Los Angeles Mayor Antonio Villaraigosa waltzed right into the den of cynicism — the Sacramento Press Club — and unveiled a plan Tuesday to fix California that his strongest supporters might even call quixotic.
He implored politicians to muster the courage to stop shying away from the third rails in California politics, including Prop. 13’s property tax on businesses and the constitutional requirement for a two-thirds vote on taxes.
And he framed it as direct challenge to Gov. Jerry Brown:
“To Governor Brown, I say, we need to have the courage to test the voltage in some of these so-called third-rail issues, beginning with Proposition 13,” Villaraigosa said. “We need to strengthen Proposition 13 and get it back to the original idea of protecting homeowners.”
Villaraigosa is proposing a split roll tax, in which commercial property would be assessed more frequently than current — and property transfers would not be allowed to defray reassessments, as they are for homeowners.
But attempts at tweaking Proposition 13, approved by voters in the so-called 1978 tax revolt, have met with fierce opposition over the years and has become essentially untouchable among politicians who fear voter backlash.
Even labor unions, who are working up a strategy for a tax initiative in 2012, have agreed to steer clear of Proposition 13 for the time being. They’re hoping that political leaders start to broach the subject over the next couple years so that it might be ripe for 2014.
Villaraigosa’s proposal might be the first shot at elevating the issue.
The unintended consequences of Proposition 13, he said, has been the steady decline in funding for schools and infrastructure, by way of corporate tax give-aways.
“Prop. 13 has had the unintended effect of favoring commercial property owners at the expense of homeowners,” he said.
In San Francisco, the share of the property tax paid by commercial owners shrunk from 59 percent to 41 percent since Proposition 13 went into effect, he said.
“It’s time to address the unfairness inherent in a system that allows Wall Street hedge fund managers to devise complex real estate investment trusts that give the super rich a free pass on the taxes every ordinary homeowner in California has to pay,” he said.
“How about recognizing we can’t afford this loophole any longer?”
He said that an overhaul of Proposition 13 should be done in the context of major reforms in California’s tax structure, and said it would require the buy-in of a wide spectrum of “stakeholders” — from business to labor to strike a “grand bargain.”
He recommended that the Legislature assemble a commission to study reforms that might include the elimination of the corporate tax, new service taxes, a reduction in personal income taxes, pension rollbacks.
Part of the “grand bargain” would have to include a rollback of the constitutional requirement for a two-thirds vote on taxes, he said.
“Let’s end the tyranny of the minority in California and give the governor and the Legislature the abiilty to pass a revenue increase by majority vote,” he said.
“I know politically this proposition may sound daunting,” he said. “Let’s not be afraid to make the case. Let’s not be afraid to stand up to the ideologues here in Sacramento, or in Washington, D.C.”
Jon Coupal, president and CEO of the Howard Jarvis Taxpayers Association, said he doubted there will be much stomach for Villaraigosa’s proposal.
“We would favor eliminating all corporate taxes,” he said. “Now, you give somebody back one of their arms but cut off the other, that would result in a situation where there’d be real winners and losers.
“There would be land intensive businesses like agriculture that will be very much hurt, so I’m not sure he’s totally thought that out.
“We don’t think there’s room for a grand bargain,” Coupal added.
Even as he proposed combining forces with business leaders, Villaraigosa bashed the Tea Party and Sacramento conservatives for their “mindless pursuit of ideology over country.”
“We have to break the mindset that has dominated our budget debates in both Washington and Sacramento,” he said. “We have to be willing to press the case that the way you build wealth is by investing. And yes, that means making a case for new revenue to sustain long-term investment.”
He gave credit to Brown and the Democratic Legislature for putting together a budget that “repaired the rooof in the center of the storm.”
But, he said it only patched leaks, and caused too much pain to too many families.
Schools, for instance, continue to get fewer and fewer resources in an era of what he called the Great Retreat.
Under Ronald Reagan, he said, California spent 5.6 percent of personal income on schools; now, just 3.5 percent, and the schools are 46th in the nation in per pupil spending.
He took aim at Brown, saying, “as a state and nation we have to stop aiming low. We can’t let this be an era of limited thinking.”
Villaraigosa denied his speech was a kickoff to a run for another office, though speculation is mounting that he is considering a run for higher office, such as governor or the U.S. Senate.