Renowned Column: Nearly 1/4 of California School Districts to Increase Property Taxes

Recently, due to the loss of so many homes in the wildfires in the Los Angeles area in California, there will be a huge demand for alternative housing, which is expected to drive up the costs of both buying and renting homes. These losses were caused by wildfires, so it is expected that homeowner insurance costs will also increase, impacting everyone in California.

Another aspect that people tend to overlook is the soaring costs of local school district construction, which will make housing even more expensive.

According to data released by the Coalition for Fair Employment in Construction (CFEC) based in California, in the state elections in November 2024, Californians approved up to 208 school district construction cost measures. In the primary elections in March of the previous year, 28 school district construction bond measures were also approved. Altogether, voters in 218 school districts across California agreed to take on over $49 billion in new debt, or approximately $100 billion in additional tax revenue due to related interest costs.

Nearly all revenue in California school districts is used each year to cover the costs of rising teacher salaries, but they often refuse to allocate funds for renovating and upgrading existing dilapidated school buildings and adding necessary facilities for the future. They also do not budget properly for ongoing maintenance, allocating only 3% of the annual budget for maintaining existing structures and buildings. Instead, they frequently ask voters to support bond measures, claiming their schools are in poor condition. Sadly, voters are often left with no choice but to passively accept these measures.

Of course, the bonds are not paid by the school districts but by property owners within the school district boundaries. The payment of principal and interest is allocated based on the assessed property values calculated by county assessors in California.

Due to the higher assessed property values of homes owned by new owners (based on their recent purchase prices), they end up paying more than their long-term neighbors.

How can a young couple afford to buy a home in California? If additional school bond taxes diminish their ability to pay for groceries, the high energy costs in California, and the needs of growing family members, it would be a tragic situation!

Eric Christen, Executive Director of the Coalition for Fair Employment in Construction, believes that the rejection of 75 similar ballot measures by voters last year gave residents of school districts a glimmer of hope.

We can’t help but wonder why people related to the construction industry are concerned about school bond measures. The situation has worsened: the teacher unions manage the school districts, and the teachers’ union leaders often collude with leaders of other unions.

When unions manage school districts, they assist unions in the private sector through so-called Project Labor Agreements. These agreements require the school district to hire only union-operated companies to utilize borrowed funds for new renovations. However, the majority of high-quality construction companies are not union members, leading to a few remaining union companies being able to charge premiums arbitrarily, up to 30% higher than non-union construction companies.

This means that if a bond measure approved by voters generates $100 million in new construction funding, residents can only get a maximum of $83 million worth of actual products.

Additionally, the extra $100 million in interest costs generated by this $100 million bond will also be borne by homeowners. Therefore, the extra $200 million in costs over the next 25 years will be spread out on every property tax bill in the jurisdiction.

If the teacher unions allow the school district to lock funds for 25 years and earn interest, it could save residents nearly $120 million!

Why do voters fall for deception? Why have nearly one-quarter of California’s school districts taken on these expensive bond measures?

Firstly, voters supported lowering the threshold for school bond passage. This was achieved through Proposition 39 on the November 2000 ballot. School bonds no longer require a two-thirds majority vote like regular tax increases, but only a simple majority of 55% plus one vote for approval.

Even worse, the teacher unions behind these bond campaigns encourage elected school district officials to hire political consultants. These consultants conduct expensive surveys to determine how much debt can be issued based on the responses received. This is a clever and effective way to push voter support for long-term bond issuance. This speculative method circumvents state law, allowing bond measures to be passed without necessarily providing the needed funds to properly renovate some of the deteriorating buildings.

As property owners pass on the costs in the form of higher rent, the overall rental costs for many commercial tenants will increase. Recently, the real estate industry has popularized the term “triple-net lease,” which means tenants must commit to paying property taxes, building insurance, and maintenance costs in addition to rent and utilities. Similarly, property owners renting residential properties will also pass on the increase in property taxes to tenants. In the greater Los Angeles area, this scenario has become inevitable due to the recent wildfires.

It is admirable to have a charitable heart towards your school district. However, rescuing a dysfunctional government entity will turn voters into “aiders and abettors,” allowing poor financial management to continue.

If you own a home in California, when making your next installment payment, be sure to read the hidden information on your tax bill. In addition to paying a minimum tax of 1% based on your property’s assessed value, you will see one or more payments for school district bonds included. And for at least a quarter of a century, it will appear on your annual property tax bill year after year.

Therefore, do not rely on your school board officials to automatically advocate for your interests. Just as you carefully choose and budget for your home purchase, exercise caution and attention when exercising your voting power to protect your rights.