Read this Before Responding to Poll
CO$T continues to sound the alarm about a California Tax Tsunami arriving with the November 2024 election and that could persist for several election cycles until the cumulative impact on California families and businesses becomes unsupportable. One big driver is ACA-1 on the November 2024 ballot, a proposal that asks voters to lower California’s constitutionally-set hurdle to pass many new taxes from 2/3 to 55%. If approved by a simple majority of voters statewide, ACA-1 becomes effective immediately, i.e., some tax measures on the November ballot that fail to get 2/3 approval but surpass 55% will get the windfall of a lower threshold. This prospect is precipitating a wave of ambitious November 2024 tax measures. Enacting so many big new taxes at once — and likely additional ones in 2026 — will have a very huge, lasting negative impact on the economics of living and conducting business in California.
The boldest, most excessive upcoming tax proposals involve bonds. Most people vote without understanding how much a bond will cost them in property taxes (or indirectly in their rent); nor for how long. Very few understand that most bond proposals are written with exceptional latitude as to what they can fund and that citizen oversight committees don’t have the power to challenge expenditures before they occur.
The most egregious proposal aiming for the November ballot is a $20 billion Bay Area Affordable Housing bond — aka The Bay Area Affordability Plan, which, it turns out, is wildly unaffordable. This is a 9 county Bay Area measure that proponents expect voters to approve based on two simple words on the ballot: Affordable Housing. The proposed tax purports to improve housing affordability for some people via a massive set of new taxpayer-funded subsidies to housing developers and other housing assistance programs. We will be writing more about this soon, but here’s what you need to know now that polling for this proposal is underway.
Astronomically audacious money grab
Voters are asked to authorize issuance of $20 Billion of bonds that, with interest, are officially estimated to cost property owners $48.3 Billion. This will be a property tax with an estimated average annual levy of $18.98/$100K (roughly $190 per $1 million) assessed value, but could exceed $34/$100K ($340/million) sometime during the bond’s lifetime. The tax would be in effect until 2078, more than half a century from now. The size and term of this bond measure is unprecedented.
Giant, unaccountable Bureaucracy in charge
The Bay Area Housing Finance Authority (BAHFA) is the sponsor. It’s a new bureaucratic subsidiary of two other giant bureaucracies that are also not directly accountable to voters: the Metropolitan Transportation Commission (MTC) and Bay Area Association of Governments (ABAG).
The “affordable housing” isn’t affordable
Recently, such California endeavors have produced housing that cost $1 million for 1 bedroom units, thanks to high land prices; mandates to use high priced labor; numerous regulations; fees extracted by local governments; and the lack of a limit on the amount of tax dollars tapped per project (so there’s not much motivation for developers to be cost efficient).
Reverse Robin Hood – Rob from the poor, give to the richer
Taxpayer money will be used to subsidize projects for people who earn as much as 120% of area median income. This means that families earning the median (typical) income or below will be subsidizing housing for other folks who earn considerably more than they do. In Marin, 120% of AMI is $223,900 for a family of four. There is no requirement that the occupants moving into housing subsidized by local taxpayers currently live in Marin, the Bay Area, or even the state.
Perpetual unfunded liabilities
Many if not most of the low income people who move into the housing can’t afford even the reduced rent. Additional taxpayer funds (not coming from the BAHFA bond) will be required for rent subsidies. Homeless individuals will also require substantial additional social services in order remain to stably housed. Additional needs for public services and infrastructure to support the tenants also are not funded. These will all ultimately require additional taxes.
Fiscally inefficient
20% of the BAHFA bond money will be reserved for the agency’s administration for uses over which it will have discretionary authority. Then Marin’s share of the money is administered by the county (more overhead and bureaucracy) and then allocated to the cities (rinse and repeat).
