Changing Proposition 13, the landmark, tax-cutting ballot initiative that California voters approved in 1978, is the goal of a constitutional amendment aimed at next year’s ballot.
The plan by two Senate Democrats – Holly Mitchell of Los Angeles and Loni Hancock of Berkeley – would allow commercial and business properties to be regularly reassessed for tax purposes, with an exemption for properties worth less than $500,000. Under current law – Proposition 13 – those properties are only reassessed when there is a change in ownership.
Mitchell and Hancock, both liberals, have a daunting task: Proposition 13 has long been popular among California voters.
Although that support has dwindled in recent years, politicians are loathe to seek changes to Proposition 13, and those that do invariably are Democrats. A constitutional amendment requires a two-thirds vote of each house. Since Democrats narrowly fall short of the two-thirds threshold, passage would require at least some Republican votes and backing from moderate, business-friendly Democrats.
If approved, the plan, SCA 5, would go directly to the ballot; it needs no signature from the governor.
Hancock and Mitchell say Proposition 13’s change-of-ownership rule has loopholes and allows a “minority group of wealthy corporations and commercial property owners to dramatically reduce their tax share and shift that responsibility onto homeowners and renters.”
Tax reform activist Lenny Goldberg, who has sought changes to Proposition 13 for decades, believes the change is necessary.
“It is inevitable, whether this year or in the future” said Goldberg, who said the existing system under Proposition 13 inflates land values and makes regulatory process too difficult.
But critics disagree.
“Before Proposition 13 and after Proposition 13, California’s property tax system has always treated property owners equally, and it would be unfair to now change the rules and target certain types of property owners with higher taxes.” says David Kline, spokesman for the California Taxpayers Association.
Kline said tax hike increases will boost the jobless rate, and that employers will increase prices to stay afloat.
A Field Poll in June 2008 randomly surveyed 1,052 registered voters on “voting preferences if Proposition 13 were up for a vote again today” and 57 percent of voters favored the proposition while 23 percent of voters opposed.
Six years later, in April 2014, Field conducted another survey of 1,000 registered voters. When asked about “voter preferences as to whether or not parts of Proposition 13 should be changed”, 49 percent of voters were open to changing Proposition 13, while 34 percent were opposed.
Rex Hime, head of the California Business Properties Association, which has lobbied against for years against changing Proposition 13, said the Hancock-Mitchell amendment faces a steep uphill battle.
“There is absolutely no way this is getting out of the Legislature” Hime said.
Ed’s Note: Alvin Chen is a Capitol Weekly intern from UC Berkeley, where he majors in political economy.