The sky is falling! Or worse, somebody is threatening to touch California’s political third rail. You know, the one found in the Bible right after the Ten Commandments. I think it’s called–checks notes–Prop 13.
The 2018 general election is more than a couple of months away, and already the purveyors of fear are cranking up their noise machine for 2020. Visions of grannies being dumped off in the Arizona desert are being crafted for fundraising appeals to the Koch brothers and their ilk by so-called taxpayer groups.
What really happened is a coalition of over 270 endorsing community organizations, labor unions, business leaders, philanthropic foundations and elected officials, calling itself Schools and Communities First, held five simultaneous press conferences in Area, Los Angeles, Fresno, San Diego, and San Bernardino. They’re proposing a ballot measure with sensible and long-overdue reforms to property tax assessments on business properties worth over $2 million in California.
They announced the submission of 850,000 signatures to the 58 County Registrars to qualify the California Schools and Local Communities Funding Act for the November 2020 ballot. The coalition needed to submit 585,407 verified signatures for the first commercial property tax reform initiative to qualify for the ballot in 40 years since Prop 13 passed.
From the Mercury News
The proposed overhaul of Proposition 13 — long sought by progressives — could yield $6 – $10 billion annually in additional tax revenue for public schools, community colleges and public services, according to the state’s nonpartisan Legislative Analyst. While panned by at least one county assessor as unworkable — and sure to be fought by real-estate interests and large companies if it went forward — proponents say the initiative would bring in sorely needed dollars for schools, lift some of the tax burden from homeowners and level the playing field between new and more established businesses.
“My elevator pitch is that residential property owners are paying a disproportionate share of current property taxes for local schools and community services,” said Helen Hutchison, an Oakland resident and president of the California League of Women Voters.
Discussion about creating a split-roll between commercial and residential properties dates back to 1980, when it became obvious a loophole in the act was a boon for big corporations.
While property taxes under Proposition 13 remain almost stable as long as an owner holds onto a home and change only when a property is sold, commercial property owners have gamed the system, creating corporate transfers that didn’t require registering the sale of the property.
Advocates of more funding for public schools and other local services have long contended this method of record keeping prevents businesses from paying their proper share of those costs, even though business property tax revenue has risen at a similar pace to what’s levied on residences.
The coalition holding the press conferences this week initially announced they were aiming for the 2018 ballot, but made the move to go 2020 in early April. This allow them to take advantage of a little-known provision of the California Constitution linking the initiative process to gubanatorial elections.
A fixed percentage of votes cast in the most recent governor’s race sets the bar for what measures qualify for the ballot. Presently, those numbers are based on 2014 voter turnout.
Initiatives collecting signatures before the 2018 general election (when voter turnout is expected to be unusually high) get to use the historically low threshold set in 2014.
From the Los Angeles Times:
In the case of 2018 initiatives headed for the 2020 ballot, it would be an effort to slow the political clock, shrewdly straddling the various deadlines that typically segment initiative efforts into two-year blocks of time.
Fewer signatures needed also mean less money spent — perhaps up to $1 million in reduced signature-collection costs. An extra bonus: State law generally requires propositions be listed on the ballot in the order in which they were certified by elections officials. Researchers have long believed that items toward the top of a ballot tend to fare better
The California Business Roundtable, California Chamber of Commerce and Howard Jarvis Taxpayers Association responded to the press conferences with a release of their own. “While the election may be more than two years away, we have already begun to build the campaign necessary to defeat this measure,” Jon Coupal of HJTA said.
The Union-Tribune story included the predictable threats of businesses fleeing the state and workers put to the street.
“There’s absolutely no need for a massive tax increase that would drive up consumer costs and would result in job losses,” said David Kline, spokesman for the California Taxpayers Association, in a phone interview. Kline said California has large reserves and has significantly increased public education spending in recent years, so there’s no reason for an increase in taxes, he said.
Rice Wilson of Alliance San Diego disagreed.
“The idea that it’s going to chase away business — false,” said Rice-Wilson, who cited a June UC Santa Cruz report that said most of the potential commercial property tax revenue not collected under Proposition 13 comes from only 8 percent of business properties.
**Note: This proposed ballot measure is not related to to Proposition 5 on the Novembner 2018 ballot.
The Property Tax Transfer Initiative (Prop 5), sponsored by the California Association of Realtors, is an amendment to Proposition 13 allowing homebuyers age 55 or older or severely disabled to transfer their tax assessments, with a possible adjustment, from their prior home to their new home, no matter the new home’s market value; the new home’s location in the state; or the buyer’s number of moves.
This is a great deal for realtors looking to make commissions, not so much for counties counting on tax revenues to pay for scools and other services.
Current law allows a homeowner, who is either severely disabled or 55 years and older, to apply their original Proposition 13 (1978) property tax bill to a replacement home of equal or lesser value. At present, counties have discretion over whether tax assessments can be transferred across county lines.
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