Below is OCTax's analysis on several recent Ballow Initiatives:
Proposition 13: Seismic Retrofitting Amendment
OCTax Position: SUPPORT
1978’s Proposition 13 amended the California Constitution to limit ad valorem taxes on newly constructed real property to 1% of the full cash value of the property. 2010’s Proposition 13 would prohibit assessors from re-assessing new construction on existing buildings when the purpose of the construction is to retrofit the buildings to meet seismic safety ordinances.
It would delete the existing exclusion for structures made of unreinforced masonry bearing walls, and delete the existing authority of the Legislature to exclude certain seismic retrofitting improvements utilizing earthquake hazard mitigation technologies.
OCTax Analysis:
It is reasonable to re-assess property that is upgraded only for cosmetic purposes. For example, a hotel that is modernized and redecorated is more valuable than it was before the renovation.
It should be re-assessed upward.
On the other hand, a hotel that has been retrofitted for seismic safety (at the command of government) may be no more attractive to customers, the owner will have undergone considerable expense, and the owner may not realize more revenue from the upgrade.
It would be unfair to re-assess such a property.
Knowing that seismic retrofitting would result in re-assessment would be a strong disincentive to complying with seismic safety ordinances.
Proposition 14: "Top Two" Primary Election
OCTax Position: OPPOSE
Proposition 14 would create a “top two” primary election for state and Congressional offices. There would be one primary election ballot, listing all candidates of all parties and all independents. Candidates would have the option of indicating their political parties, if any. A voter could vote for any candidate, regardless of the party affiliation of the voter or the candidate. There is no provision for write-in votes. Only the two candidates with the highest number of votes in the primary election, regardless of party, would advance to the general election.
Fiscal Impact: no significant direct cost, but possibly significant “indirect” costs (see below).
OCTax Analysis:
Proposition 14 is intended to elect “moderate” candidates, willing to compromise to pass budgets and raise taxes. Is that really a good thing? Even if it is, it’s a task best left to the Redistricting Commission, which will do away with gerrymandered “safe” districts for candidates in 2011. The Legislative Analyst says Proposition 14 would result in elected officials who would “make different decisions about spending and revenues than under current law. These indirect fiscal costs are unknown and impossible to estimate” (emphasis added). OCTax thinks the costs would be higher taxes and more government. In fact, that’s what Proposition 14 was designed to do when it was hatched as one of several compromises crafted to put last year’s Proposition 1A on the ballot.
Proposition 14 would disfranchise small-party candidates by making it difficult for them to advance to the general election. It would rob small-party and independent voters of their valuable roles as “spoilers” in elections where major-party candidates ignore their constituents’ wishes. But aren’t small-parties irrelevant? No. In 1998, Minnesota’s Jesse Ventura (Reform Party) got only 3% of the primary vote, but won the state’s general election for Governor. Proposition 14 also would eliminate write-in votes. Think write-in voters can’t win? In 1982 Ron Packard was elected to Congress by write-ins. He served South Orange County admirably for 18 years.
OCTax agrees with Stephen Moore, Senior Economics Writer for the Wall Street Journal. He calls Proposition 14 “open season on California conservatives.”
Proposition 15: California Fair Elections Act.
OCTax Position: OPPOSE
Proposition 15 would repeal the ban on public funding of political campaigns. It would create a voluntary system for candidates for Secretary of State to qualify for public campaign funds if they agree to limits on spending and private contributions. All participating candidates would receive the same amount, and would be prohibited from raising other funds (including personal money). Grants would be funded by contributions to the state and a biennial fee of $700 paid by lobbyists. To qualify for base funding of $1 million for a primary campaign, a major-party (Democrat or Republican) candidate would need to raise $37,500 in 7,500 contributions of $5 apiece. The candidate would be eligible for up $4 million more in matching funds to equal money spent by a nonparticipating candidate or outside groups. Minor party primary-election candidates would need to raise $18,750 in 3,750 contributions of $5 apiece to qualify for base funding of $200,000 (more if they find 15,000 initial contributors). In the general election, major-party candidates and minor-party candidates with broad support would receive $1.3 million, with up to $5.2 million in matching funds. Minor-party candidates without broad support would receive only $325,000 in base funding.
Fiscal impact: revenue to the state of $6 million every four years. The money would be spent on public financing of campaigns by Secretary of State candidates in the 2014 and 2018 elections.
OCTax Analysis:
In 2000, OCTax opposed Proposition 25; it was defeated by 65% of voters. In 2006, OCTax opposed Proposition 89; it was rejected by 74%. Both measures would have provided public funding for political campaigns. The unwelcome spawn of those two measures is Proposition 15.
Proposition 15 purports to take “big money” and “special interests” out of politics. In fact, it would skew political power even more toward large, well-organized groups (e.g., public employee unions) that easily can gather 7,500 contributions of $5 apiece to qualify a candidate for the ballot, and can raise large amounts of money easily from hundreds of thousands of members and other donors.
According to the Attorney General, Proposition 15 conflicts with Proposition 14 (the “Open Primary Act”). If both pass, the two “would have to be reconciled through additional legislation, judicial action, or a future ballot measure.” Do we really want to open that can of worms?
In itself, Proposition 15 is scarcely relevant because it applies only to the next two Secretary of State elections. But its real intent is to repeal the ban on public financing. If it passes, the Legislature certainly will put public financing for other statewide offices on a future ballot. Voters already have shown their distaste for such shenanigans by voting overwhelmingly against Propositions 25 and 89.
Proposition 16: Taxpayers’ Right to Vote Act
OCTax Position: OPPOSE
Proposition 16 would give electricity ratepayers and taxpayers the right to vote on any local government proposal to use public financing to start or expand electricity delivery to a new territory or new customers, or to become an aggregate electricity provider. (An “aggregate provider” is an agency that buys electricity from a utility, public or private, for distribution to customers, or completely replaces the utility.) A two-thirds vote of voters in the served territory would be required to approve such a project.
OCTax Analysis:
OCTax believes that most public services can be provided cheapest and best by private vendors, operating under competitively-bid contracts and licenses provided by governments.
Despite our preference for privately funded and operated utilities, OCTax thinks Proposition 16 is heavy-handed, it punishes businesses and homeowners, and it uses an unwise electoral tactic.
• Annexations are undertaken for a number of reasons that have nothing to do with who provides the electricity. Adding an election on electricity service (with a voter approval requirement higher than that required to approve the annexation itself) would increase costly bureaucratic involvement.
• The measure would require almost every new electricity connection within a municipal utility’s existing territory to be subject to a vote of the people therein. That’s punishing to prospective businesses, homebuilders and homebuyers. It’s hard to get a simple majority, let alone two-thirds, to approve any construction in this age of NIMBYism. California already has too many taxation and regulatory barriers to earning a living.
• Proposition 16 would be a Constitutional Amendment. Advocates for change, often motivated by self-interest, like to put their proposals into the Constitution because it is difficult to repeal them. (Repealing an article of the Constitution requires a statewide vote of two-thirds of the people.) As a result, California’s bloated Constitution has been amended over 500 times. Proposition 16 continues that stifling tradition.
Proposition 16 would correct a moderately bad situation with very bad law.
Proposition 17: Continuous Coverage Auto Insurance Discount Act
OCTax Position: SUPPORT
Proposition 17 corrects an inconsistency in California’s insurance law. Presently, the law allows insurers to provide a rate discount to drivers who continue with the same insurer, but prohibits them from offering the discount to new customers. Drivers who conscientiously maintain insurance coverage are not able to keep the discount if they change insurers. Proposition 17 would allow drivers who continually maintain their automobile insurance to be eligible for the discount (if offered by the insurer) even if they change insurance companies.
OCTax Analysis:
It is axiomatic that encouraging drivers to buy and maintain auto insurance is a good thing. OCTax assumes that insurers find that discounts encourage drivers to do so. We find no benefit in preventing insurers from voluntarily offering a discount to any driver.
OCTax likes competition among vendors. Existing law stifles competition by penalizing good drivers who change insurers, even when they are dissatisfied with their current vendor.
Proposition 17 would remove the penalty, presumably lowering rates for everyone.
Proposition 17 would not change the industry’s rules for determining insurance rates according to (in decreasing order of importance):
• Driving safety record,
• Number of miles driven annually, and
• Number of years of driving experience.
Finally, OCTax likes free enterprise. We think there should be no arbitrary legislative barrier to insurance companies’ offering, or not offering, discounts to their existing or prospective customers.
Mission Viejo Measure D: Right-to-Vote Amendment
OCTax Position: OPPOSE
Measure D would require additional hearings, City Council review, and/or a city-wide vote before the City could change its General Plan, zoning ordinances, zoning map, plans and development agreements (collectively called “Planning Policy Documents”) to:
• Increase the allowable number of residential units on residentially zoned land;
• Increase the number of parcels allowable on a subdivision of land;
• Change residential land use to any other use;
• Change non-residential to residential land with a density over 6.5 units per acre;
• Change non-residential land to allow a mix of commercial and residential uses;
• Provide for private development of government-owned land;
• Repeal any of the Planning Policy Documents;
• Change commercial or industrial land to other uses if the area is changed by two acres;
• Change open space land to allow any other land use; or
• Change any recreation land to allow any land use except open space.
Fiscal impact: increased costs to applicants because of more stringent noticing requirements and the expense of conducting citywide elections.
OCTax Analysis:
Measure D is the latest of many attacks on private property rights dating back to the adoption of the Fifth Amendment to the U. S. Constitution in 1791. It would invoke what Lord Acton called “the tyranny of the majority” to enable voters to veto any land use amendment that the people’s own elected representatives might find beneficial to the community or to a property owner. Measure D would be mob rule by plebiscite: smugly gratifying to no-growth voters in the anonymity of voting booths, but seriously harmful to property owners who seek land use amendments.
Mission Viejo’s motto is “Make living your mission.” It has been a successful motto, and a successful city, in part because residents and their elected officials have enjoyed reasonable discretion in their uses of property. The mission would be thwarted, and the city less job-friendly and prosperous, if a majority of voters were empowered to deny such discretion to their neighbors. Cities that have adopted ordinances similar to Measure D have found that they can stop development, but they can’t stop population growth within the city. Even existing residents of Mission Viejo have babies.
