2020 Proposition 15: Should Businesses Continue to Take Advantage at Property Tax Time?
A dozen proposals will be on the November statewide ballot. Over the next few days I’ll endeavor to give readers a glimpse at the basic issues involved, along with links allowing for further study. Later on in the season I’ll post more materials on the higher profile measures under consideration.
As has been true with elections since 2012, I'll endeavor to research and post about as many propositions and local elections as I can. I have no schedule, other than to say it will be done when it's done.
One thing we can know for sure, tons of money will be spent to support or oppose the various propositions. Where that money comes from is, to me, more important than what the messages being pushed are. I'll get around to more specifics on funding as the election approaches.
Yesterday I covered Proposition 14, which asks Californians to continue to support stem cell research funding via bond sales.
Proposition 15: Property Tax Rates on Commercial and Industrial Land
For: Coalition for Schools and Communities First, largely funded by the California Teachers Association, SEIU California and the Chan Zuckerberg Initiative. Executive committee includes: Advancement Project California, Alliance San Diego, California Calls, California Federation of Teachers, Coalition for Humane Immigrant Rights of California, Common Sense Kids Action, Evolve California, League of Women Voters of California, PICO California
Website | Facebook | Twitter | Endorsements | Text of Initiative
Against: Californians to Stop Higher Property Taxes, with major funding from California Business Roundtable Issues PAC, California Taxpayers Association, BNSF Railroad, California Beer & Beverage Distributors State Issues PAC, and Western Manufactured Housing Communities Association Issues PAC.
Website | Facebook | Twitter | Endorsements
Why: This ballot measure touches what’s been called the third rail of California politics.
It would create a set of new rules for commercial property taxes, while leaving the existing rules for residential property taxes in place. Commercial property owners with more than $3 million in holdings would see their taxes go up, with the estimated $6.5 to $11.5 billion tax revenue going to local government services and schools.
You’ll be hearing a lot about Proposition 13, passed in 1978, placing a cap on property taxes, and changing the way cities and counties were financed. Prop. 13 has been the gift that keeps on giving for commercial property owners who bought cheap real estate decades ago.
There will be an expensive — and bitter — battle for your vote.
How: Supporters have raised $19,738,008. Opponents report $3,226,413.
The rest of the story. Howard Jarvis/Carl DeMaio Drown-Government-in-a-Bathtub-types will be having a ball, collecting cash and mailing list names from folks convinced California is about to confiscate grandma’s house.
The real money to oppose Prop 15 will come from big business groups. They’ll be hiding behind a veneer of supporting your corner grocer, growers selling at farmers markets, and the proprietor of your favorite watering/caffeinating hole.
The two big arguments against the measure will be that the COVID-19 crisis makes this a horrible time to hit businesses with more taxes, and the prospect of companies leaving California for tax advantages elsewhere.
Of course, Prop 15 doesn't go into effect immediately; it's phased in start a couple years down the road, and the companies leaving California argument is just so... tired. It's (not) funny how all those supply and demand types forget demand when taxes get mentioned.
Not-so-subtly hidden in these arguments will be the prospect of the tax-and-spend types coming back next year to raise taxes on personal real estate.
Since the act of representing Democrats as the bad guy isn’t likely to play well in a state where they dominate all branches of governance, the boogie man for this campaign will be teachers unions.
Having “union bosses” as the “enemy” accomplishes the secondary purpose of denigrating public education, an important long-term objective for conservative crusaders looking to get all those evil facts and sciency stuff out of their way.
There will be some confusion about the terms and rollout of this tax. Organizers behind the initiative decided to ditch the language of a measure that previously qualified for the ballot.
Signatures were gathered for version two, which included provisions aimed at blunting criticisms of the first attempt.
From Politico:
By including new provisions aimed at “strengthening small business tax relief,’’ the labor coalition clearly aims to both blunt major business criticism and attract support from small businesses.
The new language, for example, expands the reassessment exemption to small business owners with property valued at $3 million or less, up from the previous $2 million threshold. It provides a phase-in provision aimed at providing small business tenants with sufficient time to locate other rental options if they believe they will be affected by reassessment, organizers said.
Other changes include “tightening education finance language to ensure every school district receives funding in an equitable way,” and “strengthening zoning language to ensure large corporations cannot avoid reassessment,''
According to a recent analysis, 92% of the increased revenue would be generated by only 10% of commercial and industrial properties. Homeowners, owners of property assessed at less that $3 million, and agricultural land will continue to be taxed as before.
Commercial and industrial real properties would be reassessed to their fair market value beginning as early as the 2022-23 lien date and would be required to be reassessed at least every three years thereafter.
Commercial and industrial real property would be defined to include:
Real property used as commercial or industrial property; or
Vacant land not zoned for residential use and not used for commercial agricultural production.
A majority vote will enable passage, since this is a constitutional amendment.
I expect to have a lot more to say about Prop 15. Current polling says it should pass. But an uncertain economy and the likelihood of a massive disinformation campaign by opponents will mean it won’t be easy.
Voter Guide - You've Voted for President, what's next?
I'll be writing about many ballot measures and candidates between now and the end of September. That work will be condensed into an handy-dandy voter guide just in time for your mail-in ballots to arrive. I'm the guy who coordinated San Diego Free Press's Voter Guides over the past decade, so this won't be my first effort. Stay tuned.
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