California’s Anti-School Tax Revolt

Something unexpected happened in California on Super Tuesday. While most media attention was focused on the state’s presidential primary for the Democrat party, there was also one statewide proposition on the ballot, which would have authorized the state government to borrow $15 billion to repair and upgrade schools, to be paid for by raising taxes on Californians.

KTLA describes what was at stake for the state’s voters on 2020’s Proposition 13:

The only statewide measure on Tuesday’s California primary ballot is a $15 billion bond to repair and modernize aging schools, many of which are more than a half-century old and have issues ranging from leaky roofs and old wiring to toxic mold.

Some $9 billion from Proposition 13 would go to K-12 schools, with priority given to addressing health and safety concerns such as removing asbestos and eliminating lead from drinking water.

Of that, $5.8 billion would go to updating school facilities, followed by $2.8 billion for new construction and $500 million each for charter schools and facilities for technical education.

The borrowed money does come with a price tag: taxpayers would owe an estimated $11 billion in interest over the next 35 years, according to the nonpartisan Legislative Analyst’s Office.

In addition to the state’s teachers’ unions, who would directly stand to benefit from the measure, Proposition 13 was backed by leading state political leaders, including Governor Gavin Newsom (D) and all of the national presidential candidates for the Democrat Party competing in the state’s Super Tuesday primary.

The high level of competition among the Democratic party’s presidential candidates brought high numbers of enthusiastic supporters to the polls, which should have bode well for Proposition 13 because registered Democratic Party voters in California outnumber registered Republican voters by nearly a 2-to-1 margin.

And yet, they refused to pass 2020’s Proposition 13. The Associated Press‘ Michael R. Blood writes an epitaph for the measure:

Everyone knows that living in California comes with a price: Its residents pay some of the nation’s highest taxes on the money they earn, the gas they pump and the clothes they wear. But for the moment, at least, it appears voters have had enough.

The defeat Tuesday of the largest borrowing proposal in the history of California schools—$15 billion for repairs—has opened the question of whether Californian voters put a temporary halt to the growth of government debt because of the unsettled political scene, or because they are on the cusp of a tax revolt akin to one in the 1970s that brought landmark changes to property taxes.

By itself, the crash of the question on the March 3 primary ballot was striking—it’s been a generation since a state school bond failed and there was no telling moment prior to the election indicating voters had soured on it.

But it didn’t stop there. Voters rejected more than half of the 237 local tax and bond measures on that ballot, with several dozen contests still undecided as California authorities wade through hundreds of thousands of uncounted ballots, according to a tally by the California Taxpayers Association.

Blood cites a range of comments across the political spectrum to explain the election outcome. He quotes Dan Newman, a spokesman for a group backing the proposition, as chalking up the loss to voter “grumpiness toward taxes statewide.” Similarly, low-tax advocate Jon Coupal reportedly described the outcome as the result of voters having “grown cynical after repeatedly authorizing more money and debt for government with scant evidence that services or classrooms are improving.”

There may be something to that latter view. One of the biggest issues facing states across the nation is the role public employee pensions are playing in diverting tax dollars from the public services desired by voters. That problem is very pronounced in California, where EdSource, a California education advocacy group, produced a video describing the undesirable effects rising teacher pension costs are having on California’s schools:

EdSource’s video makes a point of the teacher with a $90,000 final income getting an annual guaranteed pension of $60,000, but no Social Security income. In 2017, the Motley Fool estimated that a person earning $100,000 a year while working would collect over $32,000 in annual Social Security income after they retired. California’s teachers who become fully vested in their government-provided pension plans retire much wealthier than most Americans.

It costs a lot to provide these very generous guaranteed pensions. The average cost for teacher pensions in California doubled to $1,000 per student in the 2017-18 school year. Since student enrollment in California’s public schools is falling, the cost to taxpayers of providing exceptionally generous pensions to teachers in the state has only been rising.

That means less and less money that voters approve for schools will be used to do the things that they expect schools to do. Is it any wonder that California’s voters are becoming tax fatigued?

Craig Eyermann is a Research Fellow at the Independent Institute.
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