Still Time to Talk Taxes?

It would be sporting if government officials warned voters that these are forever taxes

Chico Marx, brother of Groucho and member of the famous Marx Brothers, heard about a tax increase as part of the plot to their hit movie, Duck Soup.

“Hey, I got an uncle that lives in Taxes!”

Finance minister says, “No, I’m talking about taxes—money, dollars.”

To which Chico replies, “Dollas! That’s-a where my uncle lives! Dollas, Taxes!”

The minister was not amused.

I’m writing this column in the midst of harvest season and the November general election is top of mind these days. It may be too late to make a difference in voting, but it might still be valuable in the context of what happens on Nov. 3.

October is also the time when California counties send out property tax bills, with the now-very-familiar warning that the first installment of taxes is due Nov. 1 and considered delinquent after Dec. 10, and that the second installment of taxes is due Feb. 1 and considered delinquent after April 10. Tax calculations are dictated by the provisions of Proposition 13, which was approved by voters in 1978. The general guideline is that the property tax is 1 percent of assessed value, which is adjusted annually for inflation, not to exceed 2 percent. Assessed values are updated as properties change ownership.

But many people notice that the actual tax is more than 1 percent of assessed value, due of what the tax bill refers to as, “Voter approved taxes, taxing agency direct charges and special assessments.” There are 12 of these on my last bill, including charges for the Warm Springs Dam, six elementary and high school bonds, two Junior College bonds, mosquito abatement, storm water projects and San Francisco bay restoration. These add-ons raised the total tax bill to 1.2 percent of assessed value. The school bonds are usually paid over 30 years. Other special charges are permanent, as in forever.

I have a list of the top 25 taxpayers for Sonoma County. It may surprise you to learn that the top taxpayer is Pacific Gas & Electric Co. at $17,528,135. Second on the list is Geysers Power Co. at $16,504,130, a wholly-owned subsidiary of Calpine Corporation, which owns 13 Geysers geothermal power plants in the Mayacamas Mountains. Third on the list is Keysight Technologies at $3,386,474, followed by St. Joseph Health Northern California at $1,920,659. The top 25 paid $61,872,305 in property taxes. Total property tax revenue was just over $1.2 billion. Not surprising is that the top 25 include nine wine-related entities, including such well-known names as Ferrari-Carano, Jackson Family, Gallo, Foley Family, Francis Coppola, Sonoma-Cutrer and Silver Oak.

There are numerous tax measures on the ballot in Sonoma County this Nov. 3. Of greatest concern to me are five tax measures that are permanent, with no “sunset” provisions. In alphabetical order, these are Measures R, S, T, U and V, in Cloverdale, Cotati, Healdsburg, Petaluma and Sonoma. Four of the Measures are extensions of existing taxes, while Measure U in Petaluma is a relatively massive 1 percent bump in the sales tax rate. Put in perspective, that sales tax increase alone would raise the price of a $20,000 car on the Petaluma Auto row by $200.

It would be sporting if government officials warned voters that these are forever taxes. But the four existing taxes that are being made permanent don’t mention that at all. And the new Petaluma official ballot summary mildly notes that the tax will exist “until ended by voters.” Will a future city council vote to place an end to the tax? Not likely. Will the public raise money to collect signatures to put ending the tax on a future ballot as an initiative? Very, very unlikely. This failure to give clear warnings about permanent taxes looks sneaky.

Speaking of sneaky, check out Proposition 15 on the California state ballot. The official short summary of Prop 15 declares that it: “Increases funding sources for public schools, community colleges and local government services by changing tax assessment of commercial and industrial property.” You have to admire the subtle misdirection of the words “increases funding sources.” What are “funding sources” other than increased taxes?

I read the entire proposition to see what other surprises or misdirections it contains. But the massive official text—more than 7,000 words—combined with an evacuation, soaring temperatures and terrible air quality, defeated me. I did find these facts worth knowing. The legislative analyst noted the following: “The measure sets aside money for various costs created by the measure. This includes giving several hundred million dollars per year to counties to pay for their costs of carrying out the measure.” The analyst also noted, “Not all governments would be guaranteed new money.

Some in rural areas may end up losing money because of lower taxes on business equipment.” What could go wrong?

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