Beyond the “Band-Aid” for Our State and Local Budgets

February 1, 2011

Close the LoopholeAs San Francisco struggles to find common sense solutions to our ongoing budget deficits, we must start addressing the underlying problems in our finances and not just apply the type of “band-aid” fixes that only work in the short term.

A perfect example of such “band-aid” solutions is the Municipal Transportation Agency’s recent proposal to make parking control officers issue more parking tickets to close the agency’s budget gap.

FAIR FUNDING FOR THE SAN FRANCISCO MUNICIPAL RAILWAY

We’re all aware that more revenue is needed in San Francisco. And one of the city agencies most in need of additional funding is the San Francisco Municipal Railway. But we need to make sure this new revenue is generated in a way that’s fair to all.

The MTA and other government agencies are forced to propose these types of flawed solutions because they are operating within an overall tax system that simply fails to make everyone pay his or her fair share.

And the most perfect example of the underlying problem in both state and local budgets is the loopholes in our tax laws that are slowly but surely transferring the tax burden away from large corporations and onto the rest of us.

CLOSING TAX LOOPHOLES TO BALANCE BUDGETS

The single biggest loophole that allows corporations to escape paying their fair share is contained in Proposition 13 – the initiative passed in 1978 with the promise of protecting homeowners.

Those parts of Proposition 13 that protect homeowners are sound public policy and should be preserved. It makes sense to provide certainty to individuals about what their property taxes will be when they purchase their homes.

But most Californians are not aware that Proposition 13 also protects big business – and that over the years this massive loophole has allowed the state’s largest corporations to shift the tax burden onto working families. In San Francisco, corporate and business property owners paid about 60 percent of all property taxes before Prop. 13 passed. Today, they pay just under 40 percent of property taxes.

The reason for this shift is that corporations usually sell their property less frequently than homeowners, so their property tax rates are slower to reset. And, more importantly, corporations have developed elaborate legal strategies to avoid reassessment even when their property does change hands.

These loopholes and creative accounting kept nearly $7.5 billion a year out state’s coffers this year alone. That’s a lot of parking tickets.

As Assessor-Recorder of San Francisco, I know what the necessary changes should be for us to have a fair and equitable tax system. That is why I have worked for the last two years leading a statewide movement called “Close the Loophole – and I hope you join me today.

My proposal would establish a split-roll property tax that levels the playing field between homeowners and corporate property owners. And, it would set us on a course towards financial stability. Fixing what’s broken in Prop 13 and taxing corporations at a fair rate would go a long way in helping to alleviate the financial burden currently being felt by the state, city and taxpayers.

Homeowners and every hard working San Franciscan are being forced to pay higher taxes and fees. It’s time to change the law so corporations do the same. But until we make those necessary changes, taxpayers will continue to foot the bill with regressive fees and “band-aid” fixes that ignore the real changes that we both need and deserve.

 

Phil Ting is currently the San Francisco Assessor-Recorder and the leader of a statewide movement to reform Proposition 13 called Close the Loophole

Paid for by Phil Ting for Assembly 2012. FPPC ID# 1343137