Parcel taxes in the county

The Cabrillo Unified School District will find out soon how deep budget cuts will run after voters decide on Nov. 5 whether to pass a parcel tax.

Bay Area school districts are much more likely to have these special taxes than other areas in the state. CUSD is one of 19 school districts in the county with a parcel tax, but the $150 per parcel it is asking for is far below the average rate.

While school board officials here considered asking for more than $150, which is also the amount of the expiring parcel tax, they were concerned doing so would endanger passage. Facing more than $4 million in cuts if the tax fails, according to the district’s unaudited actuals presentation, they decided to go with the amount that appears to garner strong support. If it passes, the district will still have major cuts to make.

Parcel taxes are unique to California. In 1978, voters passed Proposition 13 to limit property tax increases. Property tax revenue is now given to local governments through the state.

Since school trustees can no longer raise property taxes to increase funding because of Prop. 13, parcel taxes became the only way districts can get money to supplement state funds that can be cut at any time.

For many school districts, rising pension and special education costs, as well as declining enrollment, have outpaced the revenue received from the state, according to Patrick Murphy, policy director and senior fellow at the Public Policy Institute of California.

“We have school districts where they just don’t have a whole lot of options,” Murphy said. “They can do bake sales and fundraise, but they’re left with this parcel tax, which is really a residual of Prop. 13.”

Jon Sonstelie, professor of economics at the University of California, Santa Barbara, measured the characteristics of school districts that pass parcel taxes. He found that districts with high household income in the Bay Area and that had high ratios of parcels to students — which means there are more dollars per pupil — were more likely to pass parcel taxes.

San Mateo County is no exception. All but four of the 23 districts in the county have a parcel tax, and three districts have more than one. Menlo Park City School District has four parcel taxes, three of which never expire and three are adjusted annually. Property owners will pay the district more than $1,100 this year just through parcel taxes.

Parcel taxes, especially flat taxes like Cabrillo’s, are regressive by nature, meaning everyone pays the same amount regardless of income status.

“(The) biggest issue with how we structure parcel taxes is we can’t use the value of the land,” Sonstelie said. “That’s prohibited by Prop. 13. A big problem with parcel taxes is most of them are a certain amount per parcel regardless of size or value.”

Legislation is somewhat vague when it comes to defining parcel taxes. Proposition 13 designates that special taxes must pass by a two-thirds vote and subsequent court decisions determined special taxes are “taxes earmarked for a particular purpose,” Sonstelie wrote in his report, “Parcel Taxes as a Local Revenue Source in California.”

It’s left to the special district to determine what that purpose is and how the district ensures the money goes toward that purpose.

Although it is often talked about in the context of school districts, other special districts, such as sewer or fire districts, can ask voters to approve a parcel tax. The terms of the parcel tax are set in the ballot language. Murphy and Sonstelie said school districts often attempt to keep the purpose section vague enough to allow the money to be used for a variety of purposes.

The state leaves oversight to the districts, and Cabrillo has written in its accountability requirements into the ballot language, which include keeping the money in a separate fund, providing annual reports and appointing an advisory committee.

In many cases, Murphy explained, it’s hard to trace dollar for dollar where parcel tax revenues go. For Cabrillo, however, the tax would only ease the burden of cuts.

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