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.
Local members of the coalition include Alliance San Diego, California Alliance for Retired Americans, and the League of Women Voters of 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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michael-leonard says
so, the group that wants a ballot measure to close a loophole that is a “a boon for big corporations” is taking advantage of a “of a little-known provision” allowing them to need fewer signatures to qualify. am i the only one seeing a bit of irony there?
ben (the realist) says
Sadly its politics as usual,… tick, tick, tick,…eventual CaBoom!
http://www.TinyURL.com/InvestorWarning
FWIW the split-roll problem could have been put on the path to being fixed years ago because
“…In 2014, San Francisco–based state Senator Tom Ammiano, a Democrat, proposed legislation to redefine “ownership change” for businesses. The bill would have ended abusive, patently unfair practices such as those surrounding the Miramar Hotel deal. On the surface, it seemed likely to pass: The GOP wasn’t averse to the reform, the California Chamber of Commerce came out in favor, and the Howard Jarvis Taxpayers Association made statements indicating the group could live with it. Yet the bill died—and not just, or even primarily, because of corporate opposition. Paradoxically, many progressive politicians opposed it, as did organized labor and a large number of community groups. They believed the bill was far too narrow in scope and worried it would take the wind out of a bigger and broader reform movement that was finally coming into its own—one that wouldn’t just change the definition of ownership, but would also require regular reassessments of the value of commercial real estate, both the buildings and the land on which they sit…”
http://www.TinyURL.com/SanDiegoProp13
Jack Burton says
Oh it’s total liberal divide and conquer to destroy Prop 13 ultimately. The money thirst of democrats in this state is off the charts to pay for all the “free stuff” and heaven sent pensions. No worries. I’ll probably be moving away from this every growing nightmare in so many ways under single party rule.