Voters will likely have a chance in November to decide if Proposition 13 will remain as it has since its passage in 1978, or if it will turn it into a chimera that treats homes and businesses differently, bleeding the latter for tens of billions of dollars.
Supporters of a constitutional amendment that would hike taxes on commercial and industrial properties by as much as $12 billion a year say they have collected enough signatures to place it on the 2020 ballot. The Schools & Communities First campaign needed more than 997,000 verified signatures to put the proposal before the voters. It says it has both surpassed that minimum and set a new record for signatures with more than 1.7 million.
Proposition 13, led by taxpayer advocate Howard Jarvis, was approved by voters in response to punitive property taxes. It was the “political equivalent of a sonic boom,” economist Arthur Laffer wrote in “Eureka! How to Fix California.” It was also an economic boom, setting off a “entrepreneurial and commercial explosion.” Job creation soared. Economist Stephen Moore said Prop 13 “ushered in a second California gold rush.”
The effects of the proposed “split-roll” ballot initiative wouldn’t be so beneficial. It would cut in half the benefits of Proposition 13, which limits property tax hikes, by keeping residential property under its protections while exposing commercial and industrial property to increased tax rates that will generate $12 billion a year in revenue, sucking a massive sum out of the private sector and dropping it into political hands. But pass it anyway, its supporters insist, do it for the children.
If approved, the split-roll initiative “reclaims $12 billion every year to fund world-class schools and strengthen local economies to lift up all Californians,” says Schools & Communities First.
Interesting word choice. “Reclaim.” It implies those billions first belonged to someone else and will simply be returned to its rightful owners through the ballot measure.
Of course, it’s those evil multinationals and greedy businesses that took it.
“For more than four decades, big corporations have not been paying their fair share, leaving California’s school funding falling behind,” says Schools & Communities First. “California now has the most overcrowded classrooms in the U.S. and some of the worst ratios of counselors, librarians, and nurses per student. Schools & Communities First ensures that our schools and communities come first.”
It’s a compelling argument when the facts are ignored. But when the sun shines in the dark corners, a different story emerges.
“California now spends 30% more on a per-pupil inflation-adjusted basis than it did in the mid-70s when California schools were some of the best in the nation,” says Jon Coupal, president of the Howard Jarvis Taxpayers Association.
“The sad truth is that no level of taxation or debt is too heavy for the union bosses at” the California Teachers Association.
A year ago, funding for California schools reached an all-time high. Edward Ring says the state is spending more than $20,000 a year on each K-12 public school student. The education establishment is in fact spending 80% more per student “than at the low point following the Great Recession nine years ago,” says EdSource.
No one doubts California’s public schools would find ways to spend an extra $12 billion a year, whether they genuinely need it or not. But the windfall would come at a steep cost to consumers.
“Businesses would have no choice but to pass those increased costs onto you and me, raising the prices on everything we buy, from gasoline to groceries, while also raising our utility and health care bills,” Rob Lapsley and Allan Zaremberg, co-chairs of Californians to Stop Higher Property Taxes, wrote last fall in CalMatters.
Farmers and their families would feel the shock, as well. Third-generation Tulare County farmer Eric Bream, writing last week in Fox & Hounds, calls the measure “an attack on farms” as well as “the fresh fruit, vegetables and dairy products we produce.”
“The certainty provided by Prop 13 in keeping property taxes predictable is a relief to farmers who have so many other uncertain issues to deal with — from the weather and water to drought and foreign trade deals.
“But this new state ballot measure will destroy Prop 13, raising property taxes on agricultural improvements and fixtures. That means higher property taxes for structures necessary to perform the tasks involved with bringing food from farm to fork, including processing facilities, dairies, wineries, and packaging and distribution centers.
“The property taxes on these structures will dramatically skyrocket if the initiative passes.”
Proposition 13 was passed by nearly 63% of the voters; only 34% said no. It remains popular today. But is it enough of a treasure for voters to reject the split-roll proposal by a similar margin this fall?
If they do, we’ll hear another political sonic boom, not as loud as the one in 1978, but it won’t go unnoticed.
Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.