LOS ANGELES -- Gov. Pete Wilson of California this week vetoed a bill that would have allowed school districts, with simple-majority voter approval, to levy parcel taxes for general operating expenses.

In his veto message, Wilson said he feared that Senate Bill 1 "falls short in key constitutional tests" affecting such a tax.

Supporters of S.B. 1, sponsored by state Sen. Gary Hart, D-Santa Barbara, believed it would help relieve the financial stress facing many school districts. Opponents of the bill did not dispute that point, but they said the bill conflicted with past court decisions and constitutional provisions.

"I am supportive of finding a mechanism by which school districts can raise revenues locally to augment education programs," Wilson said on Monday. "The centralization of finance decision making in Sacramento has done great damage to school board accountability and local citizen participation in school finance and programs."

S.B. 1 "is a good effort" toward solving that problem, Wilson said, noting that it also addressed several concerns that led him to veto a similar bill, S.B. 177, last year.

But Wilson questioned whether S.B. 1 would pass constitutional muster.

For one thing, "the [state] constitution almost certainly precludes that a per parcel tax may be increased by a majority vote," Wilson said. "Since the constitution requires that all property is taxable and must be equally assessed, any deviation from the principle, [such as] parcel taxes, would be a special tax requiring a two-thirds vote."

Under a parcel tax, owners pay the same amount regardless of the assessed value on their property. By contrast, the amount of a property tax will vary depending on the property's assigned value.

Wilson also question language in S.B. 1 that tried to avoid having the parcel tax defined as a special tax.

The California Taxpayer's Association had raised that point in a letter to the governor.

"Parcel taxes, under current constitutional law, can only be special taxes," the letter says. "Any vote requirement change would require a constitutional amendment" rather than a statutory adjustment.

Existing parcel tax measures are considered special taxes because the revenues are dedicated to special programs and purposes, the Association of California School Administrators said in defense of S.B. 1.

Simple-majority approval would be unconstitutional if parcel tax revenues, for example, were funneled into a high school sports program, said Dennis Meyers, legislative advocate for the association, prior to the veto.

But revenues under S.B. 1 could only be used for a school district's general government purposes, Meyers said, which is why the association believed the parcel tax did not qualify as a special tax.

Wilson, however, said language in S.B. 1 declaring school districts to be general purpose agencies "cannot overcome the test" provided in the so-called Rider decision by the California Supreme Court.

Quoting that decision, Wilson said the court feared it would pull "any remaining teeth" from special tax restrictions imposed by Proposition 13 if the justices held that a tax cannot be deemed a "special tax" simply because revenues are deposited in a taxing agency's general fund.

As an alternative fund-raising idea, Wilson said school districts have authority under a law enacted in 1991 to ask county supervisors to seek sales tax increases on behalf of local education. Such proposals only require simple-majority approval in an election, Wilson said.

"I have suggested this approach to many school district superintendents," Wilson said.

Using the sales tax approach also would avoid potential problems with a California court case known as the Serrano decision, Wilson said.

The Serrano case addressed financial inequities that can arise among school districts because of different property tax levies. The sales tax revenue-raising authority would elicit none of the Serrano problems attached to a property tax, Wilson said.

Local officials are often reluctant to pursue elections for special taxes because of the difficulty in achieving two-thirds approval.

A measure on the statewide November ballot would change the approval threshold to simple majority from two-thirds for local school general obligation bonds.

Mary Moore is senior editor of California Public Finance, a weekly newsletter of The Bond Buyer.

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