We’re all stunned by the rapid increase of prices in every category, the worst I’ve seen in my life. Inflation is a tax on the consumer. As a senior of modest means, on a fixed income, it worries and scares me.
There’s something else that worries me just as much: residential parcel taxes. Let me explain.
Oakland’s progressive government has long viewed homeowners as an ATM machine for funding their pet schemes. Oakland doesn’t have the power to tax income (although I’m sure the City Council would if they could), although they do have the authority to raise certain other taxes. That leaves homeowners as the sole source of significant added income (short of Federal and state aid). In a city of renters and rent control, the City Council has often decided to put parcel taxes on the ballot, where they almost always pass, especially for things like homeless initiatives and anti-violence programs.
The problem with parcel taxes is simple. There are two ways to calculate them. One is to go by square footage: the biggest the residence, the more the homeowner pays. The other approach is one-size-fits-all: Levy the exact same amount on each property, whether it’s a 300-square foot studio condo or a 5,000-square foot mansion in the hills.
A few years ago I did a great deal of research into this topic when I realize that the amount of money I was paying on my little condo through parcel taxes had actually exceeded the amount of my mortgage. My research project also was prompted by a growing furor over Oakland’s Measure AA, a 2018 voter initiative that sought the largest parcel tax in Oakland’s history: $198 per parcel, in a one-size-fits-all format. Its sponsors claimed the resulting money would be invested in “education services and career readiness programs.”
When the votes were counted, Measure AA got 62% of the vote—a sizable majority, true, but short of the two-thirds supermajority required by our state’s Constitution. For decades, municipalities had not dared to tempt the law by formalizing a tax increase that had not been approved by two-thirds of the voters (through a ballot initiative) or by two-thirds of the Legislature. But Oakland decided to press ahead with Measure AA. That resulted in lawsuits, which finally were settled last month when an Appeals Court ruled that Measure AA “can go forward” despite having failed to attract a supermajority of votes.
With that decision, it seemed to me, Oakland’s City Council had been given the green light to put parcel taxes on the ballot on a constant basis. Always voracious for more cash, the City Council could now depend on homeowners to cough up the money. Now, one-size-fits-all parcel taxes are terribly regressive on homeowners. Not everyone who owns a home is rich; even if the property is worth a lot of money, that cash is on paper. Homeowners are unable to spend it, because if they sold their home, they’d need someplace else to live. There are many, many older homeowners in Oakland, including POC, who cannot afford the constantly-spiraling cost of parcel taxes. Everyone I’ve interviewed—from lawyers and economists to city auditors—has conceded that one-size-fits-all parcel taxes are patently unfair. I talked to a member of the Berkeley Unified School District who had been involved in getting a parcel tax on that city’s ballot—a parcel tax based on square footage. Why didn’t she go the one-size-fits-all route? “The one-size-fits-all is not the most equitable way to go—it’s not fair to smaller property owners,” she told me. A professor of economics told me, “A tax on square footage, applied uniformly on all parcels, is simple, fair, and equitable, compared to the relevant alternatives.”
In 2019, I asked Oakland’s then-auditor, Brenda Roberts, why she didn’t base Measure AA on parcel size, and she replied, “From a practicality point of view, it’s simpler” to impose a flat rate on all parcels, instead of having to determine the square footage of all parcels. For example, she said, someone might have added a new addition onto their home that the city didn’t know about.
I found that pretty shocking: it makes your job easier, Ms. Roberts, I thought, even though your method is unfair and unequitable. Doesn’t every homeowner have to file paperwork about new additions to their homes with the city? Doesn’t that information exist in your computers?
And this is what prompts my concern about inflation. As if things aren’t expensive enough, we have a City Council that, I guarantee you, has already had closed-door meetings about what parcel tax/es to impose next. With nothing to stop them—with the courts apparently having cancelled decades of settled law—this City Council looks at homeowners and sees dollar signs.
By the way, some defenders of one-size-fits-all claim that basing residential parcel taxes on parcel size would violate state law; for technical reasons having to do with a home’s assessed value, they argue, determining parcel taxes by square footage is illegal. I don’t buy this argument for a second; Berkeley’s done it, and so have other cities. The issue has yet to be thoroughly vetted in the courts, and besides, the Legislature—and the Governor—are in a position to correct this imbalance.
I believe this matter of parcel taxes is a hidden giant as a political issue. If the City Council, or any so-called “citizens’ group,” tries to push another parcel tax onto the ballot, I assure you there will be plenty of pushback from homeowners. We also have to educate renters that, while they may be protected by rent control to some degree (not completely) from having parcel taxes added to their rents, at the same time landlords who are being scalped of money for “career readiness programs” are going to be super-reluctant to upgrade their properties, to the detriment of the renters. Want new paint or a new fridge? Sorry, all my profits are being sucked into parcel taxes.
So my advice to the City Council is: Don’t even think about new parcel taxes, unless you want to plunge Oakland into another pointless, divisive fight.
Steve Heimoff