November 7, 2006 Ballot Prop. 88

Proposition 88 would impose an annual $50 tax on each parcel of property in California. The revenues from the tax would be used to provide additional K-12 public school funding. Class size expansion, instructional materials, grants to facilities upgrades, and other examples of educational needs would receive the funds. Critics believe the proposition is flawed, creating an unfair tax that landowners will have to pay without end. Proponents believe that education is deeply underfunded in the state and that Proposition 88 will fund major improvements.

Background

In California, parcels of land are currently taxed by local governments who impose their rate based on the assessed value of the property. As property values increase, so does the amount taxed. In some cases, local governments will tax a property owner a parcel tax for each unit of land that he/she possesses. Proposition 88 would significantly change how parcels of land are taxed. The measure would create a new section to the State Constitution that adds an annual $50 tax on most parcels of land in California. The measure defines parcel as any unit of "real property" (as opposed to personal property) in California whose owner is currently paying a local property tax. The measure would effect most individuals and businesses that currently pay property taxes. The measure exempts any parcel owner who lives on the parcel, meets the eligibility requirements for California's homeowner’s property tax exemption, and anyone who is severely and permanently disabled person or 65 years of age or older. Proposition 88 proponents say that any financial loss in revenue that the state experiences as a result of the measure would be offset by parcel tax revenue that would be transferred to the state's general fund.

Revenues from Proposition 88 would go into a new state special fund which would allocate $470 million for K-12 education programs and initiatives. The state spends approximately $2 billion a year on these areas already. The new funding would be distributed annually to school districts, county education offices and charter schools. The amount of money allocated to each district, office or school would be based on a formula created by the legislature that would distribute funds on a per-student basis. Each year the funding would be adjusted depending upon the revenues created by the property tax. The funds would be excluded from Proposition 98 calculations (the basis for education funding in California). 

Proposition 88 property tax revenues would be dispersed to the following areas:

• $175 billion for class size reduction. School districts would receive funds to reduce the size of their K-3 classrooms to no more than 20 students. An additional $175 million provided by Proposition 88 could be used to reduce K-3 class size further. It could also be used for initiatives to reduce class size for grades 4-12.
• $100 billion for instructional materials such as new text books. The instructional materials purchased must be approved by the State Board of Education.
• $100 billion would go towards school safety programs. The amount would average about $16 per student and could be used to pay for violence prevention, community policing, anti-crime programs, and afterschool programs.
• $85 billion would to to school districts and charter schools that have not received any funds from state general obligation bonds for school facilities. Charter schools are eligible only if they are run by a nonprofit corporation. School districts and charter schools would receive funding based on standardized test scores. The money would be distributed for every student enrolled in a school that scored in the top 50 percent on the tests. The grants could be used at the discretion of the district or school. Districts and schools would be prohibited from receiving any future general obligation funds unless the bond passed explicitly declares that they are eligible.
• $10 million provided by Proposition 88 would be used for the creation of a longitudinal data system. The system would be used to measure student and teacher performance statewide over time.

Proposition 88 would be subject to annual audits to determine that funds are not being mismanaged.

For details on public financing of education, see the California Department of Education Finance and Grants website.

Arguments For and Against

Proponents of Proposition 88 believe that California's schools require significant new funds to address critical problems, including extensive overcrowding, a lack of materials, and per-pupil spending that is consistently below the national average (largely due to the trend of falling per-pupil spending that began in the late 1980s as a consequence of declining county and local property tax revenue streams after the passage of Proposition 13 in 1978). They believe that rising crime rates and gang activity also require money for prevention programs. Backers of the measure say that the annual fee of $50 is a small price to pay for extensive improvements. They cite the fact that Proposition 88 would exempt the elderly and disabled from the annual cost and internal government oversight as key benefits from the measure. Proponents come from education advocacy groups, teacher coalitions, and members of the business community.

Critics of Proposition 88 disagree with giving tax money to the state, saying that local government control over property tax funds gives taxpayers more control. Many opponents believe that passage of Proposition 88 would give other special interests incentive to pass property tax measures. Finally, critics oppose the proposition's altering of the Constitution, as it allows for the tax to go on year after year with no end. Opponents are anti-tax coalitions, business groups, and education groups.

Official Voter Information

Voter Information Guide
Includes title and summary, arguments for and against, and text of the initiative.

Education Funding, Real Property Parcel Tax 
Analysis by California Legislative Analyst, 2006.

Individual Campaign Committees
Total Contributions and Expenditures (select "Nov. 2006 election" and "Prop. 88 " in dropdown boxes)