Once again, Californians are being asked to decide on the merits of a ballot measure that roiled the political scene when many of them were in grammar school — or not even born yet.
The ballot measure under challenge is Proposition 13, a constitutional amendment written by anti-tax crusader Howard Jarvis and approved nearly 2-to-1 by voters in 1978.
On commercial property worth more than $3 million, Proposition 13 limits taxes to the property’s assessment when last sold, and applies to both commercial and residential property. Property taxes can rise no more than 2 percent each year, unless more than half of ownership is sold or there is new construction. Since commercial property may not be sold very often, the tax may be based on an assessment that is decades old, thus avoiding the tax effects of inflation.
Proposition 13 is “the biggest loophole in the state tax system.” — Lenny Goldberg,
On Nov. 3, a measure on the ballot would essentially rewrite Proposition 13. It is Proposition 15, which would tax commercial property on the current market value at least every three years, not on the assessed value when last sold.
The Legislative Analyst’s Office had this succinct summary of Proposition 15:
“A YES vote on this measure means: Property taxes on most commercial properties worth more than $3 million would go up in order to provide new funding to local governments and schools.
“A NO vote on this measure means: Property taxes on commercial properties would stay the same. Local governments and schools would not get new funding.”
Backers of Proposition 15, led by the California Teachers Association, Chan Zuckerberg and the SEIU State Council, have raised about $44 million, according to financial disclosure records filed with the secretary of state. The opponents, headed by the PACs of the California Business Roundtable and the California Property Owners Association, and including six-figure donations from real estate, business, investment groups and others, have raised $35.2 million.
Proposition 13 is “the biggest loophole in the state tax system,” argues Lenny Goldberg, a longtime advocate for reforming Proposition 13. It is “irrational,” he told Capitol Weekly in an Oct. 4 telephone interview, adding that “Big corporations have not been reassessed for 40 years.”
Proposition 15 “is the largest property tax increase in California history.” — Susan Shelley
Goldberg said he is “cautiously optimistic” that Proposition 15 will win voter approval.
California voters are divided: A September poll from the Public Policy Institute of California (PPIC) had 51 percent of voters saying they planned to vote for Proposition 15, while 40 percent were opposed and 9 percent were undecided.
The PPIC said support is highest among likely voters in the San Francisco Bay Area (62 percent) followed by those in Los Angeles (54 percent), Inland Empire (51 percent), Central Valley (47 percent), and Orange/San Diego (41 percent).
Susan Shelley, spokeswomen for the Howard Jarvis Taxpayers Association, says Proposition 15 is bad for California.
Proposition 15 “is the largest property tax increase in California history,” she told Capitol Weekly. Furthermore, the costs to counties to implement Proposition 15’s new assessment rules would be “huge,” and there would not be large tax proceeds because “when you damage business, you will lessen the state’s overall revenue.” Shelley predicted higher prices and lost jobs if Proposition 15 wins approval. The principal campaign committee opposing Proposition 15 raised about $24 million since January to defeat it.
The Association also called the measure “treacherous.”
“Commercial properties have not paid their fair share for 42 years.” — Veronica Carrizales
In a detail-heavy online debate sponsored by the Sacramento Press Club on Oct. 5, backers and opponents of Proposition 15 disagreed on whether schools and local governments would actually benefit.
David Goldberg, vice president of the California Teachers Association, and Veronica Carrizales, policy and campaign director for California Calls, argued that Proposition 15’s proceeds would not only make the state’s tax system more fair, it would provide much-needed dollars to schools and local governments.
“Local governments are struggling to make ends meet. They need a lifeline,” Carrizales argued. “Commercial properties have not paid their fair share for 42 years.”
But opponents — Santa Clara County Assessor Larry Stone and California Farm Bureau Federation President Jamie Johansson — said Proposition 15 was so badly designed it would wind up benefitting no one while harming the state’s economy.
In 1978, right after voters approved the measure, the Amador Valley Joint Union High School District sued the state Board of Equalization to nullify Proposition 13.
Forty-one of California’s 58 counties would see no benefit from Proposition 15, Stone declared. He added that even though the proposition would not take full effect until 2022, it would be difficult, if not impossible, for county assessors to gear up in time to handle the new rules.
There have been a number of legal challenges to Proposition 13 over the decades, none of them successful.
“In fact, in polling year after year, Proposition 13 proved to be enduringly popular with voters, despite criticism that it unfairly favored some homeowners over their neighbors and was a windfall to owners of commercial properties, such as office buildings, warehouses and hotels,” Sacramento columnist Dan Walters wrote last month.
In 1978, right after voters approved the measure, the Amador Valley Joint Union High School District sued the state Board of Equalization to nullify Proposition 13, but the suit was tossed out by the state Supreme Court on a technicality.
In 1992, Los Angeles lawyer Stephanie Nordlinger sued Los Angeles County Assessor Kenneth Hahn on grounds that her purchase of a home and the required assessment at the home’s new value raised her tax bill by 36 percent, while neighbors enjoyed significantly lower rates, a violation of the Equal Protection language of the 14th Amendment. The U. S. Supreme Court ruled that Proposition 13 was constitutional.
In December 2011, former University of California at Los Angeles Chancellor Charles Young sued unsuccessfully to overturn Proposirtion 13’s requirement that a two-thirds vote of the Legislature was required to increase state taxes
State schools superintendent Tony Thurmond, Gov. Gavin Newsom and Los Angeles Mayor Eric Garcetti have endorsed Proposition 15, along with the state Democratic Party and the League of Women Voters.
The state Republican Party urges a “no” vote.