Californians have a chance to modify the landmark Prop 13, which 42 years ago changed the way property taxes are levied.
The legendary measure has kept property taxes low for decades and has long been considered the third rail in state politics. Prop 13 rolled back real estate assessments to the 1975-76 value and capped taxes at 1% of that value, with increases of no more than 2% each year. The property value is only reassessed when it is sold.
But Prop 15, which voters are currently weighing, would change that for owners of commercial properties, splitting the tax rolls so that only residential properties would be protected.
Commercial properties could be taxed at the market rate, and not just when they change hands.
“When Prop 13 passed in 1978, we were told it was for little old ladies like my grandma who are on fixed incomes, so their property taxes didn’t go up,” said Los Angeles elementary school teacher David Goldberg, vice president of the California Teachers Association, who says Prop 15 is long overdue. “What we did not know - and was not told to us - is we were freezing corporate property taxes for the richest billionaires and the biggest multinational corporations in the history of our world. So we now have Chevron still paying 1978 taxes.”
Goldberg says the measure will generate up to $12 billion dollars a year, with 60 percent going to local governments and 40 percent guaranteed to the public schools.
“This is saying we want to get back to what we deserve in California. Free UC’s like we used to have, free Cal States, free community colleges, county programs, programs to help our communities and class sizes like all of our students deserve,” said Goldberg.
But longtime Santa Clara County assessor Larry Stone says the initiative is a disaster.
“Proposition 15, while well intended, is seriously flawed and would create chaos for taxpayers and assessors,” he argued.
The measure includes an exemption for small businesses worth less than $3 million, and it gets rid of the business equipment tax on small companies.
But Stone says many commercial landlords pass their property tax on to their tenants, and this would put even more small businesses out of business, at the worst possible time. “In the middle of the COVID crisis, this is no time to push small businesses already on the brink of collapse over the financial cliff… Prop 15 would crush tens of thousands of small businesses.”
Stone says some small businesses could see their property taxes increase tenfold.
Supporters of the measure point out that Prop 15 does not go into effect until July 2022, and legislators have the power to delay its implementation further.
Joe Biden, Kamala Harris and major public employee unions back this measure, while big real estate interests, farmers and restaurant owners oppose it.
The measure has drawn more than $70 million in contributions total, with tens of millions in funding on either side.