Nearly 1/4 of school districts in California face property tax hike

With a large number of houses destroyed in the Los Angeles area, the demand for alternative housing is expected to increase significantly, which is anticipated to drive up the costs of housing and rent. Due to these losses caused by wildfires, it is expected that homeowners’ insurance costs will also rise, impacting every individual in California. However, there is an unexpected aspect to consider: the cost of local school district bonds will make housing even more expensive.

According to data from the Coalition for Fair Employment in Construction, in November of last year, California voters approved 208 school district bond measures; in the primary election in March of the same year, 28 bond measures were also approved. In total, voters from 218 districts agreed to take on over $49 billion in new debt, which also means paying around $100 billion in new taxes due to related interest costs.

California’s school districts almost entirely allocate their annual income to increasing teachers’ salaries, while they refuse to allocate funds for renovating old buildings and other necessary facilities. With a budget shortfall in daily maintenance, only 3% of the budget is allocated each year for maintaining existing buildings and facilities. Instead, school districts often seek voter support for bond measures, claiming poor school conditions, and unfortunately, voters almost always comply.

The repayment of bonds is not borne by the school districts, but by the property owners within the district. The payment of the principal and interest on the bonds is allocated based on the assessed property value calculated by county assessors in California.

Due to the higher assessed value of new homeowners (based on their recent purchase price), they will pay higher property taxes than long-term residents.

If you own your own home, carefully examine the details on your property tax bill the next time you pay it. You will find that in addition to the 1% minimum tax payment based on the assessed property value, there is also one or more school district bond payments included. This expense will appear on your tax bill every year, for at least 25 years.

Many commercial tenants will see an increase in total rent, as landlords pass on these costs through higher rents. Look at the term “Triple-net lease,” which means tenants are responsible for insurance, maintenance, and property taxes in addition to paying rent and utilities. Similar to this, residential landlords will also pass on the increase in property taxes to tenants. In the greater Los Angeles area, this situation is sure to occur due to the recent wildfires.

So why did nearly 1/4 of California’s school districts pass these expensive bond measures?

Firstly, voter support for reducing the threshold for passing school district bond measures. According to Proposition 39 passed in November 2000, where general tax increases require a 2/3 vote, school bonds only need 55% plus 1 vote to be approved.

Even worse: teacher unions supporting bond proposals encourage district officials to hire political consultants for high-cost surveys aimed at determining how much debt can be issued based on the collected responses. This clever and effective strategy pushes voters to support increased bond measures. This cunning tactic bypasses state laws, allowing bond proposals to pass, but the funds needed for school district building renovations are left unaccounted for.

However, Eric Christen, Executive Director of the Coalition for Fair Employment in Construction, sees a glimmer of hope as voters rejected 75 similar ballot measures last year.

Why are construction industry professionals interested in school bond measures? Because teacher unions control the districts, and union leaders are supportive of other union leaders.

They implement Project Labor Agreements to assist private-sector unions. These agreements require the district to only hire union-managed companies for new construction using borrowed funds. However, most high-quality construction companies are not unionized, while the remaining few union companies can charge premiums of up to 30%—much more expensive than non-union construction companies.

Displaying generosity towards your school district is commendable, but rescuing poorly managed government entities turns voters into “enablers” of ongoing fiscal mismanagement.

Do not expect school board officials to act in your best interests. If you budget carefully in your day-to-day life, you should also vote cautiously.

Note: This article represents the author’s personal views and may not reflect the stance of the publication.