When Californians vote in the November 5 election, they might get sticker shock when they find out local governments are asking them to approve $3.2 billion in new tax increases and $52 billion in bond debt.
The 531 local tax and bond measures on the ballot would dramatically increase the cost of living for the average Californian, driving up costs of everything – from electricity and gasoline to the cost of a home.
Government officials have submitted 110 sales tax hikes to the voters. The sales tax is regressive, meaning it hits low-income Californians the hardest. Cumulatively, if all of these sales tax measures are approved, taxpayers can expect to pay $2.7 billion in new taxes on everyday purchases.
In Los Angeles County, consumers might see local sales tax rates reach 10.75 percent after November. This would make the county – already one of the costliest places to live and do business – also have one of the highest sales tax rates in the nation.
For some local governments, going to the voters every year to ask for new sales tax increases was too much work. Two measures – in the cities of Lancaster and Palmdale – would allow the local sales tax to be increased automatically to the highest possible rate allowed under state law. These measures, written in anticipation of a just-approved state law that waives the sales tax rate limit in the two cities, not only fly in the face of the taxpayer protections enshrined in our constitution, but also deprive residents of the ability to review the city’s tax decisions before approving future increases.
Year to year, we have seen the price of housing in California reach astronomical heights. According to the California Association of Realtors, the median price for a single-family home in the state reached $886,560 in July. Economists estimate that annual household income would need to be $145,000 to even afford the mortgage for a small starter home – a threshold that many residents in the state will never reach in their lifetime.
What are our local officials doing to make the American dream of homeownership attainable? Unfortunately, they are actually going in the opposite direction by putting up more obstacles. Combined, school officials and local governments placed 287 bonds on the ballot that would increase local debt by $52 billion. These local bonds are paid back – with interest that can nearly double the cost – through property tax increases on homeowners and businesses.
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In some parts of the state, the cost to pay back these bonds can be thousands of dollars per property owner, annually for the next 30 years. This tab increases the cost of housing and pushes many young Californians seeking homeownership out of the housing market.
If politicians have their way and voters approve Proposition 5 on the statewide ballot, these local general obligation bonds may become easier to pass, and taxpayers’ costs will increase accordingly. Proposition 5 would lower the vote threshold for general obligation bonds from two-thirds to 55 percent, paving the way for higher property taxes.
Taxes are a necessary part of any functioning society. We need taxes to fund road construction, pay for services like fire and police protection, and uplift our most vulnerable residents. However, with sales tax rates reaching 10.75 percent and the median cost of a home at nearly $1 million, California’s state and local officials need to reevaluate their priorities. When you go to the ballot box, cast your vote with affordability at the top of your mind.
Tobias Wolken is a policy advocate at CalTax