The Fall ballot includes Proposition 15, an initiative constitutional amendment proposed by progressive interests to eliminate Proposition 13‘s cap on the assessed value of property for purposes of property taxation as to non-residential and non-agricultural property valued at more than $3 million. Residential and farm property would retain Proposition 13’s cap on assessed evaluation. An expensive campaign is coming, with business interests and property owners opposed, and unions and progressive organizations in support. The measure is estimated to produce between $6.5 and $11.5 billion — with a “b” — in new annual local government revenues. Sixty percent of that would go to cities, counties and non-education special districts. Forty percent would fund K-14 schools and, indirectly, the State — which has a duty to fund education.
The proponents of Proposition 15 issued a report prepared by Tim Gage, former director of the California Department of Finance, estimating that 90 percent of the new revenue would come from just 10 percent of the most valuable properties — i.e., those with the largest disparities between fair market value and Proposition 13 assessed value, likely because they avoided a change in ownership that triggers reassessment since 1978. Businesses have means to do so, as by selling stock in a corporation which owns land rather than selling the land itself. Few residential properties can avoid reassessment as easily. Critics of the proposal argue that commercial tenants would feel the higher taxes via rents. Expect to hear more about this debate in many forums between now and election day.
KQED’s report on the report is here.