What tax works best?
The city, county and state are scrambling over how to pay for their plans to house the homeless.
Los Angeles County supervisors are pressing Sacramento for authority to place a “millionaire’s tax” on the Nov. 8 ballot to pay for an ambitious program to combat homelessness. State Senate leader Kevin de León wants to help house the homeless by using part of an entirely different, but already existing, millionaire’s tax that is collected for mental illness programs. Some L.A. City Council members, meanwhile, want to sell housing-for-the-homeless bonds, which would be repaid by property taxes, but in case that doesn't work out they are also asking for ballot language for a sales tax, a marijuana tax, a billboard tax and a tax on transferring real estate — all for dealing with homelessness.
One or more of those homelessness tax measures may end up on the ballot in November, a ballot that is likely to also include an extension of temporary state sales and income tax increases, a transportation sales tax, a parks parcel tax, a school construction bond, a tobacco tax — and there may be more.
As the time approaches to secure a spot on the fall ballot, officials trying to deal with homelessness are scrambling for revenue, sometimes tripping over one another’s feet, sometimes tripping over even their own. Two Board of Supervisors hearings got heated as members debated options, timing and the degree to which someone else — Sacramento? Washington? — ought to be paying. At the county Hall of Administration, at City Hall and at the state Capitol, the lobbying and jockeying can appear unseemly — and frankly more than a little frightening when all those potential tax increases are added up. How worried should we be? Let’s hold that question in abeyance, at least for the present, and focus on the positive: Elected officials are finally taking the homelessness crisis seriously. City, county and state officials too often hatch plans without taking the time to think them through, to consider costs or to vet alternatives, but this time they are at work. The plethora of tax plans should be viewed as part of a work in progress, a process of brainstorming, not always tidy and not yet fully baked. They are pieces in a puzzle — one piece to help the mentally ill, another to construct housing, yet another to provide supportive services, etc. — that don’t yet fit together.
The time will come soon – very soon – when officials have to narrow their options, join forces, fit the puzzle pieces together and present a persuasive case (if they can) that they are prepared to deal with homelessness, that they need additional money to do it, and that it is in the interest of voters to approve it and taxpayers to pay it. By the Fourth of July, the state budget will be finalized and city and county plans must crystallize. In the meantime, a little lobbying and jockeying are just part of the process.
There are reasons elected officials are discussing so many varieties of taxes. Each possible revenue measure carries some political or policy baggage, so each must be weighed against the others.
A county sales tax, for example, would need four votes on the Board of Supervisors to get on the ballot, but probably can’t muster more than three. If it did get on the ballot it would compete with the top priority of Sacramento Democrats — extension of the “temporary” sales and income tax increases that voters approved in 2012 in the form of Proposition 30. It would compete with Metro’s transportation sales tax, which is supported by many of the supervisors. And it wouldn’t raise as much revenue as some of the alternatives.
How about a property tax? That’s the way local government formerly would have addressed a problem for which it needs more money, but new taxes based on property value are not permissible under Proposition 13, which has been in place now for nearly 40 years. The county could instead ask voters to approve a parcel tax – a flat amount assessed on each piece of real estate or on each square foot of improved property, regardless of the property’s value. But that would directly compete with a proposed parcel tax that the Board of Supervisors already is considering for the November ballot to pay for parks, recreation, open space and cultural facilities, to succeed a previous parcel tax that expired last year and another due to expire in 2018.
A majority of the Board of Supervisors has zeroed in an income tax on the wealthy — up to 1% on any personal earnings over $1 million. But no city or county in California currently imposes income taxes. Only the state can do that. The county is lobbying for a change in the law that would allow voters here to consider the tax, but state lawmakers are wary, in part because they don’t want to lose focus on De León’s plan to redirect the existing state millionaire’s tax — which voters approved in 2004 as Proposition 63 — toward housing for mentally ill homeless people.
But the county is lobbying Sacramento hard, because polls show that a county millionaire’s tax has the best chance of success on the ballot.
And of course it does — most voters don’t earn more than $1 million a year, so wouldn’t have to pay the tax, so have nothing to lose if they vote for it. Like taxes on smokers or any other narrow group, taxes on the rich are popular. People who have spent decades in politics know that popular means politically viable. They can get it done. They follow the polls. That’s fine up to a point.
Let’s hope, though, that they follow more than just the polls. It’s a given that any effort that requires more money will require some group to pay more. But any new tax must make sound policy sense. It must offer the best chance of dealing with homelessness, not just to alleviate the misery of people on the street but to develop more effective ways of addressing mental illness, crime, poverty and other problems that are intertwined with homelessness. The elected officials who are currently cobbling together ballot measures must turn their attention, in short order, to constituents who will want to see a viable, unified and cost-effective plan.