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Ca. Tax Lawyer MAY 2019, VOLUME 28, NUMBER 1

A Proposal to Increase California School District Autonomy and Funding Through Parcel and Mello-Roos Tax Reforms

By Darien Shanske1 & Saba S. Shatara2

EXECUTIVE SUMMARY

This proposal provides a path for the California Legislature to address two interconnected problems. First, California’s current tax system makes it difficult for local voters to increase local taxes used for school operations. The Legislature may seek to empower local voters to address this issue directly. Second, due to the new cap on the State and Local Tax ("SALT") deduction at the federal level, any attempt to mitigate this first issue through the imposition of new local taxes may increase the tax liability for some of the same taxpayers who will be paying more in federal taxes because of the cap.

California’s property tax limit (Proposition 13) does not permit local voters to override its property tax limit to increase funding for school operations. California Government Code Section 50079 provides some relief in that any school district may impose a parcel tax within the district. As a matter of California constitutional law, a parcel tax is a type of "special tax." As a matter of statutory law, parcel taxes are "taxes that apply uniformly to all taxpayers or all real property within the school district." In Borikas v. Alameda Unified Sch. Dist., 214 Cal. App. 4th 135 (2013), the Court determined that "uniform" in this context meant that school districts cannot apply differentiated rates of parcel tax dependent on the size or type of parcel.

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