Wednesday, June 5, 2019
LA Voters Wise Up; Soundly Defeat Prop EE, The Largest Property Tax Increase in LA History
Teachers have struck over the past year and a half in West Virginia, Oklahoma, Colorado, Arizona, Oakland in, and Los Angeles. 32,00 Los Angeles teachers, represented by the United Teachers of LA (UTLA), struck the Los Angeles Unified School District (LAUSD) for six days, January 14-22, before an agreement was reached. 600,000 students received, at best, minimal teaching during the strike. The terms of the new contract were very favorable to the teachers: 1) A 6% pay raise, retroactive to the 2017-18 school year 2) A 4 student reduction in class size; 3) Removal of a provision allowing larger class size during economic emergencies; 4) A commitment for a full time nurse in each school; 5) A librarian for every middle and high school; 6) Special education teachers will get two release days to conduct testing; 7) A dedicated hotline and attorney for immigrant families. The average pay for LA school district prior to the agreement was $74,789. The first problem is that the LAUSD was already operating at a loss, and said after the settlement that it didn’t know how it was going to pay for it. Austin Beutner, LAUSD Superintendent, said he had “tremendous concerns about insolvency.” He also said “This is a truly historic agreement, and we look forward to tomorrow, and a new day for our schools.” It’s historic – signing an agreement with no funds to pay for it. The second problem was that Prop 13 requires a 2/3 vote of voters to approve a tax increase. Hence a proposed tax increase For the Children, always For the Children. Why not propose the largest property tax increase in the history of Los Angeles? It's for the children. The third problem is that no matter how much political pull the public employee unions, especially teachers unions, have with elected officials in LA, California, and several other states, the elected officials cannot enact a tax increase on the own in California. Prop 13 requires a 2/3 vote at the ballot box. Hence a proposed property tax increase of 16 cents for square foot of improvements. It would residential single family and multi-family housing and commercial buildings for 12 years. The assumption is that almost every home owner in the LAUSD voted against it. A further assumption is that renters would vote for it. Renters understood that it would result in rent increases. The proponents didn't even have the honestly or integrity to call t a property tax; They labeled it a "parcel Tax," as if it came from the Post Office, UPS, or FedEx. Voters have memories. They don't trust the LAUSD and the politicians. They remember the 2013-4 IPad scandal. The then Superintendent of Schools entered into a $1.3 billion deal to supply IPads to every student, roughly 650,000 students, in the District. The money came from a bond issue for school reconstruction. Prop EE threw a few bones to charter schools, which the UTLA otherwise vigorously fights. Prop EE did not receive 2/3 of the vote. It did not even receive a majority! The vote count yesterday was 165,294 NO, 139,027 Yes. It was a smackdown rebuke of UTLA, LAUSD, and Mayor Eric Garcetti who vigorously campaigned for it. Absentee ballots remain to be counted, but even with the best ballot stuffing, it will not be enough to overturn the Tuesday vote. Prop 13 limits property tax increase to 2% annually based on the year you bought the property. The Democrats and public employee unions have hated it since the public voted for it. The significance of this vote is a warning to them. They plan to place a proposition on the ballot next November that would lift the Prop 13 limits on commercial property. They call it a “split roll” proposal. Yet another measure that will drive more businesses out of California. LA taxpayers had already approved tax increases for roads, Prop H sales tax increase of 1/4% for the homeless, plus bonds, and against repeal of the gas tax increase. Why not another tax increase, this time for the children? They’re sympathetic to tax increases for good causes and for the children. The polls showed a 65-35% approval of a proposed parcel tax. Once again, the pollsters were wrong. Business was unified against the increase. The real estate industry was against it. John and Ken with their large listenership on KFI ranted against it daily. It would be another California way to drive business out of the state. Opponents ran an interesting campaign, not so much against the tax proposal itself, but a takeoff on the great The Who song, “Won’t Get Fooled Again.” The gas tax increase as for “the roads.” Much of the proceeds were diverted elsewhere, pursuant to the fine print in the act. Indeed, some communities used the funds to reduce traffic lanes for bicycles and other uses. A billion for the homeless, and the homeless tragedy in LA is growing. Voters a few years ago in San Jose and San Diego enacted pension reform on the public employees. They have been struck down in the courts, but the public is increasingly upset with the salaries and benefits of these workers. The voters also understand that little of the tax increase will in fact reach the classroom, much less fix the deferred maintenance in the schools. The math didn’t add up. The new contract was estimated to cost $175,000 million the next two years, and then $228 million beginning July 2081. LAUSD estimated EE would raise $500 million annually. Where’s the rest of the roughly $300 million going? No answer. It’s a replay of the gas tax increase. Prop EE did not address an underlying structural problem with LAUSD. Student enrollment in LAUSD dropped from 654,000 five years ago to 621,000 today while the bureaucracy grew 20%. Fewer students; more administrators. LAUSD has done nothing to control these costs. It’s Not for The Children, but for the union workers and the unions. LAUSD has reserves of $1.8 billion, but by state law they gave to maintain a reserve of 1%. Remember the distrust? The Superintend, union leader, and Governor said after the defeat they had the funds to cover the first two years of the new contract. The tax proceeds would go into the general fund of the school district, probably to cover accrued pension costs. They’re be back next year with a new tax proposal.