Once thought of as a sacred cow, Proposition 13, the tax revolt measure passed in 1978, is now under attack. Schools and Communities First, a coalition of nearly 300 groups and leaders, has qualified an initiative for the Nov. 2020 ballot that would lift caps on property taxes for commercial and industrial properties.
The coalition says that if the initiative is approved, it will reclaim more than $11 billion a year for K-12 schools, community college, cities, counties and special districts that support everything from parks to libraries. PPIC also found that 65 percent of the state’s likely voters believe Proposition 13 has turned out to be a mostly good thing for the state. But taxpayer advocates say the measure would hurt the economy, drive businesses out of state and lead to job losses.
Proposition 13 limits property taxes for both homes and businesses to 1% of the property’s taxable value and prohibits the taxes from going up more than 2% per year until the property is sold. In this way, property owners who have held on to their land for many years often pay much lower taxes than new buyers. The initiative would create a “split roll” system, leaving in place the caps on home property taxes while removing the protections for commercial and business properties. Commercial and business properties could be taxed at fair market value.
But getting voters to approve it may be an uphill battle. According to a June report from the Public Policy Institute of California, support for a split roll among likely voters is at its lowest point since the institute began asking the question in 2012, with only 46% in favor. The institute also found that 65% of the state’s likely voters believe Proposition 13 has turned out to be a mostly good thing for the state.
“They have been taking this into their pockets. It’s time for them to pay their fair share.” — Helen Hutchison
Helen Hutchison, president of the League of Women Voters of California, who supports the initiative, said schools and communities are desperately underfunded and need the additional revenues that would come from lifting the property tax caps on commercial and industrial land.
She stressed that the measure would mostly affect a fraction of very large legacy companies. “It’s companies like Chevron and Shell,” she said. “They have not been giving us a discount because they have been paying lower property taxes. They have been taking this into their pockets. It’s time for them to pay their fair share.”