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Does the Mills Act decrease public school funds?

564mills041808full California's Proposition 13 is the bane of public education in the state - and for the most part benefits the richest single segment of the population, relying on the old straw man of "senior homeowners on fixed incomes" (when tax credits for that demographic would be far more equitable in keeping folks in their homes). However, it's only one of many archaic and unethical pieces of the tax code keeping our public schools underfunded.

The whole story is much more complicated, but a recent grand jury report in San Diego took the focus off Prop 13 and turned that energy to vilifying owners of historic homes - only it turns out they got the story wrong. Kelly Bennett of Voice of San Diego reports:

One of the most heartrending arguments for dramatic changes to the city of San Diego's historic preservation program is that its tax discounts for homeowners results in an annual revenue loss to the San Diego Unified School District of nearly $1.5 million.

That sum factored in media reports, propelled damning rhetoric in a county Grand Jury report and became a talking point of Mayor Jerry Sanders in press conferences and on the Roger Hedgecock radio show earlier this month. And so, the city's Mills Act program looked quite like a fat tax break to homeowners in some of San Diego's wealthiest neighborhoods at the expense of schoolchildren. And this at a time when schools are preparing to slash staff levels and budgets.

              But it's not true.

The school district didn't lose $1,486,317, as was claimed in the Grand Jury's report titled "History Hysteria." The state reimburses the district to make sure it has a particular level of funding for schools, even if property tax revenue drops, according to the state Department of Finance and San Diego Unified School District. The program does mean losses for the city of about $600,000, for the county, and for several other municipal agencies due to the tax discounts.

The number blunder exemplifies some of the confusion swirling in the debate over one of the few programs for which San Diego leads the state. San Diego has entered into far more Mills Act contracts, more than 800, than any city in the state. The contracts with homeowners of historically designated homes trade a break in property taxes for a homeowner's promise to keep the facade up to snuff.

 

Read the full story at VoSD; photo  by Sam Hodgson.

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