Proposition 26 keeps MUNI’s hands tied

By: Phil Ting

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While the November 2010 mid-term election saw many progressive victories in California – like sending Jerry Brown, Gavin Newsom and Kamala Harris to Sacramento and beating back Proposition 23 – it also brought about one dangerous defeat: the passage of Proposition 26.

And it is already becoming clear that Proposition 26 has the potential to be a Proposition 13 of our era, not just starving local government of funds they need to deliver effective services but also creating an increasingly contorted and unfair taxation system.

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Under Proposition 26, a two-thirds supermajority in the legislature is required to pass any taxes. But most dangerously, it also re-qualified many fees as taxes, making it much more difficult to implement them.

Tax policy may seem arcane – but these policies have very real world consequences for San Franciscans. One of the first consequences of Proposition 26 is going to be a Municipal Railway so constrained in the effort to find funds needed for reform that it is resorting to increasingly inefficient ways to raise revenue.

For example, I wrote a few weeks ago about the unfair and potentially unsafe proposal to raise funds by issuing more parking tickets. Since Parking Control Officers are employed to enforce rules that promote safety and effective transit – turning them into revenue officers undermines their most important missions of safe and navigable streets. The fact that this is essentially a regressive tax, with people in 10-year old Hondas paying the same as people with Hummers is one more reason to oppose the measure.

But why is this happening now? The reality is that the leaders of MUNI, because of Proposition 26, might feel that they have little other choice. In the past they might have reasonably proposed to raise fees where there was a clear nexus with the service delivered. In the new era of Proposition 26, that kind of rational decision is constrained, thus leading to more irrational decisions like the ticket proposal.

Just like Proposition 13 in its day, Proposition 26 was sold as a taxpayer friendly law. But the reality is already amplifying the long-term effects of Prop. 13 – lowering funds needed to make government work and promoting a series of unfair and inefficient “workarounds” like the San Francisco parking ticket proposal that punish the very taxpayers the measure purported to help.

Like any taxpayer, I want fees to be fair. And I want my government to be as effective as possible so our tax dollars are used wisely. But what none of us should want is a government so constrained that it can’t deliver basic services without resorting to tax trickery.

As an Assessor-Recorder in California, I see first hand the irrational nature of our tax system. That’s why I have been helping to organize a statewide coalition to close the loopholes in Proposition 13 in a way that leaves protections for homeowners in place but closes the corporate loopholes that have been steadily shifting the tax burden onto middle class and working Californians. Because of this work I know that Proposition 26 is a giant step in the wrong direction.

Partially because of the corporate property tax loopholes in Proposition 13, local governments have been forced to raise revenue through a variety of means, including instituting many of the types of fees that Proposition 26 will now constrain. That’s why agencies like MTA are forced to look at even more inefficient measures to bring in money. And the targets of these new revenue schemes are, once again, the people with the least ability to pay.

Since San Francisco has long been the home of early adapters – it’s no surprise to see agencies like MTA figuring out ways around Proposition 26. But soon the rest of the state will follow our lead.

And once again – it is not the average taxpayers who will be protected. The largest corporations will continue to enjoy extensive tax loopholes enshrined under Proposition 13. Cities, schools and the state are left to scramble to find funds with increasingly irrational tax policies.

All of this was predictable. Prior to November’s election, the California Public Utilities Commission weighed in, saying that programs like “reduced electricity rates for low-income customers, incentives to install solar panels, discounted MUNI fares for youth and seniors…” could all be gone because of Proposition 26.

Tying the hands of local governments and agencies as they try and find sensible solutions – including some fees – is the idea of people who clearly haven’t waited on a MUNI bus that doesn’t come.

We need sensible tax policies that promote economic growth and preserve vital services. And that means we need to add one more item to our tax reform list – start working right now on repealing Proposition 26.

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