When The Parcel Tax Gods Want To Punish You They Answer Your Prayers

Both those who are for and those who are against putting yet another public school parcel tax back on the ballot in the Pasadena Unified School District after the upcoming November elections should be careful what they wish for – they both may get what they wanted but with unintended consequences they both may regret.

Should a Parcel Tax pass look for an eventual change in the community power structure with a clean sweep of the school board, with Paul Little and the Chamber of Commerce having more power, and with the Tea Party placing its candidates on the school board and elsewhere.

PEF Vows Another Parcel Tax Campaign

Peter Dreier and George Brumder of the Pasadena Educational Foundation (PEF) have vowed they will be back with another ballot initiative for a school parcel tax after the defeat of Measure CC in April.  Quote:

George Brumder, campaign chair of Yes on CC, told the Pasadena Star-News, “This isn’t the end of this matter. The majority of this community did vote to tax itself. I don’t know what direction the board will take, but the need we have hasn’t changed. If it means going back out again to fill that gap in funding from the state, we will.”

http://www.examiner.com/headlines-in-los-angeles/breaking-news-pasadena-measure-cc-parcel-tax-defeated

For Peter Dreier’s promise to be back with another Parcel Tax initiative read here:-http://www.huffingtonpost.com/peter-dreier/in-pasadena-a-vote-of-con_b_575633.html?page=3

The Parcel Tax proponents are eagerly awaiting the results of Prop 25 on the November ballot that would lower the majority vote required for passing parcel taxes for school operating costs from 65% to 50% + 1 (the vote threshold for school building improvements is 55%).

In effect, Prop 25 would end Prop 13 in California, with disastrous consequences to property values and the property tax base.  But the Prop 25 and Parcel Tax advocates don’t care about the consequences – they just want to inflate taxes in a deflationary Recession when prices of everything else are deflating.

The Parcel Tax advocates are encouraged that Measure CC got 52% of the vote in the last election despite vigorous opposition and the anti-tax mood of the public due to the economic recession.

Anti-Tax = Anti-Corruption.

Conversely, the Anti-Parcel Tax advocates claim that they will not back any taxes for public schools unless and until special interest corruption is eliminated in the PUSD in its nefarious consultant contracting system benefiting School Board members and other well-connected persons. Parcel Tax opponent Ross Selvidge wrote in the Pasadena Star News that “PUSD’s Culture Must Change” before those who voted down the tax could consider a parcel tax – (article no longer posted online but reader comments here:
http://www.topix.com/forum/source/whittier-daily-news/TM17SHS77S14P7EU4).  This raises the question that if corruption was cleaned up would the anti-tax advocates have no opposition to a parcel tax?

The Parcel Tax Paradox

Both sides fail to understand the unintended consequences of taxes on property values, voting, and the community power structure.

Paradoxically, one of the major possible ways to clean up the corruption at PUSD is with a Parcel Tax. This is not an endorsement of any future Parcel Tax but an empirical statement.  And conversely, once a parcel tax is enacted to fund school operations (teacher’s salaries) then there will likely be an effort afterward by “homevoters” to takeover the Board of Education to better reflect homeowners than special interests as the Board is constituted today.

So a Parcel Tax may reduce corruption but result in a turnover on the Board of Education to reflect homeowner interests, not special interests.  Those Parcel Tax advocates who want their cake (the Parcel Tax) and want to eat it too (keep their PUSD patronage) may have a sudden surprise on their hands if they should pass the tax. And if they think they can co-opt the community, with the help of Larry Wilson the Public Editor of the Star News, by convincing the public that it can have a parcel tax without a change in the power structure of PUSD they may be “like an unbelieving prisoner reading the formal death sentence of his own execution” (to borrow Robert Traver’s phrase).

Would both those who are for and those who are against a parcel tax vote for it if they knew this likely outcome in advance?

Would BOE member Ed Honowitz support a parcel tax if he knew that it would likely result in him being voted off the Board and with it his influence in doling out anti-poverty contracts that allegedly benefit his wife’s nonprofit consulting firm?  Ditto for high profile Board of Education members Scott Phelps, Tom Selinske and others.

And would Ross Selvidge, Mary Dee Romney, and Martin Truitt, and the Pasadena Patriots (Tea Party) endorse a parcel tax if they knew it would greatly reduce corruption?  Or is corruption the price of the status quo? Corruption largely exists because voters perceive state school funding as coming from “other people’s money.”  Once the funding source for school operating costs is shifted to “your home value and your pocketbook” voters will pay more attention and run their own candidates for the school Board. This has been called “The Homevoter Hypothesis” by economist William Fischel (see The Homevoter Hypothesis: How Home Values Influence Local Government Taxation, School Finance and Land Use Policies, 2005). Taxpayers will want homeowner representation.

This is especially so in Pasadena where school busing in the 1970’s forced wealthier families into private schools, immigration back filled the public schools with non-homeowning families, school funding was shifted to the state, and property values became loosely coupled with the quality of the public schools.  Contrary to self-serving statements by real estate brokers, there is no home value premium for public schools in Pasadena.  But that would likely change with a parcel tax. It’s called tax capitalization and it is the law of how the Parcel Tax gods work.

Everyone knows that a parcel tax that funds teacher’s salaries is not the same as funding capital building costs and is a bottomless pit.  Once a modest annual parcel tax was enacted it would be increased each year ad infinitum.  And once Prop 25 weakens Prop 13 there will no brake on such parcel taxes.  In Pasadena it would be taxation at will.  The middle class would flee and Pasadena would end up a two class city, the wealthy elites and the poor underclass working in their businesses and homes, with a thin middle class.

What I Learned from CC

After the Measure CC election the State legislature relaxed all the categorical mandates in its public school funding formulas. Actually, the categorical funding was made more flexible way before the Measure CC election but neither the newspapers nor PUSD felt this needed to be communicated to voters to keep them in the dark. So all the special interest funding protections for music and arts teachers, for phys ed instructors, for bus drivers, for building maintenance personnel, for union members, etc. that previously bought votes for State legislators had to be eliminated once there was a state budget deficit.  Put differently, the corruption premium in the State ADA funding formula for public schools had to be cut out.  This liberated more funding for core classroom expenses (teachers).  Oddly, teachers and teachers unions opposed this. But cops and teachers never break ranks.  Measure CC proponents naively thought that if the parcel tax passed that they would be able to back-fill their lost special interest premium without any change to the educational or community power structure.  Never was going to happen even if CC passed.

What I learned from the CC campaign was that neither side in the parcel tax debate could or would tell us if PUSD had an actual budget shortfall if the tax did not pass.  PUSD just kept its sloganeering about “it’s for the children” and “you don’t have a right to oppose taxes unless your volunteer in the schools.”  The Anti-CC forces just kept up their message about corruption and overspending.  But what was the truth?  After delving into the PUSD budget myself and calling the State Department of Education I found that there was no way to know for sure unless PUSD became more transparent about its budget, which they weren’t about to do.

What I did learn that PUSD typically typically had an annual $200 million operating budget but that it did not count another about $150 million in “categorical” Federal and State funding for special needs education.  But such categorical funding, and all those extra poverty grants, pay their share of “overhead,” meaning administrator and support staff benefits, building rent, building upkeep, cafeteria expenses, etc. When I pointed this out to a reporter for the Pasadena Star News in a phone interview he seemed surprised and thought I was making this up.  This is one reason why PUSD has a lot more money than they want to disclose. The overall funding past funding level at PUSD was $350 million per year, not $200 million as PUSD and the Star News made out. Divided by about 18,500 total students that is $18,919 per student per year!  And if you include annual debt payment on facility improvement bonds the amount expended per student is about $23,000 to $25,000 per student per year. Not chump change.

After the CC election when redevelopment agency funds were raided by the state to lessen the state’s school funding burden, it appeared that the Anti-CC forces were closer to the truth than the Pro-CC campaign.  PUSD was forced to eliminate some programs, some teachers, and discretionary school busing but still had enough funds to operate without a corruption premium.  Today, we are told by PUSD no less that student test scores are rising with less funding.  But the “less funding” part is dropped out of PUSD press releases and Star News coverage.

PUSD, together with the Star News with PEF’er Larry Wilson behind the scenes, is running a propaganda campaign the make the community believe that PUSD should be rewarded with a parcel tax for higher test scores.  But neither PUSD nor the Star News wants to mention that test scores keep climbing with fewer funds.  Still no mention whether more funds are really needed.

Who to Believe?

During the Measure CC campaign, this writer unsuccessfully tried to help the community understand that it wasn’t only corruption or alleged shortfalls in school funding that were the most crucial about the parcel tax controversy. Trying to communicate a nuanced moderate position is impossible in a polarized community with newspapers that only want to report extremist positions to appease readers on both sides of issues.  To the Anti-taxers you’re a traitor; to the Taxers you’re person who doesn’t care about children and have no authority unless you volunteer for PEF or mentor in the schools. To the Local Media you are just another Stooge who can be used to make the Anti-Tax efforts look bad.

It didn’t matter to liberal community elites that this writer was a former children’s social worker, trained community organizer, eligibility worker for the indigent, former low income housing developer, and renewable energy project manager.  To those elites in the community power structure you have no voice or credibility except the words they want to put into your mouth. But what ever happened to the voice of reason and responsibility instead of ideology?  There is no room for such a voice in the media, in newspaper guest editorials, on a ballot argument, or in a debate.  Such voices are marginalized to blogs or Topix comments that are buried at the bottom of 100 or more comments.

The Parcel Tax Gods are Unrelenting

In ancient pre-Christian Rome, Mercury was the god of traveling and communication.  He was also the god of thieves.  Supposedly, he was only a few days old when he stole the cows of Apollo.  Mercury made special shoes for the cows and made them walk backwards so no one could follow their tracks. Eventually Apollo figured out that Mercury had stolen his cows. Apollo eventually accepted Mercury’s lyre musical instrument as compensation for the herd of cows. Call it eminent domain with unjust re-compensation.

PUSD, the PEF, and the Pasadena Star News will continue to make sure that you cannot follow the money trail of the sacred cows of political corruption with school funding and poverty grants.  And they will try and buy you off with music programs.  Life is often full of trade offs.  But the Parcel Tax god is unrelenting and unforgiving and the power structure of Pasadena is likely to be radically changed if a parcel tax is passed.  Perhaps a parcel tax may even become part of a reform platform for the Tea Party.

Be careful of ascending to the mount of the All Saints Temple to pray for social justice for public schools.  When the parcel tax gods want to punish you they answer your prayers.