Prop. 15 approaches the “third rail” of California politics

If Proposition 15 prevails at the ballot next month, that’s anyone’s guess.

Nonetheless, the measure to reform how property is taxed and money is distributed is the closest anyone’s gotten to touching the “third rail” of California politics—despite nearly 40 years of attempts.

Proposition 13, which passed in 1978, froze property tax assessments at purchase, allowing for small annual tax increases and ensuring that people—particularly those on fixed incomes—wouldn’t be taxed out of their homes as property values soared. That made the law untouchable.

Prop. 13, however, also generously applied the tax break to non-residential properties, from towering office buildings to golf courses. Prop. 15 would change that by mandating that commercial properties be assessed every three years and taxed at their current fair market value. The proposition, known as “Schools and Communities First,” would not change how single-family houses, condos and apartment buildings are assessed.

Some critics, including Prop. 13 reform proponents, believe Prop. 15 contains a poison pill for the Bay Area: it would export money out of the region. Progressive voters who may be inclined to support Prop. 15 because they believe in property tax reform may not know that’s what they are voting for, said Jennifer Bestor, volunteer research director for the nonprofit Educate Our State.

“If you understand property tax allocation—and this [measure] came out of L.A., and those folks do—the way that it all falls out is actually they [Los Angeles] end up also being the biggest taker from the statewide school pot,” said Bestor, who was speaking on behalf of herself and not Educate Our State. “This whole thing is meant to extract money up here and ship it down there.”

Advocates for Prop. 15, known as Schools and Community First, say it’s not that simple.

While money will move between counties if the measure is approved, the distribution is meant to send money to the neediest schools and equalize education across California, which ranks 41st nationwide when it comes to K-12 per-student spending after adjusting for the cost of living, according to the California Budget and Policy Center.

Alex Stack, communications director for the Schools and Community First campaign, said in an interview that California “has created incredible wealth, and every single school in the state will benefit.” He added, “We are fine with ESL learners and foster kids and low-income students getting a bit more resources.”

Stack says that with Prop. 15, each school will be guaranteed at least $100 more per child annually than they are guaranteed today, marking a win for schools across the state.

Bestor says that after crunching the numbers, she’s not convinced that parents and school districts in the Bay Area will deem the proposition a win.

“When people feel like they’re spending so much on the schools … and then it doesn’t get there, it ruins our civic faith in our schools,” she said.

The proposition promises to bring between $6.5 billion and $11.5 billion to schools, community colleges and local governments in coming years as properties are reassessed.

A “slim majority” of residents in the state lean toward a yes vote on Prop. 15, according to a mid-September Public Policy Institute of California poll.

As has long been the case for property taxes, 40 percent would go to schools across the state, and 60 percent would fund other local government expenditures, like infrastructure, fire safety and homelessness initiatives.

While several Prop. 15 advocates said they didn’t know about the outflow of funds—suggesting that Bestor’s concern about uninformed voters may not be unfounded—each maintained that they supported the measure, irrespective of the spending plan.

Walter Wilson, a principal at the Minority Business Consortium, supports the measure but said in a recent interview that he didn’t know money raised in particular counties would remain there.

Even so, he said opponents have not shown that the measure will negatively impact businesses or communities, and he wants large companies to pitch in more. “The whole idea is that this is not the time to raise taxes on taxpayers, but this is the time to raise corporate taxes on corporations that have been getting away, for … 40 years, with billions of dollars in taxes that should have gone back to our communities and schools,” he said.

Indeed, the promise of new funding for those institutions comes as a pandemic-induced recession creates deficits for cities across the state and as schools try to embrace distanced learning with shrinking budgets.

Even the measure’s critics acknowledge that’s likely to make the proposition look even more appealing.

Advocates estimate that about 90 percent of the money generated by Prop. 15 would be paid by 10 percent of the state’s largest companies, including Chevron and Disney. In the Bay Area, some of Silicon Valley’s large technology companies would likely find themselves with a bigger tax bill than they’re used to under Prop. 15.

Previous efforts to amend Proposition 13 have failed to gain momentum in large part because, as in national politics today, the two sides of the argument don’t seem to agree on the basic facts.

On one end of the spectrum, advocates say Proposition 13 is broken, arguing that it creates severe inequity across the state for all property owners, exacerbates the housing crisis and contributes to the under-funding of local school systems.

From that position, the only option is to analyze the best fix—and fast.

But on the other side of the issue are those who say that Proposition 13 is not only not broken, but doing exactly what it is supposed to do: create consistency for government budget planning, allow all property owners to make investments with certainty and encourage businesses to stay in California.

In other words, if it isn’t broken, don’t fix it.

“It’s good for everybody to know what your taxes are going to be when you buy property,” said Susan Shelley, vice president of communications for the Howard Jarvis Taxpayers Association. “It’s true that people who bought many years ago have a lower tax assessment than their neighbors may, but everybody who buys has the certainty that they will not be taxed unexpectedly out of their property.”


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