Los Angeles Mayor Antonio Villaraigosa addressed the
Sacramento Press Club yesterday offering a "grand bargain" of revenue increases
and tax cuts to fix the fiscal condition of the state but the core of the plan
dealt with significant dismantling of Proposition 13.
The 1978 property tax reform measure set a firm property tax
rate, and limited yearly property tax increases while requiring a two-thirds
vote of the legislature to raise taxes and a two-thirds vote of the people for
some local tax increases.
Villaraigosa proposed undoing many parts of the proposition removing
business property from property tax protection, lowering the two-thirds vote to
simple majority votes for legislative tax increases and lowering the two-thirds
vote for local property parcel taxes dedicated to education. Parcel tax
increases would be new taxes on both business and residential property.
He also called for a tax on services that could raise $28
billion.
To offset the tax increases in the Grand Bargain, the Los
Angeles Mayor suggested reducing the state income taxes 11-percent, considering
eliminating the corporation tax and cutting property taxes for homeowners. He
estimated "reform of our property tax system as I’ve described could yield
anywhere from $2.1 up to $8 billion dollars a year."
Overall, Villaraigosa’s goal was to raise revenue and invest
in public services. He said, "Progressives have to start thinking – and acting
-big again." A thought about where he might be going with this in a moment.
Villaraigosa argued early in his speech that he was opposed
to politics that pitched jobs overboard, but that is exactly what his property
tax increases on business will do. The most vulnerable businesses under his
plan would be small businesses, which are the engine of the economy.
Small businesses, especially minority owned, live on the
margin with thin capitalization. They often sign leases requiring them to pay
any tax increases affixed to the property. If property taxes are increased
small business owners will have tough choices to make which likely would result
in employees laid off or a job left unfilled.
Eliminating corporation taxes will not help small businesses
while they are ravaged by a property tax increase, potentially every year. If
the mayor proposes to leave "some" of Proposition 13’s protections "to
homeowners and homeowners alone" businesses may be looking at both yearly
reassessments and a property tax rate increase above the current 1-percent.
Such a plan would lead to more job losses, which would not
be made up by the tax cut proposals in the plan.
Villaraigosa challenged Governor Jerry Brown, saying,
"Governor Brown, I say, we need to have the courage to test the voltage in some
of these so-called ‘third rail’ issues, beginning with Proposition 13."
He also attacked what he called "Tea Party economics" at
work in Washington and Sacramento.
After the speech, he was asked what his political future
held. He insisted he was only looking at the present and fighting for reforms.
However, his challenge to the governor on Prop 13, his attack on the Tea Party,
and his urging Progressives to think big made it easy to imagine that if
Governor Brown looks to his left he might find that he has company in the 2014
Democratic primary should he choose to run for re-election.