who own no more than two homes from new rent-control policies. - In accordance with California law, provides that rent-control policies may not violate landlords’ right to a fair financial return on their property. - Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Potential reduction in state and local revenues of tens of millions of dollars per year in the long term. Depending on actions by local communities, revenue losses could be less or more.