State General Election Ballot Measures End Up Addressing the Post-Pandemic Economy
There is still time for statewide ballot propositions to get certified for the ballot and/or withdrawn as the result of a negotiated settlement. There are two items, however, that have qualified and are certain to go before voters in the general election,
The Schools and Communities First initiative - An opportunity for voters to right a wrong buried within Proposition 13, the third rail of California politics passed in 1978 to limit property tax increases.
Protect Drivers and Services -- A gig industry funded attempt to settle the question of the rights of workers.
Today, I’ll take a quick look at the campaigns for and against these propositions and where they fit in a fundamentally different COVID-19 influenced economy. Later in the cycle, I’ll take a deeper dive into what’s being claimed by advocates and opponents.
The Schools and Communities First initiative would create a new stream of tax revenue for local governments and public schools by reassessing commercial and industrial properties valued over $3 million in California every three years instead of whenever they are sold.
Residential property taxes will not be impacted by this “split roll” initiative, but you can expect a full-throated effort to convince voters otherwise. Given that many homes change hands every few years, they’ve already been repeatedly reassessed since Proposition 13’s passage.
However, large businesses often remain under the same ownership for a long time. Some properties have dodged reassessment thru clever sales agreements. There are California businesses paying property taxes based on 40 year old assessments.
This was a loophole in the original Property 13 language that proponents are seeking to close.
The budgets of school districts and cities in California have taken a shellacking as revenues from sales taxes have fallen along with the consumer driven economy. The prospect of huge budget cuts will make them desperate to fill the holes.
Proponents are organized around Schools and Communities First, with major funding already in place from the California Teachers Association, SEIU California State Council, and Chan Zuckerberg Advocacy.
From the San Francisco Chronicle:
[Oakland Mayor Lilly] Schaaf, however, said the measure represents the kind of “fundamental shift” that California needs to make, pandemic or no pandemic.
“This is a moment to actually make people uncomfortable,” Schaaf said. “Businesspeople should be uncomfortable about the level of income inequality that we have.”
Opponents of the proposition point out that the pandemic has hit small businesses hard. And voters can expect to see a campaign aimed at creating the impression that mom and pop enterprises, especially those which are minority owned, will be negatively impacted.
Business groups have coalesced behind the Californians to Save Proposition 13 group, though we can expect to see the Howard Jarvis-type groups out there raising money.
The initiative’s opponents are sounding equally dire messages about how the pandemic has changed the political and economic climate. Changing Prop. 13’s formula to raise commercial property owners’ taxes is “tone deaf” at a time when countless small businesses are already dying, opponents say.
“It will increase the cost of living in California,” said Rob Lapsley, president of the California Business Roundtable, which opposes the initiative as part of a coalition called Californians to Save Prop. 13 and Stop Higher Property Taxes. “People are already gravely concerned that California is too expensive a place to live.”
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The other big fight on the November ballot is being characterized as between labor unions and gig-economy companies over employee classification.
California voters will decide whether drivers for three app based services should be exempt from a state law (AB5) that reclassified many of them as employees instead of independent contractors.
While the initiative promises companies would provide more benefits to independent contractors, it would exempt them from state-mandated employee protections like unemployment insurance and workers’ compensation.
California Attorney General Xavier Becerra and city attorneys for San Diego, Los Angeles, and San Francisco have sued Uber and Lyft for refusing to reclassify half a million independent contractors as employees, depriving them of key benefits while also avoiding paying into the state’s unemployment fund.
“At the end of the day, no business model should hang its success on mistreating its workers and not playing by the rules,” Becerra said during a press conference.
A recent report from UC Berkeley’s Institute for Research on Labor and Employment found.If the drivers had been classified as employees, Uber and Lyft would have paid $413 million into California’s unemployment fund between 2014 and 2019. That’s about the same amount of money as California has borrowed from the federal government to pay recent unemployment claims.
The law’s author, Assemblywoman Lorena Gonzalez, D-San Diego, is working this year to refine it through a new bill that would allow for certain exemptions for, among others, journalists and musicians.
She’s doubled down, however, on tech companies, which she says refuse to organize their business models at the cost of providing workers a livable wage.
Ride-hailing alliances in support of the law have also initiated their own campaign against the ballot initiative, hailing it as way for the companies to continue “violating the law” and “refusing to protect drivers.”
Uber Technologies, Lyft, and DoorDash are behind the Protect App-Based Drivers and Services committee supporting this measure. It promises wage/benefit guarantees, customer/public safety protections, and to protect access to app-based delivery and rideshare services.
Their big selling point will be a claim concerning mandatory scheduling for drivers and service providers if they are classified as employees, to wit: these services won’t be there when consumers need them.
Opponents of the measure say there is nothing concerning scheduling in the legislation the gig companies hope to override.
The big picture view on this dispute over gig economy workers is finding a way to include them in the social safety net.
Companies organized around app-based services have created a business model dependent on not participating in government based programs created to provide basic protections for workers.
The COVID-19 pandemic has created a fundamental challenge to the way the economy works. Many existing business models won’t survive.
Is the future going to be everyone for themselves or we’re all in this together?
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Lead image credit: Rob Dobi