California Initiative Filed to End Proposition 13 Protections for Commercial Properties

Proposition 13 (Lennox McLendon : Associated Press)
Lennox McLendon : Associated Press

A coalition of liberals turned in 860,000 signatures on August 14 for a 2020 vote to end Proposition 13 protections for commercial properties, according to CALmatters.

Funded by Silicon Valley deep pockets — including the Chan-Zuckerberg Initiative, the personal charity of Facebook CEO Mark Zuckerberg and his wife Priscilla Chan; a coalition of teachers unions; the League of Women Voters; affordable housing advocates; and other “social justice warriors” organized as “Schools and Communities First,” — the activists submitted the signatures to the Secretary of State on August 14 to place an initiative on the 2020 ballot to increase California commercial property tax revenue by $11 billion.

Passed by about two-thirds of voters in June 1978 as a California Constitutional Amendment, Proposition 13 rolled back and froze residential and commercial assessed property values to 1976 levels, and limited the property tax increases to no more than 2 percent per year, as long as the property was not sold. Once a property was sold, the property was reassessed at 1 percent of the sale price and property tax increases were limited to a maximum of 2 percent in future years, according to California Tax Data.

Jon Coupal, President of the Howard Jarvis Taxpayers Association (HJTA), told Governing Magazine: “There are repeated efforts to try to weaken [Proposition 13] or repeal it, but that’s a ticket to a short political career.”

The burden to overturn Prop 13 has been considered daunting, because petitions proposing to amend the California Constitution must gather signatures of validly registered voters equal to at least 8 percent of the total votes cast for governor in the last gubernatorial election, or 585,407 in 2018.

But given that the “Schools and Communities First” initiative turned in 275,000 more signatures than required, it is extremely likely that HJTA will not be able to disqualify enough signatures to keep the “California Schools And Local Communities Funding Act” off the 2020 ballot.

The sponsors structured the initiative to create a “split-roll” for property tax that would continue to provide Prop 13 residential owner protections for about 8 million of California’s 12,214,549 housing units.

But commercial, industrial, and apartment property whose owners currently pay property taxes on about the equivalent of about 28 percent of the properties’ market value will see their property taxes almost quadruple by 2022, according to San Francisco Public Radio. Once free of constitutional limits, the Democrat-controlled California legislature can also raise those taxes in the future with a simple majority vote.

Schools and Communities First estimates that if the initiative passes, K-12 schools and community colleges will bank another $4.5 billion in tax revenues a year, and $6.5 billion will be split by counties, cities, and special districts to “support community services, including health clinics, trauma care and emergency rooms, parks, libraries and public safety.”

The Public Policy Institute of California asked voters last month about “a proposed measure [that] would tax commercial properties according to their fair market value but not lift Proposition 13 limits on residential property taxes—creating a ‘split roll’ tax system.” About 46 percent favored the idea, 43 percent were opposed, and 11 percent did not know.

That was the lowest level of support since PPIC began regularly asking voters their opinion of split-roll, beginning in January 2012 when 60 percent were in favor.

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