Existing law requires local governments, when submitting a measure for voter approval for the issuance of bonds that will be secured by an ad valorem tax, to provide voters a statement that includes estimates of the tax rates required to fund the bonds. Under existing law, the estimated tax rate is expressed as the rate per $100 of assessed valuation on all property to be taxed to fund the bonds.

This bill would instead require that the estimated tax rate in the statement be expressed as the rate per $100,000 of assessed valuation on all property to be taxed to fund the bonds.

Existing law requires local governments, when submitting a measure for voter approval for the issuance of bonds that will be secured by an ad valorem tax, to provide voters a statement that includes estimates of the tax rates required to fund the bonds. Under existing law, the estimated tax rate is expressed as the rate per $100 of assessed valuation on all property to be taxed to fund the bonds.

This bill would instead require that the estimated tax rate in the statement be expressed as the rate per $100,000 of assessed valuation on all property to be taxed to fund the bonds.

Existing law requires local governments, when submitting a measure for voter approval for the issuance of bonds that will be secured by an ad valorem tax, to provide voters a statement that includes estimates of the tax rates required to fund the bonds. Under existing law, the estimated tax rate is expressed as the rate per $100 of assessed valuation on all property to be taxed to fund the bonds.

This bill would instead require that the estimated tax rate in the statement be expressed as the rate per $100,000 of assessed valuation on all property to be taxed to fund the bonds.

SENATE THIRD READING

STR Bill Id:SB 798

Author:(Glazer)

As Introduced Ver:February 17, 2023

Majority vote

SUMMARY

Requires the tax rate statement that is required to be included in the sample ballot for local bond measures to include a tax rate per $100,000 of assessed valuation on all property to be taxed to fund a bond issue, instead of a tax rate per $100 of assessed valuation on all property to be taxed to fund the bond.

Major Provisions

COMMENTS

Existing law requires a local government agency, when submitting bond measures that will be secured by an ad valorem tax for voter approval, to mail a statement to voters with the sample ballot for the bond election that includes the best estimate of the average annual tax rate, highest tax rate, and total debt service, as specified, and defines the term tax rate to mean the tax rate per $100 of assessed valuation on all property to be taxed to fund a bond.

According to an analysis by the Senate Governance and Finance Committee, existing law generally defines tax rates as the rate per $100 of assessed value. Examples include state and local appropriations limits pursuant to the state Constitution, and state laws concerning general provisions related to property tax and maximum property tax rates for harbor districts. According to that analysis, if this bill is signed into law, local bond measures would be the only tax rates expressed as per $100,000 of assessed property value.

According to the Author

"Given the increase in the median value of housing in California over the past 50 years, using $100 increments has become a less understood point of reference for voters with homes now valued in the hundreds of thousands of dollars. By requiring the estimated tax rate on a voter's ballot statement be expressed as the rate per $100,000 of assessed value on all property to be taxed to fund a bond measure, it will provide a more relatable dollar amount for voters when deciding to approve or reject a bond measure. SB 798 seeks to modernize a ballot's tax rate statement so that voters could more easily understand what they are voting on."

Arguments in Support

In support of this bill, the California Taxpayers Association writes, "Existing law requires that when a city, county, school district, or special district places a bond on the ballot, a statement is mailed to voters that contains the best estimate for the average annual tax rate that would be levied to repay the bond debt expressed as the tax rate per $100 of property value.

"For example, the Little Lake City School District proposed a bond to voters in 2022 using the following question: 'To repair aging classrooms/leaking roofs to ensure student health/safety/achievement, upgrade plumbing, electrical, gas lines, heating/ventilation, security systems, classroom technology, remove asbestos, lead paint, mold, provide safe drinking water, repair, construct/acquire classrooms, sites/equipment, shall Little Lake City School District's measure authorizing $36,000,000 in bonds at legal rates, levying 3¢/$100 assessed value ($2,000,000 annually) while bonds are outstanding, be adopted, with audits/oversight, all funds for local schools?'

"Many taxpayers are unable to easily determine their potential tax burden when the tax rate is expressed in this fashion. Expressing the tax as a rate per $100,000 of assessed value will improve transparency, as values often are discussed in terms of hundreds of thousands of dollars, and property owners will have an easier time calculating their potential tax."

Arguments in Opposition

None received.

FISCAL COMMENTS

None. This bill is keyed non-fiscal by the Legislative Counsel.

VOTES

SENATE FLOOR: 37-0-3

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener

ABS, ABST OR NV: Blakespear, Glazer, Wilk

ASM ELECTIONS: 8-0-0

YES: Bryan, Lackey, Bennett, Essayli, McKinnor, Low, Pellerin, Blanca Rubio

UPDATED

VERSION: February 17, 2023

CONSULTANT: Nichole Becker / ELECTIONS / (916) 319-2094 FN: 0001077

Date of Hearing: June 7, 2023

ASSEMBLY COMMITTEE ON ELECTIONS

Isaac G. Bryan, Chair

SBPCA Bill Id:SB 798

Author:(Glazer) – As Introduced Ver:February 17, 2023

SENATE VOTE: 37-0

SUBJECT: Elections: local bond measures: tax rate statement.

SUMMARY: Requires the tax rate statement that is required to be included in the sample ballot for local bond measures to include a tax rate per $100,000 of assessed valuation on all property to be taxed to fund a bond issue, instead of a tax rate per $100 of assessed valuation on all property to be taxed to fund the bond.

EXISTING LAW:

1. Requires a local government agency, when submitting bond measures that will be secured by an ad valorem tax for voter approval, to mail a statement to voters with the sample ballot for the bond election. Requires the statement to be filed with the elections official conducting the election not later than the 88th day before the election, and to include all of the following:
   1. The best estimate from official sources of the average annual tax rate that would be required to be levied to fund that bond issue over the entire duration of the bond debt service, based on assessed valuations available at the time of the election or a projection based on experience within the same jurisdiction or other demonstrable factors. Requires the estimate to also identify the final fiscal year in which the tax is anticipated to be collected.
   2. The best estimate from official sources of the highest tax rate that would be required to be levied to fund that bond issue, and an estimate of the year in which that rate will apply, based on assessed valuations available at the time of the election or a projection based on experience within the same jurisdiction or other demonstrable factors.
   3. The best estimate from official sources of the total debt service, including the principal and interest that would be required to be repaid if all the bonds are issued and sold. Permits the estimate to include information about the assumptions used to determine the estimate. (Elections Code §9401(a))
2. Allows the statement, in addition, to contain a declaration of policy of the legislative or governing body of the applicable jurisdiction, proposing to use revenues other than ad valorem taxes to fund the bond issue, and the best estimate from official sources of these revenues and the reduction in the tax rate levied to fund the bond issue resulting from the substitution of revenue. (Elections Code §9401(b))
3. Defines the term “tax rate” to mean tax rate per $100 of assessed valuation on all property to be taxed to fund a bond. (Elections Code §9401(c))

FISCAL EFFECT: None. This bill is keyed non-fiscal by the Legislative Counsel.

COMMENTS:

1. Purpose of the Bill: According to the author:

Given the increase in the median value of housing in California over the past 50 years, using $100 increments has become a less understood point of reference for voters with homes now valued in the hundreds of thousands of dollars. By requiring the estimated tax rate on a voter’s ballot statement be expressed as the rate per $100,000 of assessed value on all property to be taxed to fund a bond measure, it will provide a more relatable dollar amount for voters when deciding to approve or reject a bond measure. SB 798 seeks to modernize a ballot’s tax rate statement so that voters could more easily understand what they are voting on.

1. Local Bond Measures: Local government agencies may place bond measures on the ballot secured by increased property taxes. When public agencies issue bonds, they essentially borrow money from investors, who provide cash in exchange for the agencies’ commitment to repay the principal amount of the bond plus interest in the future. Article XIIIA, Section 1 of the California Constitution requires counties, cities, and school districts to get voter approval for long-term debt. Counties, cities, school districts, community college districts, and some special districts may issue general obligation (GO) bonds, secured by ad valorem, or according to value, property tax revenues with 2/3 voter approval. Existing law allows school districts and school facility improvement districts to issue GO bonds to build, rehabilitate, or replace schools with 55% voter approval subject to certain conditions, including tax limits.
   

When a local government agency qualifies a bond measure for the ballot, existing law requires the agency to mail a statement to voters with the sample ballot that includes the best available estimates of the following:

• Average annual tax rate to be levied to fund that bond issue over the entire duration of the bond debt service, based on assessed property values within the jurisdiction;

• Highest tax rate to be levied to fund that bond issue, and an estimate of when that rate would apply; and,

• Total debt service, including principal and interest, required to be repaid if all the bonds are issued and sold.

Current law defines the term “tax rate” to mean the tax rate per $100 of assessed property value. When local agencies prepare official election materials in addition to the sample ballot, including voter information guides, state law requires them to include this tax rate information.

This bill changes the definition of tax rate to mean the tax rate per $100,000 of assessed value, instead of per $100 of assessed value.

1. Tax Rates: According to the Senate Governance and Finance Committee analysis, when existing law defines tax rates it appears in per $100 of assessed value. Examples include state and local appropriations limits pursuant to the state Constitution, and Revenue and Taxation state laws concerning general provisions related to property tax and maximum property tax rates for harbor districts.
   
   According to the Senate analysis, if this bill is signed into law, local bond measures would be the only tax rates expressed as per $100,000 of assessed property value.
   
2. Arguments in Support: In support of this bill, the California Taxpayers Association writes:

Existing law requires that when a city, county, school district, or special district places a bond on the ballot, a statement is mailed to voters that contains the best estimate for the average annual tax rate that would be levied to repay the bond debt expressed as the tax rate per $100 of property value.

For example, the Little Lake City School District proposed a bond to voters in 2022 using the following question: “To repair aging classrooms/leaking roofs to ensure student health/safety/achievement, upgrade plumbing, electrical, gas lines, heating/ventilation, security systems, classroom technology, remove asbestos, lead paint, mold, provide safe drinking water, repair, construct/acquire classrooms, sites/equipment, shall Little Lake City School District’s measure authorizing $36,000,000 in bonds at legal rates, levying 3¢/$100 assessed value ($2,000,000 annually) while bonds are outstanding, be adopted, with audits/oversight, all funds for local schools?”

Many taxpayers are unable to easily determine their potential tax burden when the tax rate is expressed in this fashion. Expressing the tax as a rate per $100,000 of assessed value will improve transparency, as values often are discussed in terms of hundreds of thousands of dollars, and property owners will have an easier time calculating their potential tax.

1. Related Legislation: SB 532 (Wiener) exempts fiscal disclosure requirements from counting towards the 75-word ballot label limit if a proposed local ballot measure imposes or increases a tax with more than one rate or authorizes the issuance of bonds, as specified. SB 532 is pending in the Assembly.
2. Previous Legislation: AB 610 (Obernolte) of 2019, would have required the tax rate statement included in the sample ballot for local bond measures to express the tax rate per $1,000 of assessed property value, instead of per $100 of assessed value. AB 610 was approved by the Assembly Elections & Redistricting Committee (the predecessor of this committee) and on the Assembly Floor, but failed passage in the Senate Governance and Finance Committee by a 2-4 vote.

REGISTERED SUPPORT / OPPOSITION:

Support Opposition

California Chamber of Commerce None on file.

California Taxpayers Association

Analysis Prepared by: Nichole Becker / ELECTIONS / (916) 319-2094

 CONSENT  

Bill No: SB 798

Author: Glazer (D), et al.

Introduced: 2/17/23

Vote: 21

SENATE GOVERNANCE & FIN. COMMITTEE: 8-0, 3/29/23

AYES: Caballero, Seyarto, Blakespear, Dahle, Durazo, Glazer, Skinner, Wiener

SENATE ELECTIONS & C.A. COMMITTEE: 7-0, 4/18/23

AYES: Glazer, Nguyen, Allen, McGuire, Menjivar, Newman, Umberg

SUBJECT: Elections: local bond measures: tax rate statement

SOURCE: Author

DIGEST:

This bill requires the tax rate statement included in the ballot materials for local bond measures to express the tax rate per $100,000 instead of per $100 of assessed value.

ANALYSIS:

Existing law:

1. Requires a local government agency, when submitting bond measures that will be secured by an ad valorem tax for voter approval, to mail a statement to voters with the sample ballot for the bond election.
   
2. Requires the statement to be filed with the election official conducting the election no later than the 88th day before the election, and to include all of the following:
   1. The best estimate from official sources of the average annual tax rate that would be required to be levied to fund that bond issue over the entire duration of the bond debt service, based on assessed valuations available at the time of the election or a projection based on experience within the same jurisdiction or other demonstrable factors. Requires the estimate to also identify the final fiscal year in which the tax is anticipated to be collected.
   2. The best estimate from official sources of the highest tax rate that would be required to be levied to fund that bond issue, and an estimate of the year in which that rate will apply, based on assessed valuations available at the time of the election or a projection based on experience within the same jurisdiction or other demonstrable factors.
   3. The best estimate from official sources of the total debt service, including the principal and interest, that would be required to be repaid if all the bonds are issued and sold. Permits the estimate to include information about the assumptions used to determine the estimate.
3. Allows the statement to contain a declaration of policy of the legislative or governing body of the applicable jurisdiction, proposing to use revenues other than ad valorem taxes to fund the bond issue, and the best estimate from official sources of these revenues and the reduction in the tax rate levied to fund the bond issue resulting from the substitution of revenue.
4. Defines the term “tax rate” to mean tax rate per $100 of assessed valuation on all property to be taxed to fund a bond.

This bill requires the tax rate statement included in the ballot materials for local bond measures to express the tax rate per $100,000 instead of per $100 of assessed value.

Background

Article XIII of the California Constitution provides that all property is taxable at the same percentage of fair market value unless explicitly exempted by the Constitution or federal law. The Constitution limits the maximum amount of any ad valorem tax on real property at 1% of full cash value, and directs assessors to only reappraise property when newly constructed, or ownership changes (Proposition 13, 1978). Proposition 13 additionally limited any inflationary growth of the full cash value base to 2% per year.

Local agencies can place bond measures on the ballot secured by increased property taxes, which can be in excess of the Proposition 13 limitations. When public agencies issue bonds, they essentially borrow money from investors, who provide cash in exchange for the agencies’ commitment to repay the principal amount of the bond plus interest in the future. Article XIIIA, Section 1 of the California Constitution requires counties, cities, and school districts to get voter approval for long-term debt. Counties, cities, school districts, community college districts, and some special districts can issue general obligation (GO) bonds, secured by ad valorem, or according to value, property tax revenues with 2/3-voter approval. Proposition 39 (2000) allows school districts and school facility improvement districts to issue GO bonds to build, rehabilitate, or replace schools with 55% voter approval subject to certain conditions, including tax limits.

Comments

1. Purpose of the bill. According to the author, “Given the increase in the median value of housing in California over the past 50 years, using $100 increments has become a less understood point of reference for voters with homes now valued in the hundreds of thousands of dollars. By requiring the estimated tax rate on a voter’s ballot statement be expressed as the rate per $100,000 of assessed value on all property to be taxed to fund a bond measure, it will provide a more relatable dollar amount for voters when deciding to approve or reject a bond measure. SB 798 seeks to modernize a ballot’s tax rate statement so that voters could more easily understand what they are voting on.”
2. You do the math. Depending on the year, voters have to research and analyze multiple local and state ballot measures, as well as choose between candidates for many for local, state, and national offices. In the November 2022 election, Californians waded through a 128-page voter guide with seven different state-level measures, not including additional local measures, including bonds. Helping voters make sense of complicated ballot measures is important. However, it is unclear whether this bill actually accomplishes that goal, specifically whether tax rate statements are to blame for voter confusion, or whether that confusion would decline if ballot information stated local bond tax rates in a different way. When San Diego Unified School District in the City of San Diego submitted a $3.5 billion school bond measure to voters in November 2018, the bond statement voters received described the tax rate as $0.06 per $100 of assessed value. If the Legislature had enacted SB 798 at the time, the ballot would have expressed the tax rate as $60 per $100,000 of assessed value. In either case, a home valued at $500,000 would have to pay an additional $300 in annual property taxes for debt service of the bonds. If voters have previously voted on local bond measures, changing the way tax rates appear on election materials could also be confusing for voters. If reasonable minds differ as far as what is more intuitive for voters, should the Legislature require all ballots to express tax rates on a per $100,000 basis?

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 4/20/23)

California Chamber of Commerce

California Taxpayers Association

OPPOSITION: (Verified 4/20/23)

None received

Prepared by: Jonathan Peterson / GOV. & F. / (916) 651-4119

4/21/23 15:32:06

**** END ****

SENATE COMMITTEE ON

ELECTIONS AND CONSTITUTIONAL AMENDMENTS

Senator Steven Glazer, Chair

2023 - 2024 Regular

Bill No: 798 Hearing Date: 4/18/23

Subject:

DIGEST

This bill requires the tax rate statement included in the ballot materials for local bond measures to express the tax rate per $100,000 instead of per $100 of assessed value.

ANALYSIS

Existing law:

1. Requires a local government agency, when submitting bond measures that will be secured by an ad valorem tax for voter approval, to mail a statement to voters with the sample ballot for the bond election. Requires the statement to be filed with the election official conducting the election no later than the 88th day before the election, and to include all of the following:
   1. The best estimate from official sources of the average annual tax rate that would be required to be levied to fund that bond issue over the entire duration of the bond debt service, based on assessed valuations available at the time of the election or a projection based on experience within the same jurisdiction or other demonstrable factors. Requires the estimate to also identify the final fiscal year in which the tax is anticipated to be collected.
   2. The best estimate from official sources of the highest tax rate that would be required to be levied to fund that bond issue, and an estimate of the year in which that rate will apply, based on assessed valuations available at the time of the election or a projection based on experience within the same jurisdiction or other demonstrable factors.
   3. The best estimate from official sources of the total debt service, including the principal and interest, that would be required to be repaid if all the bonds are issued and sold. Permits the estimate to include information about the assumptions used to determine the estimate.
2. Allows the statement to contain a declaration of policy of the legislative or governing body of the applicable jurisdiction, proposing to use revenues other than ad valorem taxes to fund the bond issue, and the best estimate from official sources of these revenues and the reduction in the tax rate levied to fund the bond issue resulting from the substitution of revenue.
3. Defines the term “tax rate” to mean tax rate per $100 of assessed valuation on all property to be taxed to fund a bond.

This bill:

1. This bill requires the tax rate statement included in the ballot materials for local bond measures to express the tax rate per $100,000 instead of per $100 of assessed value.

BACKGROUND

Local Bond Measures. Local agencies can place bond measures on the ballot secured by increased property taxes which can be in excess of the Proposition 13 limitations. When public agencies issue bonds they essentially borrow money from investors who provide cash in exchange for the agencies’ commitment to repay the principal amount of the bond plus interest in the future. Article XIIIA, Section 1 of the California Constitution requires counties, cities, and school districts to get voter approval for long-term debt. Counties, cities, school districts, community college districts, and some special districts can issue general obligation (GO) bonds, secured by ad valorem, or according to value, property tax revenues with 2/3-voter approval. Proposition 39 (2000) allows school districts and school facility improvement districts to issue GO bonds to build, rehabilitate, or replace schools with 55% voter approval subject to certain conditions, including tax limits.

When a local agency qualifies a bond measure for the ballot, it has to mail a statement to voters with the sample ballot no later than the 88th day before the election. This statement must include the best available estimates of the:

1. Average annual tax rate to be levied to fund that bond issue over the entire duration of the bond debt service, based on assessed property values within the jurisdiction.
2. Highest tax rate to be levied to fund that bond issue, and an estimate of when that rate would apply.
3. Total debt service, including principal and interest, required to be repaid if all the bonds are issued and sold.

The local agency submitting the measure to voters can also declare its intent to use revenues other than ad valorem property taxes to fund the bond issue and include its best estimate of this replacement revenue and the reduction in the tax rate resulting from the substitution of revenues.

Current law defines the term “tax rate” to mean the tax rate per $100 of assessed property value. When local agencies prepare official election materials in addition to the sample ballot, including voter information guides, state law requires them to express the tax rate in this specific way. The local agency must include this tax rate information on all official materials directed at or including a bond issue proposal.

Since local bond measures impose a tax or raise the rate of a tax, the ballot must also include:

• the amount of money the tax will raise annually;
• the duration of the tax; and
• the tax rate.

The ballot statement must be a true and impartial synopsis of the purpose of the proposed measure, and presented in language that is neither argumentative nor likely to create prejudice for or against the measure.

COMMENTS

1. According to the Author: Given the increase in the median value of housing in California over the past 50 years, using $100 increments has become a less understood point of reference for voters with homes now valued in the hundreds of thousands of dollars. By requiring the estimated tax rate on a voter’s ballot statement be expressed as the rate per $100,000 of assessed value on all property to be taxed to fund a bond measure, it will provide a more relatable dollar amount for voters when deciding to approve or reject a bond measure. SB 798 seeks to modernize a ballot’s tax rate statement so that voters better understand what they are voting on.
2. Argument in Support. In a letter supporting SB 798, the California Chamber of Commerce stated, in part, the following:

SB 798 will help to clearly state when local governments place a bond on the ballot what estimated tax rate would be for each parcel of property. Having this information expressed as the rate per $100,000 as opposed to per $100 will give a more accurate picture of the true impact on constituents. As voter guides have expanded to well over 100 pages in some instances, having this information clearly stated will help to inform voters of the true impact of these bond proposals.

1. Double Referral. Before being heard by this committee, SB 798 was considered and passed by the Committee on Governance and Finance with an 8-0 vote.

RELATED/PRIOR LEGISLATION

SB 532 (Wiener) of 2023, which permits the proponents of a local initiative measure, or a local jurisdiction submitting a local ballot measure, that imposes or increases a tax with more than one rate, or authorizes the issuance of bonds, to choose how specific information will appear on the ballot label. The bill is currently pending in the Senate Committee on Governance & Finance.

AB 610 (Obernolte) of 2019 required the tax rate statement included in the ballot materials for local bond measures to express the tax rate per $1,000 of assessed property value, different from this measure’s requirement to express the tax per $100,000 of assessed value. The bill failed passage in the Senate Committee on Governance and Finance.

SB 858 (Petris), Chapter 813, Statutes of 1968, required a local government agency, when submitting bond measures that will be secured by an ad valorem tax for voter approval, to mail a statement to voters with the sample ballot for the bond election and defined the term “tax rate” to mean tax rate per $100 of assessed valuation on all property to be taxed to fund a bond.

POSITIONS

Sponsor: Author

Support: California Chamber of Commerce

California Taxpayers Association

Oppose: None received

-- END --

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Anna M. Caballero, Chair

2023 - 2024 Regular

Elections: local bond measures: tax rate statement

Requires the tax rate statement included in the ballot materials for local bond measures to express the tax rate per $100,000 instead of per $100 of assessed value.

Background

Property tax. Article XIII of the California Constitution provides that all property is taxable at the same percentage of fair market value unless explicitly exempted by the Constitution or federal law. The Constitution limits the maximum amount of any ad valorem tax on real property at 1% of full cash value, and directs assessors to only reappraise property when newly constructed, or ownership changes (Proposition 13, 1978). Proposition 13 additionally limited any inflationary growth of the full cash value base to 2% per year.

Local bond measures. Local agencies can place bond measures on the ballot secured by increased property taxes, which can be in excess of the Proposition 13 limitations. When public agencies issue bonds, they essentially borrow money from investors, who provide cash in exchange for the agencies’ commitment to repay the principal amount of the bond plus interest in the future. Article XIIIA, Section 1 of the California Constitution requires counties, cities, and school districts to get voter approval for long-term debt. Counties, cities, school districts, community college districts, and some special districts can issue general obligation (GO) bonds, secured by ad valorem, or according to value, property tax revenues with 2/3-voter approval. Proposition 39 (2000) allows school districts and school facility improvement districts to issue GO bonds to build, rehabilitate, or replace schools with 55% voter approval subject to certain conditions, including tax limits.

When a local agency qualifies a bond measure for the ballot, it has to mail a statement to voters with the sample ballot no later than the 88^th day before the election. This statement must include the best available estimates of the:

• Average annual tax rate to be levied to fund that bond issue over the entire duration of the bond debt service, based on assessed property values within the jurisdiction;
• Highest tax rate to be levied to fund that bond issue, and an estimate of when that rate would apply; and
• Total debt service, including principal and interest, required to be repaid if all the bonds are issued and sold.

The local agency submitting the measure to voters can also declare its intent to use revenues other than ad valorem property taxes to fund the bond issue and include its best estimate of this replacement revenue and the reduction in the tax rate resulting from the substitution of revenues.

Current law defines the term “tax rate” to mean the tax rate per $100 of assessed property value. When local agencies prepare official election materials in addition to the sample ballot, including voter information guides, state law requires them to express the tax rate in this specific way. The local agency must include this tax rate information on all official materials directed at or including a bond issue proposal.

Since local bond measures impose a tax or raises the rate of a tax, the ballot must also include:

• The amount of money the tax will raise annually;
• The duration of the tax; and
• The tax rate.

The ballot statement must be a true and impartial synopsis of the purpose of the proposed measure, and presented in language that is neither argumentative nor likely to create prejudice for or against the measure.

In an effort to make these taxes easier to understand, the author wants to change the definition of tax rate to mean the tax rate per $100,000 of assessed value.

Proposed Law

Senate Bill 798 requires the tax rate statement included in ballot materials for local bond measures to express the tax rate per $100,000 of assessed property value, instead of per $100 of assessed value.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “Given the increase in the median value of housing in California over the past 50 years, using $100 increments has become a less understood point of reference for voters with homes now valued in the hundreds of thousands of dollars. By requiring the estimated tax rate on a voter’s ballot statement be expressed as the rate per $100,000 of assessed value on all property to be taxed to fund a bond measure, it will provide a more relatable dollar amount for voters when deciding to approve or reject a bond measure. SB 798 seeks to modernize a ballot’s tax rate statement so that voters could more easily understand what they are voting on.”

2. You do the math. Depending on the year, voters have to research and analyze multiple local and state ballot measures, as well as choose between candidates for many for local, state, and national offices. In the November 2022 election, Californians waded through a 128-page voter guide with seven different state-level measures, not including additional local measures, including bonds. Helping voters make sense of complicated ballot measures is important. However, it is unclear whether this bill actually accomplishes that goal, specifically whether tax rate statements are to blame for voter confusion, or whether that confusion would decline if ballot information stated local bond tax rates in a different way. When San Diego Unified School District in the City of San Diego submitted a $3.5 billion school bond measure to voters in November 2018, the bond statement voters received described the tax rate as $0.06 per $100 of assessed value. If the Legislature had enacted SB 798 at the time, the ballot would have expressed the tax rate as $60 per $100,000 of assessed value. In either case, a home valued at $500,000 would have to pay an additional $300 in annual property taxes for debt service of the bonds. If voters have previously voted on local bond measures, changing the way tax rates appear on election materials could also be confusing for voters. If reasonable minds differ as far as what is more intuitive for voters, should the Legislature require all ballots to express tax rates on a per $100,000 basis?

3. If it isn’t broken, don’t fix it. When existing law defines tax rates, it appears in per $100 of assessed value. Some examples include:

• Article XIIIB, Section 9 of the California Constitution regarding state and local appropriations limits.
• Revenue and Taxation Code Section 135, concerning the general provisions or property tax.
• Revenue and Taxation Code Section 2263.4 regarding maximum property tax rates for harbor districts.

If the Legislature enacted SB 798, local bond measures would be the only place where Californians and lawmakers would find tax rates expressed as per $100,000 of assessed property value. While the Legislature could change other code sections to be consistent with SB 798, it would not be able to change the constitutional provisions without voter approval. The Committee may wish to consider whether creating these inconsistencies is necessary.

4. Recent legislation. AB 610 (Obernolte, 2019) required the tax rate statement included in the ballot materials for local bond measures to express the tax rate per $1,000 of assessed property value, different from this measure’s requirement to express the tax per $100,000 of assessed value. The bill failed passage in the Senate Governance and Finance Committee.

5. Related legislation. SB 532 (Wiener, 2023), which permits the proponents of a local initiative measure, or a local jurisdiction submitting a local ballot measure, that imposes or increases a tax with more than one rate, or authorizes the issuance of bonds, to choose how specific information will appear on the ballot label. The bill is currently pending in the Senate Governance & Finance Committee.

6. Coming and going. The Senate Rules Committee ordered a double referral of SB 798: first, to the Governance and Finance Committee to consider its local government implications, and second to the Elections and Constitutional Amendments Committee.

Support and Opposition

(3/24/23)

Support: California Taxpayers Association

Opposition: None submitted.

-- END --