What You Need To Know About The Schools And Communities First Initiative

You'll Pay Through The Nose If The Schools And Communities First Initiative Passes

Some taxpayers close their eyes, some stop their ears, some shut their mouth, but all pay through the nose.”

—F.J. Raymond

vote against the schools and communities first initiative

The pandemic has impacted everyone and everything.  Businesses large and small struggle, and while it has probably not come to your attention, this November, a proposed ballot measure aims to increase the cost of living for everyone.  Under the guise of “helping our children,” the legislature placed The Schools and Communities First (initiative 19-0008) on the ballot.  If approved, this will push prices higher for all residents.

Today’s property tax regulations — Proposition 13

On June 6, 1978, the voters passed Proposition 13 reducing property tax rates on homes and businesses by 57%.  That happened because legislative bodies were raising taxes aggressively, the only limits being a legislator’s imagination on how to devise the next tax increase.  So, Prop 13 rolled back and froze the taxable value to the 1976 level.  Any increases were limited to no more than 2% per year as long as the owner did not sell it.  Once sold, assessors re-valued the property at 1% of the sale price, and the 2% yearly cap applied to future years.

Changing Prop 13 Through The Schools and Communities First Initiative

The Schools and Communities First Initiative seeks to repeal Proposition 13 protections for commercial and industrial property owners. Every business, commercial and industrial property will be reassessed every three years and taxes assessed based upon “the fair market value” or the “income approach “of valuation, whichever is higher.  They project it will raise $12 billion per year in new tax revenue.

Declining enrollment doesn't warrant schools and communities first initiativeWhether owned by a large corporation or a family, the initiative would be a massive tax increase. It will affect office buildings, retail stores, shopping malls, movie theaters, gas stations, supermarkets, factories, warehouses, self-storage facilities, auto dealerships, car washes, restaurants, hotels and every other job-creating business in the state. Even small businesses that lease space in a strip mall would see their operating costs jump sharply due to tax increases passed through from landlord to tenant.

Many public unions support this tax Initiative — the California Teachers Association (CTA), the Service Employees International Union (SEIU), California Tax on Commercial and Industrial Properties for Education, Education and Local Government Funding Initiatives (2020).

What The Proponents Say Is Wrong

Advocates argue that this is only a “split roll,” and it is “for the children.”  Split roll is a shorthand term for proposed changes to Proposition 13 that would allow higher property tax assessments on a commercial property, but would not change for residential property.

Another argument advocates make is that corporations have benefited more than homeowners under Proposition 13. They assert that the business property tax-burden shifts from companies to homeowners; they call a “property tax loophole.” They say passing The Schools and Communities First Initiative closes this loophole.

The suggestion that there has been an “enormous shift” is untrue. Displayed is a chart showing the percentage of tax paid by business versus individuals in 1979-80 and then in 2015-2016. Using data obtained from the California State Board of Equalization and the California Legislative Analysis Office, the following pie charts show business property owners pay more in taxes now than they did 40 years ago:

schools and communities first charts on ownership

Source: California Tax Foundation

How You Will Be Affected If This Passes

All consumer costs will jump. Business property owners will pass the tax increase to consumers in the form of higher prices for everything, for all goods and services.

  • Chain stores will pass on the costs to consumers and survive, maybe. Five hundred companies have filed for Chapter 11 since the pandemic began.
  • Shopping malls like the Pacific View Mall, where a retail tenant typically pays a Triple Net Lease (N-N-N),meaning the tenant pays the taxes.  In this instance, property owners will not pay the higher taxes, as the proponents would lead you to believe. Instead, store owners will pay the tax and pass that expense on to their customers with higher prices. If not, they will fail.
  • If you rent a self-storage unit, pay attention. The self-storage industry is very concerned about the effect on its business. The industry calls the tax disastrous. Who are the most frequent users of self-storage units? Renters!
  • Gas Stations. If you drive, Schools and Communities First Initiative will hurt you. Retail gas stations would see price hikes and closures. A quick review of gas stations for sale shows that the split roll will negatively impact many of them. Gas prices will go up accordingly.

Opponents to the Schools and Communities First Initiative

A list of the opponents to the Schools and Communities First Initiative includes the Howard Jarvis Taxpayers Association, the Ventura County Taxpayers Association, the California Taxpayers Association, the California Chamber of Commerce, the California Farm Bureau, the California Business Properties Association and the Western Manufactured Housing Communities Association.

schools and communities first image of willie brownWillie Brown, former San Francisco mayor and the longest-serving Speaker of the California Assembly, also opposes this measure and stated: “…that the Schools and Communities First Initiative will harm small businesses, especially minority-owned small businesses.”

David Kline, vice president of communications and research for the California Taxpayers Association in Sacramento, said, “The last thing this state needs is higher taxes, and especially a tax that would increase the cost of everything we buy in California.”

The California Assessors’ Association (CAA) is also in opposition. Larry Stone, Santa Clara County’s assessor, said, “it is impossible to implement as written.”  CAA President Don Gaekle, the assessor for Stanislaus County, wrote in a letter to lawmakers, “Current local budgetary realities will make the implementation of the initiative extremely difficult.”

Editors Comments

The high cost of living in California would be pushed even higher by this massive tax increase. Passing the Schools And Communities First Initiative would hit every business in the state at the same time.

Don’t be fooled when “split roll” advocates say that it just hits businesses. When their costs go up, so do the prices you pay for goods and services.

The “split roll” would make California’s brick-and-mortar businesses increasingly uncompetitive with online companies based in other states where costs are far lower. It would also accelerate business flight out of California.

Advocates of a “split roll” say it merely closes a “loophole.” They maintain that voters never intended Proposition 13 to apply to commercial property, but this isn’t true.

California has had a single or “unified” roll, treating all property the same, since the 1800s! Proposition 13 didn’t change that.

The government employees charged with implementing the Schools And Communities First Initiative say the law is untenable as written. They would need extra appraisers and support staff to do what the law requires, thereby increasing the government’s cost and adding to California’s pension burden.

Taxes are already too high in California, yet the demand for more is unrelenting. Read past the Schools And Communities First name on the ballot. Look beyond the rhetoric to understand the real costs to you.

Learn Where Your City Councilmember Stands On The Schools and Communities First Initiative

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What Services Will Ventura Cut In The 2020-2021 Budget?

2020-2021 Budget Mocked By Laurel & Hardy

Another Fine Mess You’ve Gotten Us Into, Stanley.”

Laurel & Hardy

Sharpen Pencil To Balance 2020-2021 Budget

The 2020-2021 budget presents a challenge to the City Council. This Council must weigh how to close the budget deficit in the coming year.

The Coming Problem

the 2020-2021 Budget Makes People WhingeToday’s Council is still operating on the 2019-2020 budget that shows everything is fine. In six months we will be in a new budget cycle, how does that look? The city staff projects a “most likely” budget scenario that will have a shortfall of $4.1M.  How can the seven members of the City Council take action to save jobs and essential services for the citizens of Ventura?

The Seriousness of the 2020-2021 Budget

In two of these three scenarios, Ventura residents should be concerned about possible severe cutbacks in services and personnel.  Ventura has a 67% probability of significant shortfalls in the next fiscal year and the next four years after that. This Council may play a game of fiscal musical chairs with the budget hoping the music doesn’t stop and throw the city into insolvency. Is there a better solution?  It may be time for the Council to focus on a multi-year budget to better spend the limited money available to us.

The Council must come to a decision soon and may need to cut back services and personnel. If they don’t, the specter of insolvency looms over the city. The Council should inform citizens and allowed them input before taking drastic measures. Please keep reading!

What Can The Council Do With The 2020-2021 Budget?

The city staff presented the Council with several options to consider remedying the projected shortfalls. The team looked at revenue and expense items available to the Council.

Potential Revenue Enhancements to the 2020-2021 Budget

  1. The added revenue from proposed changes to Prop 13.​ These changes are beyond the City Council’s control. They are purely wishful thinking at this time.
  2. Increase the Transit-Occupancy-Tax (TOT) rate.​ The TOT, also known as the bed tax, impacts tourists visiting the city. Each 1% rise in the tax generates an additional $600,000 in revenue. The downside of increasing the TOT is that it makes Ventura less desirable for tourists to visit or may shorten a visitor’s stay.
  3. Additional revenue from cannabis sales might generate $500,000 or more.​ Prop 64 made recreational marijuana use legal, yet Ventura has been slow to embrace pot sales. Outgoing Police Chief Ken Corney believed Ventura should exercise caution when rolling out cannabis. Yet, even if Ventura pushed hard for cannabis sales, the revenue would barely dent the projected $4.1 million deficit.
  4. Other revenue-generating ideas.​ The city staff didn’t elaborate on what those ideas might be.

Potential Expense Reductions to the 2020-2021 Budget

  1. Limiting Overtime in the 2020-2021 BudgetReduce overtime for city employees.​ The largest single expense category in the city is staff salaries and benefits. Reducing overtime might save as much as $5.6 million in the budget.
  2. Reduce “extra help” expenses.​ Such a reduction would generate $2.3 million in expense reduction. Extra helpers supplement city workers.
  3. Reduce anticipated pay increases.​ That means fewer raises or smaller raises for city employees. Every 1% decrease in pay raises contributes approximately $800,000 in savings.
  4. Transfer some Information Technology (IT) or Internal Services Fund (ISF) costs to Measure O. ​The city staff believes transferring some of these costs to Measure O will support staff needs. The cost savings would be $120,000. If they do move those costs, though, it will represent a shift in policy.The Measure O proponents told voters the money would address specific needs. IT and ISF costs were not among those needs. Measure O money goes into the General Fund, so the City Council can use it as they see fit. Yet, using it for operating purposes would invalidate the spirit of the sales tax increase.  Using Measure O breaks one of then-Mayor Erik Nasarenko’s promises of the Measure’s benefits. The Measure O Oversight Committee should be concerned.We warned you.​
  1. Review warehouse costs. ​ This alternative lists no amount of savings.
  2. Review all discretionary spending:
  3. Museumm Cuts in the 2020-2021 BudgetReview the money Ventura pays to support the Ventura County Museum. ​ This option will save $250,000 per year. ​Prior Councils agreed to give the museum more than $1 million through the fiscal year 2022-23.
  4. Review the money spent on Ventura’s Libraries. ​ Savings could be as much as $250,000 per year. No one mentioned the unintended consequences of such a cut, however.
  5. CAPS may be cut in the 2020-2021 BudgetEvaluate Community Granting Programs. ​ The amount of potential savings is not listed. This category includes programs like Community Access Partners (CAPS). CAPS received a contentious fourth amendment​ through December 31, 2019.
  6. Assess contributing to Ventura’s Visitors Bureau. ​ The savings could be as high as $968,000.
  7. Examine other discretionary spending. This alternative included no specifics.

Potential Use of Fund Balances

  1. Use $3 million in 2021, $2 million in 2022 and $1 million in 2023 (or some other variation) from the Unassigned Funds.
  2. Use the Catastrophic Reserve of $15 million if a recession strikes.
  3. Use Measure O revenue. Certainly not its intended goal.

These three options are the most troubling items presented by the city staff. Using the city’s various fund balances should be considered as a last resort and, while it’s prudent for city staff to present them as options, the City Council should consider using them only in dire circumstances.

Considering the 2020-2021 Budget

The city staff assumed some projects would continue as planned. That is a false assumption. The City Council should consider all alternatives. More than ever, the Council should review “Business As Usual.”

  1. Do we the Citizens want to authorize spending up to a BILLION dollars on a water project?The Water Agency and the Council continue to put forward the need to spend $1 billion because we need drinking water, thus the need to use recycled wastewater by building VenturaWaterPure to satisfy supply needs. Are there regulations in place to allow that?  The State of California won’t have an approved test for water safety until 2024, at the earliest. Seemingly the purpose behind this is that the Council needs to ship the Santa Clara River effluent somewhere else. Yet, they could choose the most cost-efficient option of shipping that water to Oxnard’s Advanced Water Treatment Facility.  A $70 million option versus $1 billion. What do the citizens want?
  2. Should the Council ask city employees to contribute a higher percentage of their pay towards their retirement?
  3. Should the Council consider options for the Fire Department? Evaluate whether to merge Ventura Fire with Ventura County fire?
  4. Shouldn’t the Council and citizens know precisely how Homeless services cost and how they get allocated? Let’s ask for the facts as citizens. Just some of the costs include:
    1. The Homeless Shelter ($712,000 per year)
    2. The police Homeless Task Force (seven officers)
    3. A Safe & Clean Program manager
    4. An embedded mental health professional
    5. The Downtown Ambassadors
    6. The police and fire personnel that answer service calls in addition to the Homeless Task Force

Editors Comments

We’re confronted with several key questions when considering the 2020-2021 budget. How is it that after more than ten years of economic growth and market growth, and the imposition of a sales tax increase, we are about to face a sudden, significant budget deficit?  We believe it’s the cumulative effect of more than a decade’s worth of poor economic policy choices by both the city government and the citizens.

Ventura hasn’t projected a budget deficit this large since the 2008-2009 Recession. With the stakes this high, there is little room for error. Poor decisions could lead to the city’s insolvency.

Yes, we must solve the current budget shortfall. We expect this City Council will focus on meaningful change and keep citizens informed. This Council has a difficult task ahead and must weigh how to best spend the limited revenue we have and substantially cut expenses to close the budget deficit.

Citizens expect the Council to be astute when evaluating these alternatives and to have staff report as clearly as possible.  That’s why we believe taking on a $1 billion water project is lunacy without direct input from the voters.

The decisions the Council make with the 2020-2021 budget will have consequences for years to come. Citizens must help with input and oversight. Please consider contacting your representative and let them know you are concerned, want to be informed, and are watching the process.

Tell City Council You’re Concerned, Want to be Informed, and Are Watching the Process.

Below you’ll find the photos of our current City Council. Click on any Councilmember’s photo and you’ll open your email program ready to write directly to that Councilmember.

Councilmembers Councilmembers

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